Archives for February 2026

The Auditors, Lawyers, and Bankers Who Watched a Fraud Unfold and Kept Billing Hours

Earmark Team · February 17, 2026 ·

Two men stood at an LAX mailbox, passing an envelope between them like a hot potato.

“I don’t want to mail it. You mail it.”

Hours earlier, they’d flown from Chicago with no plan. Their mission was to intercept a confirmation letter before lawyers could verify lease terms with a customer. They’d arrived at the customer’s Los Angeles office just as a courier walked in ahead of them. While one man distracted the customer with lunch options, the other snuck into a nearby room, forged a signature, and faxed it back to the law firm.

Now they just had to mail the original back and catch their flight home. The envelope slipped from their hands and fell to the ground. They checked their watches—the flight was boarding. Without another word, they picked it up together and dropped it into the mailbox.

This scene captures exactly where OPM Leasing Services ended up. In a recent episode of Oh My Fraud, host Caleb Newquist traces how two childhood friends built one of America’s largest computer leasing companies, only to watch it collapse into a fraud worth more than $190 million.

Two Friends, One Dangerous Bet

Mordecai “Morty” Weissman and Myron Goodman went way back. Same Brooklyn yeshiva. Same college. By 1969, they were brothers-in-law when Myron married the sister of Morty’s wife. So when they started a business together in 1970 above a candy store in Brooklyn, it probably felt natural.

They called it OPM Leasing Services. The name supposedly stood for “Other People’s Machines.” But as Caleb points out, the interpretation that stuck was more cynical and ultimately more accurate: “Other People’s Money.”

In the early 1970s, if you were in the computer business at the enterprise level, there was one company that mattered: IBM. As Caleb puts it, “they were the only game in town.” These days, IBM is what he calls “the Norma Desmond of tech companies”—iconic but past its prime. Back then, they were creating the future.

OPM’s business model seemed straightforward. Borrow money to buy IBM mainframes. Lease them to corporations. Use the lease payments to service the loans and pocket the difference.

But Morty and Myron had a clever angle. While competitors wrote three- or four-year leases, OPM offered seven-year terms. The result was lower monthly payments that customers loved. As Caleb observes, “there’s never a shortage of price-conscious customers out there.”

The catch was that OPM required “hell or high water” clauses—lease payments had to be made no matter what. To sweeten the deal, customers could sublease computers back to OPM after three years, and OPM would re-lease them to someone else. If those payments didn’t cover the original amounts, OPM would eat the difference.

The entire model rested on one huge gamble: that IBM wouldn’t release better computers for seven years.

When Technology Refuses to Stand Still

Throughout most of the 1970s, the gamble seemed to pay off. OPM grew to 250 employees across 11 offices, including plush Manhattan headquarters. Their customer list read like a Who’s Who of American business: AT&T, Revlon, Polaroid, Merrill Lynch, Xerox, American Express, General Motors. Their biggest customer was the aerospace and defense giant Rockwell International.

Morty and Myron lived well. They settled into estates in Lawrence, Long Island. Myron decorated what the New York Times called his “baronial estate” with a disco and a small movie theater. He pledged $10 million to Yeshiva University and became its youngest trustee ever.

Competitors remained skeptical. Edward Czerny, president of the nation’s second-largest leasing company, said OPM was “going 180 degrees against what the industry was doing.” But as Caleb notes, skeptics don’t always get it right. People were skeptical of Amazon losing money for a decade. They thought automobiles would never replace horses.

Then came 1978.

IBM launched its Series 3000 computers, which were faster, smaller, and cheaper than anything on the market. Every big business wanted one, including OPM’s customers. As the New York Times reported, customers immediately started turning in their old computers. OPM had to accept “knock down rentals” for obsolete equipment, resulting in shortfalls of up to $40,000 per month on individual deals.

That same year, Morty and Myron purchased First National Bank of Jefferson Parish, Louisiana. Why would two computer leasing guys from New York buy a bank in Louisiana? As Caleb dryly notes, owning a bank might come in handy “for one reason or another, like for a check kiting scheme.”

The Desperate Descent

Check kiting exploits the “float,” or the days it takes checks to clear. You write checks between accounts with insufficient funds, timing deposits to create the appearance of money that doesn’t exist. Caleb calls it “the financial equivalent of the spinning plate routine.”

Those plates stayed airborne for six months before bank officials caught on. In March 1980, OPM pleaded guilty to 22 felonies and paid a $110,000 fine. “Virtually no one outside of Morty and Myron heard anything about it,” Caleb notes.

But the desperation only grew. Single computers became collateral for multiple loans at different banks, and they fabricated lease documents. In one example, OPM claimed monthly lease payments of $54,500 when the actual amount was $463. Documents described four IBM computers worth $3.1 million in Texas, when Rockwell’s records showed three pieces of equipment worth $20,000 in Los Angeles.

Judge Charles Haight Jr. later revealed the forgery technique. “Mr. Goodman would crouch under a glass table with a flashlight, and Mr. Weissman would trace the forged signatures.”

