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Your Excel Data Never Leaves Your Computer With This AI Automation Method

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While 58% of professionals have tried AI, only 17% use it regularly. Kyle Ashcraft sees opportunity in that gap.

In episode 108 of the Earmark Podcast, host Blake Oliver sits down with Kyle, a CPA who built Maxwell CPA Review and helped over 1,500 students pass their exams, for a live demonstration that might change how you think about Excel automation. Their conversation shows how any accounting professional can start automating their work in under an hour. No coding experience required.

The AI Gap Nobody’s Talking About

“The more advanced AI becomes, we can take one of two directions,” Kyle explains during the demonstration. “You can continually veer away from it, and the more that comes out, you step farther and farther away from it. Or you can make it a goal to learn, let’s say, one new tool a week.”

The problem isn’t that accountants don’t want to use AI. It’s that they don’t have dependable strategies for implementing it. Kyle describes the typical approach as, “Opening up ChatGPT, throwing in a spreadsheet, and then giving it a prompt and seeing what it comes up with. Sometimes like a Hail Mary, where you just want to see if it gives you an acceptable output.”

There are two major issues with this approach. First, it often takes multiple attempts to get the output you want because ChatGPT can’t read your mind. Second, and this is crucial for accountants, when you upload a spreadsheet to ChatGPT, “your Excel document is going directly to OpenAI. Your prompt is going to them, and the prompt that they output to you is going to them as well.”

This matters because OpenAI’s data retention practices are questionable at best. They’re currently in a lawsuit with The New York Times and required to permanently retain logs. No wonder 70% of accounting professionals cite data security as their primary concern with AI adoption.

Enter “Vibe Coding”: When Everyone Becomes a Developer

Kyle’s journey started with a challenge. Could someone with zero coding experience build something that traditionally required a development team?

Four months later, he had his answer. Using Cursor, ChatGPT, and Claude, he built a complete assessment platform that identifies students’ weakest areas, emails follow-up practice materials, and provides analytics dashboards for professors. All with no programming background whatsoever.

“This really shows it’s possible to not have any idea what the code itself is saying, but with clear communication and patience, you can accomplish things that would have been impossible just two years ago,” Kyle tells Blake.

This phenomenon has a name: vibe coding. It’s coding without being a coder, using everyday language to generate complex scripts. During the demonstration, Kyle shows how Cursor generates hundreds of lines of Python code based on simple English instructions. You don’t need to understand what those lines mean, you just need to know what you want to accomplish.

Kyle offers a metaphor that reframes the entire relationship with AI. “Picture it like an orchestra and a conductor. You’re the conductor. You are in control. You set the tempo. You set the vision of what you want to achieve. And it’s the orchestra that’s doing all of the hard work.”

“There’s this assumption that AI is going to eliminate a lot of work,” Blake observes. “But what we find in reality is that it shifts the work from doing to reviewing. So that job is not going away, but now we review the output and provide feedback.”

The Script Solution: Privacy and Reliability in One Package

During a live Q&A, one attendee asks the question on everyone’s mind: “When you load the project into Cursor and it shows you the Excel files, does this AI platform not retain that client data? How is this different than uploading the Excel into ChatGPT?”

Kyle’s answer reveals why scripts are game-changing for accounting work. “It does not retain this data because with this process, it created this Python script, which is just Python code. It’s offline. There’s no record of this script.”

Your Excel data never leaves your computer. Instead, AI creates a script—basically a recipe—that runs locally on your machine. Think of it this way: instead of handing your sensitive client data directly to an AI company, you’re asking AI to write you instructions. The AI writes the instructions based on your request, but it never sees your actual data.

Blake highlights another advantage: “When Cursor communicates with AI services like Claude, it does so through APIs that have zero data retention policies. That’s in stark contrast to the chat interfaces most people use.” As he explains, these companies want large enterprises to be comfortable, so API interactions have much stricter privacy protections.

But privacy is only half the equation. Scripts also solve the reliability problem. Blake shares a cautionary tale about a Big Four firm in Australia that had to refund a government contract because its AI-invented citations didn’t exist. “They send an entire report to the government, the government clicks on the links for it, and they don’t exist. It’s disastrous if you don’t actually review the output.”

When another attendee asks about the risk of hallucinations, Kyle explains why scripts are different: “You’re not having an AI model interact with the Excel information. You’re having this step-by-step script that says, ‘do an auto sum of column B.” The script uses Excel’s own functions, it just automates the clicking and typing you’d normally do manually.

This deterministic nature means the same script produces the same result every time. As Blake notes, “We can reuse the script we created, apply it to a new Excel file and get the same expected result without having to check everything over again.”