Warning signs accumulated. Business Week questioned OPM’s practices in 1978. Goldman Sachs resigned as their investment bank. But customers wanted to keep believing. When Edward Czerny showed the Business Week article to customers, he said, “most of them didn’t care.”

Everything unraveled in February 1981 when a routine inquiry discovered “rather poor forgeries” of a Rockwell executive’s signature. Within a month, lenders sued, alleging fraud exceeding $100 million. The final tally would reach $190 million from 19 lenders.

The Professionals Who Should Have Said No

The bankruptcy examiner’s report revealed a network of enablers who chose client relationships over professional responsibilities.

Lehman Brothers knew about the check kiting but never reported it. They continued representing OPM to lenders in “the best possible light,” downplaying concerns when convenient.

Fox and Company, the audit firm, “yielded to pressure to certify materially false and misleading financial statements.” In 1976, they initially drafted statements showing large losses. Myron Goodman told the audit partner to “get back to the grindstone and try to figure out a way to show a profit.” Because the firm was being paid by the guy yelling at them, that’s exactly what they did, using what the report called “questionable accounting techniques.”

Singer Hutner Levine and Seeman, OPM’s law firm, took the brunt of the blame. Partner Andrew Reinhard, Myron’s close friend, allegedly knew about the fraud as early as 1978. The report called him “a reluctant but knowing accomplice,” though he was never charged.

The story of John Clifton, OPM’s internal accountant, shows how badly the system failed. Clifton found evidence of bogus Rockwell leases, consulted a lawyer, turned the information over to Singer Hutner Levine & Seeman, and quit, hoping they’d handle it. His letter arrived while Myron Goodman happened to be at the firm’s offices making a “partial confession of unspecified past wrongdoing.” Goodman intercepted the letter, and the specifics stayed hidden.

Singer Hutner Levine & Seeman continued working for OPM, closing more than $70 million in fraudulent loans before finally resigning in September 1980. The bankruptcy report said they’d gotten “the worst possible advice about its ethical obligations.”

The Reckoning and the Lessons

OPM filed for bankruptcy in March 1981. By December, five executives had pleaded guilty to defrauding lenders. A year later, Morty and Myron pled guilty and received 10 and 12 years, respectively.

Judge Haight didn’t hold back. OPM was “basically insolvent” almost from the start and “survived by means of just fraud and bribery.” The frauds were “without parallel in the history of this court.”

Caleb draws several lessons from the wreckage:

Unorthodox business models deserve scrutiny. They’re not automatically fraudulent. After all, plenty of skeptics have been wrong. But when a company’s entire advantage rests on assumptions that defy common sense, like technology standing still for seven years, that’s worth examining.
Desperation breeds fraud. “Fraud is often a temporary solution to a problem,” Caleb observes. People convince themselves it’s just this once, they’ll pay it back, everything will be fine. “It’s almost never fine.”
“Too good to be true” still applies. OPM’s customers got deals nobody else could match. Even when Business Week raised questions, “most of them didn’t care.” People don’t want to stop believing they’re getting a great deal.
Professional enablers make large-scale fraud possible. Banks, auditors, and lawyers “didn’t say no to their client. They were conflicted in many ways and allowed things to go on for too long.”

And finally, Caleb calls the check kiting “the dumbest fraud on Earth.” There’s only one way it ends. Either you stop and face the consequences, or “money falls out of the sky.” The sky rarely cooperates.

For accounting professionals, the pressure to find creative solutions hasn’t changed since 1978. When clients pay your fees and threaten to fire you if they don’t like your answers, the temptation is real. The OPM case reminds us that professional independence is the only thing standing between aggressive accounting and criminal fraud.

“If your plan B is kiting checks, then plan A might need some work,” Caleb concludes:

Listen to the full episode for more details about this spectacular fraud, including the thorny attorney-client privilege issues that emerged from Singer Hutner Levine & Seeman’s conduct. It’s a story that proves some lessons in fraud never get old; they just get more expensive.

The Voice That Told You to Stay Quiet Wasn’t Yours

Earmark Team · February 17, 2026 ·

What if the biggest roadblock in your career path isn’t a lack of skills or experience, but the voice in your head that’s been telling you to stay quiet since you were a little girl?

That voice is familiar to many women in accounting, tax, and bookkeeping. It’s the one that whispers “don’t brag” when you land a major client. It suggests you “soften” your opinion in the board meeting. It convinces you that speaking up will somehow offend someone. Most of us inherited this voice through years of well-meaning feedback that taught us to make ourselves smaller.

In a recent episode of the She Counts podcast, hosts Nancy McClelland and Questian Telka tackle this topic head-on with special guest Misty Megia. Misty is the CEO and creative force behind Theatre of Public Speaking, where she helps women and underrepresented voices unmute themselves, whether in a conference room, a technical breakout session, or a keynote spotlight. Nancy and Questian are proud graduates of her TOPS program and can speak about the transformation from their firsthand experience.

The trio discussed how to reclaim the voices we’ve learned to silence, and it doesn’t involve generic confidence mantras or vague advice to “just think positive.” Real change comes from understanding why our brains cling to negativity in the first place, building specific action plans that outsmart procrastination and fear, surrounding ourselves with people who tell us the truth, and recognizing that self-promotion isn’t ego; it’s service to the people who need exactly what we have to offer.

The Power of Building Your Dream One Step at a Time

Misty opens the episode with a story. While working on a film in Armenia, she asked the director for advice about making a documentary. “I hate documentaries,” the director replied. “And while we’re at it, I’m not a fan of rom coms either.”

The twist? They were literally filming a rom-com at that moment.

The director explained that her real dream was to make a sci-fi film she’d written. But she knew she wasn’t ready. So she made documentaries first to learn how to tell stories and frame scenes. Then she wrote the rom-com they were filming because it was “a massive playground and the stakes were low, but the lessons were high.”

“Watching a woman who fully owned the climb,” Misty reflects. “Not waiting for permission, not waiting to be ready, not apologizing for learning. She was building her dream, one imperfect moment at a time.”

The lesson hit Misty hard. “We often wait to begin until we are an expert. But we need to begin because that’s how we become an expert.”

Understanding What’s Keeping You Muted

Before you can reclaim your voice, you need to understand what silenced it in the first place and why your brain makes it so hard to break free.

When Misty talks about “unmuting,” she’s not just referring to the moment you turn on your microphone in a Zoom call. “There are so many components in our life that are muscles we need to constantly exercise, whether it’s our creativity, how we show up in a space, or how we support one another,” she explains. “To me, that’s the act of unmuting. What do we dream of doing? And what steps do we need to take to move toward that dream?”

Nancy keeps a Post-it note next to her computer (right beside the one reminding her of the cost of goods sold formula) that reads, “Be the best version of yourself you can be. But who is that?” That question is crucial. “It reminds me to make sure it’s my own definition of who I am,” Nancy explains. “It’s easy to get lost and start being who we think the world wants us to be.”

The muting happened gradually for Questian. “When I was really young, I was very, very vocal, very outspoken,” she shares. She beat all the boys in pull-ups in elementary school. She was “born a feminist,” convinced she could do anything. But somewhere along the way, the feedback started coming. “You are bothering other people. You have to say things in a certain way as a woman so you don’t upset someone or offend them.”

By the time she joined Misty’s program, Questian was “absolutely terrified to go into a Zoom meeting or conference and have a conversation with someone.”

There’s a scientific reason those negative messages stick so hard. “Our mind is wired to keep us safe, and that negative comment can be perceived as a threat,” Misty explains. “Your mind thinks it’s unsafe, so it circles around it like crazy to figure out how to be safe.”

But what makes the situation even more complicated is that the systems around us compound these struggles. Men experience imposter syndrome too, but they tend to move through it faster. She shares a telling example of a male head of sales who was competing against a woman with more experience for a VP role. Despite his “massive anxiety,” he got the job because the hiring committee saw themselves in him.

“We internalize a lot of the external conversations,” Misty observes. “How did those even become internal conversations? We weren’t born with that.”

Building Your Action Plan for Breaking Through

Understanding why you’re muted is important, but your brain needs more than awareness. It needs concrete action.

“A lot of people say just start thinking positive. Just think happy, joyful thoughts and counteract it,” Misty says. “That is so difficult. Your body and your mind are so much better when they have a specific action to take.”

When Misty finds herself stuck on a presentation, procrastinating instead of working, she has a diagnostic process. She asks herself, Is it the people making her nervous? Is it her skill set? Does she lack confidence in how she’ll show up? Or is it the overall situation causing anxiety?

“Once I have an action plan, because I’ve focused on where that anxiety is coming from, then I can move forward and I stop procrastinating,” she explains. Often she’ll discover something specific. “I don’t feel strong about my opener. Let me fix that.”

The procrastination itself becomes information. For Misty, it’s housework. Suddenly, folding laundry seems urgent. For Questian, it’s doomscrolling. “I’ll be working and my brain will just come to a moment where I stop, and then all of a sudden I find myself on my phone.”

Nancy, who describes herself as a “cognitive behavioral therapy nerd,” points out that you have to notice yourself being in anxiety before you can address it. “You have to notice that it’s happening, which takes a lot of practice and honestly, a lot of friends who can see it in you.”

Misty shares two powerful techniques for reframing negative self-talk:

The Best Friend Technique. When negative self-talk starts, Misty literally names it after her best friend Christina. “To me, she’s my biggest supporter. She’s my cheerleader. She also will give it to me honestly if I’m not doing something right.” Christina would never say the brutal things that inner voice dishes out. “We truly talk to ourselves worse than we would talk to our best friend.”
The Childhood Photo Technique. Years ago, Misty took a class that had participants put a picture of themselves as a child next to their bed. “Anytime we had that negative self-talk, we would see our younger self and go, ‘Would you say that to this little girl?”‘ The protective instinct kicks in immediately.

Questian loves this approach. “We’re all still that little girl inside, right?” And as Misty points out, that little girl “would be so impressed with how far you’ve made it, who couldn’t even dream of where you are and what you’re doing.”