The Three-Part Formula That Makes It All Work

“Goal. Steps. Output.” With these three words, Kyle unlocks the secret to making AI do exactly what you want.

During the demonstration, he tackles three real-world Excel challenges that every accountant faces. First up: a messy data export with empty rows, headers in row three, 14 different date formats, and inconsistent spacing.

His prompt is elegantly simple:

  • Goal: Clean up this Excel file
  • Steps: Identify any inconsistent formatting. Add basic color and style. Analyze each column to better understand its format
  • Output: A new Excel document

Within moments, Cursor generates hundreds of lines of code. The result is a perfectly formatted table with consistent dates, proper headers, and professional styling. “It looks clean, smooth, with some nice shading,” Kyle observes. “It’s just easier to look at overall.”

When Blake asks whether Cursor can do its own checksum, they quickly add both files and ask Cursor to verify nothing was lost. The response: “All 20 transactions are present. All amounts were correctly processed. The sum of $19,000 is maintained.”

The second demonstration scales up the complexity. Kyle shows a General Ledger detail export with 400 rows spanning every account. Manually organizing this would require hours of filtering and copying. His structured prompt creates a summary tab showing account codes, transaction counts, debits, credits, and net amounts, plus individual tabs for each account’s detailed transactions.

“Instead of going to each account in your accounting system and exporting the GL individually, just export all the accounts together and then run this through,” Kyle suggests. What might take an hour completes in under a minute.

The third example addresses bank reconciliation, comparing statements to GL detail to find discrepancies. No more scrolling row by row. The automation identifies matching items, missing transactions, and differences between the files instantly.

Blake connects the dots for viewers. “I picture our listeners who work with some older ERP systems that don’t have very customizable reporting and who are doing a lot of manual formatting. Now you can automate that recurring task every month or every week.”

Getting Started Is Simpler Than You Think

The transformation begins with two downloads that take five minutes each. First, download Python, then download Cursor. Start with the free tier. Kyle uses the $20 monthly plan for daily use, but the free version is powerful enough to begin.

When you first open Cursor, it will ask you to install some packages like “pandas” for Excel interaction. Kyle recommends, “Click the dropdown button and choose ‘run everything’ so you trust the platform. It’s very reliable, and then anytime it needs a new required package, it automatically downloads that.”

Don’t forget to adjust your privacy settings. In Cursor’s settings menu, scroll to privacy options and select “privacy mode” with “no training data used.” This ensures your work isn’t incorporated into AI training datasets.

The key to success is to start small and be patient. “Try it with some information that is not private at all, maybe one of your own documents,” Kyle suggests. “The more patience I have, the more I follow up on that review step by giving it tiny pieces of feedback, the more it improves over time.”

Blake adds perspective on managing expectations: “When I try new tech, 80% of what I do doesn’t have a payoff, but then the 20% has a huge payoff. So don’t get discouraged if your first few attempts fail.”

For recurring tasks, the payoff compounds quickly. “Private roles always have month-end closing. Public end clients always need amortization and depreciation schedules for their notes,” Kyle notes. Even creating client checklists based on prior year information becomes a candidate for automation.

The Bottom Line: Your Move

The tools are accessible. The knowledge is available. As Kyle demonstrated with live examples, you can go from messy data to polished reports in minutes using nothing more than clear English instructions.

So, will you step away from AI as it advances, or learn one new tool at a time and stay connected to this movement? Because as Kyle reminds us, “It’s not going to go away. It’s just going to become more integrated into everyday work culture.”

To hear these demonstrations in action, listen to the full episode at podcast.earmarkcpe.com/108. Kyle has also offered to help early adopters, so reach out to him at kyle@maxwellcpa.com with questions or to brainstorm how this could apply to your specific work situation.

As Kyle challenges at the session’s close, “Try your first task with it this week and see how it works for you.” The revolution in accounting work is here, waiting for those bold enough to embrace it.

This CPA Firm Grew to $1 Million by Saying No to Most Clients

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When Nick Liguori, CPA started his accounting firm at the beginning of 2020, he had modest goals. “I figured if I can add a few more clients and build it up a little bit, that would work fine,” he tells Rachel Dillon, host of Who’s Really the Boss? podcast. “I’d hopefully make enough money to pay the mortgage and make ends meet.”

Five years later, his New Hampshire-based firm, Liguori Accounting, has seven employees and just under $1 million in annual revenue. The transformation didn’t come from working longer hours or taking on every client who walked through the door. Instead, Nick discovered the power of focusing on one specific industry: medical aesthetics and med spas.

From Side Hustle to Specialized Practice

Nick’s path to firm ownership wasn’t typical. After starting his career at a mid-size regional firm and then moving to a smaller practice focused on small businesses, he spent time in industry working for a publicly traded company. During those corporate years, he began taking on tax and bookkeeping clients on the side.