Sometimes, hitting bottom provides the clearest view. Questian shares that after a year of family challenges, loss, and professional setbacks with nonprofits losing funding, she recently told someone, “I feel like a failure.”

But the next day, she had clarity. “Here are the things I have to take a step back from,” she told Nancy. “I need to do it so I can focus on these other areas.”

“You got clarity when you saw that low point happen,” Nancy observed. “If those things are really the most important to you, then you need to focus on those.”

The reframe matters. Failure becomes information about what needs to change.

The Power of Community and Authentic Self-Promotion

Individual techniques can transform how you handle fear and self-doubt. But the people you surround yourself with are the accelerator.

“If you surround yourself with people who believe in you and think you are the sun, moon and stars, then that will be contagious to you. And it’s based in reality because they see the work you put in,” Misty explains. “If you surround yourself with doubters, then that’s what you start to believe.”

The key phrase is “based in reality.” This isn’t about empty cheerleading. Nancy demonstrates authentic support when she tells Questian, “You wrote that 100-minute session for the main stage at the Women Who Count conference on sexual harassment. You changed lives. I have no doubt that you changed lives with that.”

Questian knows Nancy means it because, as she puts it, “You will tell me if I’m full of shit.”

Now for the uncomfortable part: self-promotion.

“I know for the podcast to be successful, for Ask a CPA to be successful, for the work I’m doing as a public speaker to be successful, I need to self-promote,” Nancy admits. “But I am turned off by self-promotion. It’s icky.”

Questian adds, “We were told when we were little girls, don’t brag. You’re not allowed to brag. Don’t talk about yourself too much.”

“There are so many people out there to tell you no. Do not be the first one to say it,” Misty says, offering a powerful reframe. You’re not promoting to everyone. “You’re doing it for that one person who needs your services. They need to hear what you have to say on this podcast. They need that little bit of validation to say, ‘I can do this too.'”

When Nancy and Questian promote She Counts, they’re saying, “Hey, there’s a space for you where you count.” That’s not self-promotion; it’s service.

Self-affirmation needs evidence, though. “We don’t take enough proof points that we didn’t die doing something,” Misty points out. You posted on social media and didn’t die. You presented to the board and didn’t die. Each survival is data your brain needs.

The final lesson is to stop copying others. “We are such unique individuals. Every single one of us brings something totally different to the table,” Misty says. “Yet any time we want to show up, we want to look at who else was successful and follow that to the T so much that we forget our own voice.”

Instead, she’s taking an upholstery class and consuming content outside her niche, finding what excites her so she can bring something authentically new to her work.

Your Turn to Unmute

Questian’s transformation tells us what’s possible. She went from being terrified to speak in a Zoom meeting to presenting to 400 people on a main stage (twice). “Now I won’t shut up,” she jokes. But that’s not a problem. It’s proof that unmuting works.

The conversation makes several things clear:

Unmuting is about becoming who you want to be, not who others expect
Your brain’s negativity bias isn’t broken; it’s overprotective
Vague positivity doesn’t work; you need specific action plans
How you talk to yourself matters. Would you say those things to your childhood self?
Real community provides honest feedback and genuine support
Self-promotion serves those who need what you offer

Brené Brown, whom Nancy recently met at Intuit Connect (and gave a She Counts pin!), puts it perfectly: “When we screw up or fall down, many of us talk to ourselves in ways that we would never talk to someone we love and respect. Talking to ourselves from self-love and self-respect is a practice.”

Your homework is to notice when your inner critic pipes up and answer it the way you’d answer your best friend.

If you’re ready to start your unmuting journey, Misty’s Theatre of Public Speaking women’s cohort starts the first Wednesday of March, and seats are already half full. There’s also a beginner’s course for those who need foundational help before jumping into live sessions.

Listen to the full episode for the complete conversation, including the vulnerable moments, practical techniques, and the kind of honest talk that makes She Counts a valuable resource for women in accounting.

New CPA Mobility Rules Mean Your Firm Is Probably Breaking at Least One State Law Right Now

Earmark Team · February 17, 2026 ·

The accounting profession scored a rare bipartisan win this week and simultaneously confronted a growing compliance nightmare that’s hitting firms across the country. On this episode of The Accounting Podcast, hosts Blake Oliver and David Leary tackled both stories, along with Deloitte’s terrible week, new research on why accountants flee public accounting, and a special guest segment on the hidden complexities of CPA mobility.

A Rare Win for Government Transparency

Blake kicked off the episode by celebrating legislation he actually supports. The Fiscal State of the Nation Act, a bipartisan bill from Representative Andy Barr (R-KY) and Representative Scott Peters (D-CA), would require the Comptroller General to deliver an annual presentation to Congress on the federal government’s financial statements.

“We need to deliver an annual report to the board of directors, to the investors, to the people,” Blake said. The bill has broad support, with 81% of Americans backing the idea, according to a Harris Poll conducted on behalf of the AICPA.

The AICPA’s strong endorsement marked a rare moment of agreement between Blake and the organization. “I don’t think that’s ever happened before,” he joked, noting he was supporting two AICPA positions in one episode, the other being new independence standards for alternative practice structures.

The CPA Mobility Crisis

The episode featured Lindsay Patterson, co-founder and CEO of CPA QualityPro, who joined to explain how the profession’s victory on alternative pathways created an unexpected compliance minefield.

Twenty-five states adopted alternative pathways to CPA licensure, allowing candidates to pursue certification with 120 credit hours plus two years of experience instead of the traditional 150 hours plus one year. While this addresses the pipeline crisis, it’s shattered the “substantial equivalency” that made CPA mobility work.

“After going through every single state’s laws and rules, if a firm operates across state lines now, I bet they’re breaking at least one law,” Lindsay warned. “There are so many little nuances.”

The problem is that the old system worked because every state had basically the same requirements. Now, state mobility laws have wildly different rules about which credentials qualify. For example, a New York firm doing an audit in Oregon might discover too late that team members licensed through certain pathways can’t legally sign off on the work.

Lindsay outlined what firms now need to track for every CPA: whether they completed 120 or 150 hours, if they had an accounting concentration, whether their experience was supervised or just verified, and if they had one or two years of it. Most firms have never collected this data.

“Do you know any firm that asks their employees, ‘Was your experience verified or supervised?’” Lindsay asked.

The penalties are real. Lindsay has seen fines from $1,000 to $15,000, with some states being particularly aggressive. She once received an email from a state board because she had “CPE” in her email signature and had emailed someone in their state. “I’m like, who reported me for this? First off, we’re planning a birthday party, so calm down.”

David pointed out that this problem existed before alternative pathways, but Lindsay agreed it’s gotten worse. The pandemic made it even more complex, with CPAs moving states and assuming mobility provisions cover them when they actually need local licenses.

Deloitte’s Very Bad Week

While firms grapple with mobility rules, Deloitte faced a different kind of scrutiny. A viral Twitter post viewed 43.5 million times called the firm “a $74 billion cancer metastasized across America,” highlighting failed government IT projects and cost overruns.

“They take on a project like the California payroll system, and the project never gets done. And they just keep charging for changes and overruns,” David explained.

Making matters worse, Deloitte announced plans to hire 50,000 employees in India right after conducting layoffs. “The narrative out there now is Deloitte’s taking billions of dollars of taxpayer money to hire people in India,” David said. “Is Deloitte trying to get in the crosshairs of the Trump administration?”

Lindsay offered a philosophical take. saying, “Never attribute to malice what you can attribute to stupidity.”

Why Accountants Really Leave

A new report from researchers at Virginia Commonwealth University and Clemson University confirmed what many suspected: work-life balance, not money, drives most exits from public accounting. The study found poor work-life balance is the primary reason people leave, and they’re skeptical of empty retention promises.

“It’s the hours, the deadlines, the pressure, the unending timesheets, and the inability to take PTO,” Blake summarized.

The research also revealed that leaving is usually a long, social process with warning signs, meaning firms have opportunities to intervene if they’re paying attention. But as Lindsay noted, this isn’t just an accounting problem. “I think a lot of companies, not just accounting” struggle with retention.

Reasons for Optimism

Despite the challenges, accounting undergraduate enrollment rose 7.3% this fall—the third straight year of growth. One in eight business students now major in accounting, up from one in nine two years ago.

“We said it was going to happen,” Blake said, crediting alternative pathway reforms. “Get rid of that extra year of unnecessary, expensive education and more people will want to be accounting majors.”

Lindsay mentioned another positive indicator. “We have so much private equity investment in CPA firms right now. They are not looking to invest their money in an area that they think is about to go extinct.”

When a listener asked whether AI would eliminate accounting jobs, the panel was reassuring. David maintained his position that AI won’t replace bookkeeping entirely, though he admitted QuickBooks’ new AI-powered reconciliation features were “slick.” Lindsay was even more direct: “Get your CPA, you’ll get a good job.”

The Bottom Line

The accounting profession is navigating a period of significant change. Alternative pathways bring in new talent, but create compliance headaches. Technology is advancing but not eliminating jobs. And while firms like Deloitte face public scrutiny, the fundamentals of the profession remain strong.

For practitioners, Lindsay recommends auditing your compliance to understand how each employee got licensed and prepare for a more complex regulatory landscape. The enrollment numbers suggest the profession’s future is bright if it can manage the growing pains.

To hear the full discussion, including Blake reading Jerome Powell’s statement about standing up to political pressure and a truly bizarre story about a Florida gubernatorial candidate proposing a 50% tax on OnlyFans content, listen to the complete episode of The Accounting Podcast.

Your Client’s Non-Cash Donation Documentation Is Probably Missing These Critical Details

Earmark Team · February 9, 2026 ·

A married couple donated used goods worth $6,760 to charity. They filed Form 8283 with their 2019 tax return. The IRS examined the return, the case ended up in Tax Court, and the entire deduction was disallowed.

What makes this case remarkable is that neither the IRS nor the Tax Court ever claimed the donation didn’t happen. Both sides agreed the contribution was real and made to a qualifying organization. The taxpayers lost anyway.

In this episode of Tax in Action, host Jeremy Wells breaks down the Besaw v. Commissioner case to reveal what went wrong. It comes down to something every tax practitioner has seen.

“When you help people with tax returns, and you ask them to upload their documents around tax time, and you get a slew of these blank Goodwill receipts,” Wells explains, “the taxpayer’s expecting some sort of tax benefit from all that. And you’re looking at that thinking, I can’t do anything with this.”

When Good Donations Go Bad

The timeline of the Besaw case reads like a warning every tax practitioner should remember.

In 2019, the Besaws filed their joint federal income tax return claiming $6,760 in non-cash charitable contributions. They attached Form 8283, the correct form for reporting non-cash donations of $500 or more. So far, so good.

But the form was basically empty. The Besaws left out the donation dates, the fair market values of the donated property, their cost basis in that property, and the method they used to arrive at the deductible amount.

“Really, all of the important information,” Wells notes.

The IRS examined the return in 2022 and requested proof for those charitable contributions. In response, the Besaws submitted what Wells calls a “reconstructed record,” essentially taking what was on their incomplete Form 8283 and using it to piece together documentation of their contributions.

The IRS said that wasn’t good enough. They denied the deduction and sent a notice of deficiency. The case wound up in Tax Court.

Contemporaneous Is The Magic Word

The fatal flaw in the Besaw case comes down to one word that appears throughout tax law: contemporaneous.

“The word contemporaneous comes up in other places in tax law as well,” Wells explains. “If you drive to meet a client or meet a vendor, you’re supposed to keep a contemporaneous written mileage log. That means you’re supposed to keep that throughout the year. You’re not supposed to look back at the prior year and try to reconstruct that from memory.”

The same principle applies to charitable contribution records. But Section 170 gives a specific definition. Documentation must be received by the earlier of the date you file your return or the due date (including extensions).

The Besaws created their records in 2022, long after filing their 2019 return and while the IRS was already examining it. That timing made all the difference.

What makes this case really striking is that nobody disputed that the donation actually happened. “At no point did the IRS or the Tax Court claim the donation may never have happened,” Wells emphasizes. “Everyone agreed that the donation happened. The issue was whether it was properly documented.”

This flows from a principle Wells returns to often. “Deductions are a matter of legislative grace.” That phrase appears throughout Tax Court decisions. It means the deduction doesn’t come free. You can’t just say you made a contribution and expect the benefit. The law sets rules for how taxpayers claim and prove deductions. Fail to meet those requirements, and the deduction disappears, even if the donation was real.

The Four Levels of Documentation Requirements

Understanding what documentation you need depends on how much you’re donating. The rules get stricter as the amounts go up.

Level 1: Non-Cash Contributions Under $250

For donations under $250, Treasury Regulation 1.170A-13(b)(1) requires a receipt showing:

The name of the charity
A description of the property
The date and location of the contribution

This is where those blank receipts from donation drop-offs become a problem. “A lot of times those slips of paper wind up in our client portal without much more than whatever is preprinted on them by the organization, which is usually just the name of the organization and its location,” Wells observes. “There’s no other information there.”

The receipt doesn’t need to include a value—that’s the taxpayer’s job. But it must describe what the taxpayer gave.

Level 2: Non-Cash Contributions Over $250

Cross the $250 threshold, and you need a contemporaneous written acknowledgment from the organization. This must include:

A description of the property
A statement of whether any goods or services were provided in exchange, and a value or good-faith estimate of those goods or services

“This is actually where the taxpayer failed in this Tax Court case,” Wells points out, “because the charity receipts contained no descriptions of the donated items.”

Remember, the acknowledgment must be received by the earlier of the filing date or the due date, including extensions. Miss that window, and you can’t fix it later.

Level 3: Total Non-Cash Contributions Over $500

When total non-cash contributions exceed $500, you must file Form 8283. Treasury Regulation 1.170A-13(b)(3) says you need to report:

The date you acquired the property
How you acquired it (i.e., purchase, gift, or inheritance)
Your cost or basis in the property
The fair market value at the time of donation
The method used to determine the fair market value

“The taxpayer in this Tax Court case left all these blank,” Wells notes. “And that was problematic for him.”

Level 4: Single Items or Groups Over $5,000

When any single item or group of similar items exceeds $5,000, IRC Section 170(f)(11)(C) requires a qualified appraisal. The taxpayer, the charity, and the appraiser all must sign Section B of Form 8283.

Wells has seen how this plays out. “I’ve had situations where taxpayers wanted to claim a deduction in excess of $5,000, and once we explain the appraisal requirement, either they didn’t want to go through with the appraisal, or they adjusted their valuation of that contribution to an amount below $5,000.”

What You Need vs. What You File

The charity doesn’t provide valuations on receipts. “It’s up to the taxpayer to report and to calculate a fair market value of those contributed items,” Wells explains. “It’s not up to the organization to put that together.”

But descriptions must be detailed enough to identify the items and estimate value. You can’t write “trunk full of stuff.” But you don’t need to list every single piece of clothing either.

Beyond what gets filed with the return, Treasury Regulation 1.170A-13 requires taxpayers to keep:

A detailed list of donated property
Receipts showing dates, locations, and descriptions
Fair market value worksheets showing how they calculated values
Any appraisals, if required

This is what the IRS requested in 2022, and what the Besaws couldn’t produce in its original form. Form 8283 is only part of the package.

Dealing with Those Blank Goodwill Receipts

“When you see those blank Goodwill receipts pop up in your client portal, how will you address those?” Wells asks. It’s a question every practitioner faces each tax season.

When receipts say something like “household goods, used clothing $1,000,” is that enough? Based on the Besaw case and the regulations, “Probably not,” Wells says. “We need a little bit more information than that.”

When non-cash charitable contributions appear, Wells recommends asking these questions:

What exactly did you donate? Get actual descriptions, not just “clothing”
When and where did they donate? Dates and locations matter
Is there a receipt or written acknowledgment? If not, do they have their own records?
Does the record describe the property adequately? “Stuff” won’t cut it
Did they receive anything in return? This affects the deductible amount
Do total non-cash contributions exceed $500? This triggers Form 8283
Does any single item exceed $5,000? This may require an appraisal
How did they determine the value? They need an actual method

Getting Real About Fair Market Value

Treasury Regulation 1.170A-1(c)(2) defines fair market value as “the price a willing, knowledgeable buyer would pay a willing, knowledgeable seller under no compulsion.”

For clothing and household goods, this usually means thrift shop value. Wells recommends a practical test. “If you didn’t know anything about this t-shirt other than you saw it hanging on a rack in a thrift shop and you liked it, what price would you reasonably pay for that?”

One common problem is sentimental value. “Just because an item holds some sentimental value for you or your family doesn’t necessarily mean it has a higher fair market value,” Wells cautions. “Sentimental value doesn’t really translate into actual market value.”

There’s also a quality requirement. Under Section 170(f)(16), clothing and household goods must be in “at least good used condition” to qualify. Worn-out or broken items are not deductible at all.

Four Myths That Create Problems

The Besaw case debunks several common assumptions:

Myth 1: A signed receipt is enough

In reality, the receipt must describe the property and include other details.

Myth 2: You can fix missing details later

This killed the Besaws’ deduction. Documentation must be contemporaneous.

Myth 3: Fair market value is optional for small donations

Form 8283 requires fair market value for every non-cash donation over $500.

Myth 4: If the donation happened, the IRS should allow it

The Besaw case proves otherwise. Both sides agreed that the donation occurred. But the Tax Court still disallowed the deduction.

The Bottom Line

The Besaw case demonstrates that, in tax law, documentation beats facts. A legitimate charitable donation means nothing without proper contemporaneous records.

Tax practitioners must remember:

Contemporaneous means by the filing date or due date (including extensions)
Different amounts trigger different requirements
Form 8283 isn’t the whole story. Taxpayers must keep detailed records
Those blank Goodwill receipts are audit risks waiting to happen

“This Tax Court case illustrates that substantiation is everything,” Wells concludes. “It really is in a lot of areas of tax law, and especially here in terms of charitable contributions.”

The charitable deduction can be powerful, but it comes with serious technical requirements. Listen to the full episode and make sure your clients understand these rules before they drop off that next load at Goodwill, and definitely before they try to claim the deduction.

The Manager Paradox: Why AI Agents Need Just as Much Oversight as Human Employees

Earmark Team · February 9, 2026 ·

David Leary had something to confess at the start of The Accounting Podcast episode 471. He needed an employee health insurance survey for his company, and the whole thing, from blank page to finished Google Form, took him three and a half minutes.

“I started with nothing, and I needed a result, and end to end it did everything for me,” David told co-host Blake Oliver. ChatGPT created the survey questions first. When its implementation got clunky, Google Forms with built-in Gemini AI took over and built the entire form. No tedious field creation or manual option adding. Work that would have taken an hour vanished in the time it takes to brew coffee.

It’s the kind of AI success story that’s becoming common: technology wiping out drudgery and freeing humans for better work. But as the hosts dug deeper in this episode, they uncovered a reality check for accounting firm leaders.

AI’s Hidden Cost: Same Management Time, Different Headaches

The tools keep getting better at connecting dots. Blake pointed to Google’s new “Personal Intelligence” feature that links Gmail, photos, YouTube, and search into Gemini with one click. ChatGPT has similar workspace integrations that search your email history for client and project information.

“Once your firm gets big enough, you don’t realize three other people also have relationships with that client,” David noted. AI that surfaces that context before you act is a real leap forward.

But the success story gets complicated when you deploy AI agents across an organization. Jason Lemkin, who runs SaaStr (a community for software startup founders), has been tracking the results of such deployments. At SaaStr, about 60% of the team is now made up of AI agents. They deliver huge productivity gains, but also need about the same weekly management time as humans.

“The big mistake,” David explained, summarizing Jason’s findings, “is that you can’t treat AI as set-it-and-forget-it. You have to have daily management of AI.”

The reason you need that oversight is the accuracy rates. For five- to ten-minute tasks, AI hits near-perfect accuracy: 99.9%. But stretch those tasks to an hour or two, and accuracy drops to 80% or even 50%. And AI mistakes don’t announce themselves.

“The AI makes these small mistakes that compound into big mistakes,” Blake said. “Humans do this, too. If you don’t have proper oversight of people, they’re just doing their own tasks, and small errors can compound into disasters.”

When There’s No One Watching the Store

The IRS is an excellent case study for what happens without human oversight of AI. The IRS just lost more than 25% of its workforce through various reduction programs, according to the IRS Advisory Council’s annual report. Over 2,000 IT workers have left since January 2025 alone. More than half of the $80 billion allocated under the 2022 Inflation Reduction Act has been rescinded, totaling about $42 billion since 2023, including nearly all enforcement funding.

Now the agency faces implementing the One Big Beautiful Bill Act (OBBBA), which includes more than 100 tax law changes. They need new guidance, technology updates, and process changes—all with fewer people and less money.

The consequences of this skeleton crew approach became clear in the case of Attallah Williams, a former SBA and IRS employee charged with stealing more than $3.5 million from federal COVID-19 relief programs. Williams used insider access at both agencies to approve fraudulent applications, recruiting accomplices through Instagram and collecting kickbacks. The scheme ran for three years and touched Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loan (EIDL) grants, and employee retention credits.

“If one person can approve fraudulent pandemic applications, there are no controls at the federal level,” David said.

Tax Season Reality Check

Against this backdrop, tax season readiness varies wildly. CPA Trendlines’ busy season survey found that only 44% of firms feel about as ready as they were last year. Larger firms with 25 or more professionals report greater stability thanks to deeper staffing and refined processes. Smaller firms with 1-10 employees face the most volatility.

“Late documents, absences, compressed review cycles. When you have fewer people, you have less redundancy,” Blake noted. “When problems happen, it hurts more.”

Tax-heavy firms feel particularly exposed since their entire season depends on client behavior. Firms with recurring revenue from bookkeeping or advisory work report more stability because their work spreads throughout the year.

One bright spot came from Brenda Cannon of Cannon & Associates, who shared an innovation on the CPA Trendlines podcast. Instead of letting tax work pile up, she gives clients calendar links to schedule when they’ll submit documents. Eight slots per day, Monday through Thursday. Fridays for internal work. No slots three weeks before April 15th (reserved for extensions). Clients who don’t schedule by year-end get marked inactive.

“Clients no longer complain about extensions because they basically chose to miss their self-imposed deadline,” Blake explained. Only about 5% of clients left after implementing the system.

The Vanishing Entry Level

But even successful adaptations can’t solve a bigger problem: what happens when AI absorbs all the entry-level work that trains future professionals?

“The quality burden used to fall on the senior staff and managers,” David said. “But now the managers are going to have to bear that weight.”

Blake expanded the concern. Managers used to trust that trained seniors had learned to review work through years of practice. With AI handling those training tasks, that trust disappears. “I have a theory that life is going to get harder for managers in public accounting because they’re going to be the only thing between the AI doing the work and the partner.”

A viewer captured the problem in the live chat: “You can’t get experience to become a manager without an entry level. Bots and offshore have absorbed entry. So how do you get new managers?”

Blake’s answer was sobering. If firms can’t develop managers internally, they’ll have to recruit from industry. But industry professionals who’ve tasted work-life balance won’t return to the grind of public accounting. “The people won’t drink the Kool-Aid after they’ve had a break from drinking the Kool-Aid.”

Testing for Yesterday’s Skills

This transformation raises tough questions about the CPA exam itself. The 2024 pass rates were:

Audit and Attestation: 46%
Financial Accounting and Reporting: 4%
Tax Compliance and Planning: 73%
Regulation: 63%
Business Analysis and Reporting: 38%
Information Systems and Controls:58%

“The hardest part of the exam isn’t the material,” Blake argued. “We’re not doing advanced math. We’re doing algebra. It’s not complicated stuff; it’s just a lot of memorization, and it’s a real grind.”

Blake’s theory is the exam filters for grinders because that’s what firms needed. “The exam is a grind, and public accounting is a grind so they lined up.”

But that’s not the job anymore. “We don’t need accountants to come in and do a bunch of boring, manual, tedious work,” Blake said. AI does that now. The profession needs people who can analyze concepts and direct AI agents, not memorize rules they can look up in seconds.

“You have all these AI tools where they have all the knowledge. You don’t need to memorize things,” David added.

Yet change comes slowly. “Even if the powers that be agree with you, Blake, it’ll be a decade before they change that,” David said.

The Bottom Line

David’s three-minute survey creation shows where we’re headed: routine tasks becoming instant. But efficiency isn’t freedom. AI needs as much management as humans, but a different kind of management. The cognitive burden shifts up while the entry-level work that trained judgment disappears.

Every knowledge profession will face the same questions. How do you develop talent when AI does the training work? How do you maintain quality when the middle layer of reviewers vanishes? How do you test for skills that matter when memorization becomes obsolete?

Listen to the full episode of The Accounting Podcast for all the details, including more on the IRS crisis, innovative tax season solutions, and a surprise supporter for millionaire taxes.