“After a little while of doing that, it got to the point where I couldn’t balance both things anymore,” Nick explains. He made the leap to full-time practice right as 2020 began, just before the pandemic changed everything. In some ways, the timing worked in his favor. “I was setting everything up virtually and remote anyway,” he says. “So COVID-19 obviously forced that on everybody. In some ways I got a little bit of a head start.”

For over a year, Nick worked solo. Then, about two years in, a referral changed everything. A local med spa needed help with outsourced accounting, tax, and advisory work. The fit was perfect.

Discovering the Perfect Niche

“A lot of the med spa owners that we work with are obviously medical professionals. That’s their area of expertise,” Nick explains. “But they’re not necessarily financially minded or that’s not their strength. So we provide a lot of value there, helping them navigate the financial aspect of their business.”

That first med spa client led to referrals, which led to more referrals. The firm got involved with local associations. “That was the first stepping stone into taking it to a much bigger audience—more med spas across the country,” Nick says.

Two years ago, the firm decided to focus exclusively on med spas. It wasn’t easy. “We had an existing client base that were not all med spas,” Nick admits. “So it was a little scary to say, okay, now we’re only going to focus on med spas.”

The transition meant letting go of clients who no longer fit. “We’ve definitely lost a lot of those clients. Some have just churned out naturally and some we’ve let go because they really weren’t a good fit for the services we provide now.” But Nick sees it as progress. “Each year when I look back, we’re a step forward in the right direction.”

Marketing Where Your Clients Already Are

Once the firm committed to the med spa niche, marketing became much more targeted and measurable. “What’s been most successful is getting in the industry spaces where the owners are hanging out,” Nick says.

Conferences became a primary strategy, though the investment felt risky at first. “Getting into it for the first time was a little bit scary because it’s a big investment,” Nick admits. Conference booths typically cost between $3,000 and $5,000, with some running as high as $10,000.

But the returns justified the expense. “We went to one last November and came away with two or three new clients,” Nick reports. “When you think about it from an ROI standpoint, if you’re getting a monthly client for an event that costs you $5,000, it pays for itself.”

Beyond conferences, the firm appears on industry podcasts and webinars targeted at med spa owners. They work with the New Hampshire Association for med spas, which started just a few years ago. “We’ve worked with them from the beginning,” Nick says. “There’s a much lower cost of entry when it’s local.”

The firm now focuses on getting speaking opportunities at conferences rather than just booth space. “That’s where you get the most exposure and probably the best opportunities,” Nick explains. “People can come and go. And depending on where you’re set up in the conference center, you may not get great activity.”

Building Systems That Scale

Specializing in one industry created unexpected operational benefits. “Once you learn a few med spa clients, now you sort of know where the potential issues lie,” Nick says. “It’s probably inventory. Are their sales broken out properly? Is there equipment broken out on the balance sheet? We know where the problems tend to be.”

This predictability transformed their onboarding process. What originally had no timeline became a 60-day process, then shortened to just 30 days. The firm built templates in Keeper (now Double), its practice management software, sends comprehensive checklists to clients, and schedules three strategic meetings throughout the onboarding period.

“We always try to schedule the next meeting before the end of the current meeting,” Nick shares. “So it’s on the calendar. They’ve committed to a time that works in their schedule.”

The firm adopted the Team of Three structure about a year ago. With three bookkeepers, two managers, and Nick as the CFO, everyone has clear responsibilities. “There’s no confusion,” Nick says. “Everyone knows what they’re responsible for.”

Training new team members became easier too. “Once you’ve worked on this client, the next client is going to be very similar,” Nick explains. The firm relies on shadowing and screen recordings for training. As Rachel notes, “When people are limited on capacity or availability, shadowing is always great. We just always try to record.”

The Price of Expertise

Perhaps the most dramatic change has been in pricing. “My original packages were $200 a month for bookkeeping and $500 for CFO support,” Nick recalls. Today, the firm offers three tiers:

  • Bronze (bookkeeping only): $800/month
  • Silver (bookkeeping + quarterly tax planning/CFO): $1,200-1,500/month
  • Gold (bookkeeping + monthly tax planning/CFO): $2,000+/month

Most clients choose the silver tier. “That’s where we have the most interest, especially with med spas, because that tax planning piece is really beneficial,” Nick explains.

The firm also charges substantial onboarding fees: $3,000 for bronze tier, $5,000 for silver or gold. When prospects push back, they might offer to split the fee into two or three payments, but rarely discount.

Higher prices actually improved client quality. “You avoid some of the clients that are just price shopping and really don’t value what you’re doing,” Nick notes. The clients who seek out industry specialists understand they’re paying for expertise.

Lessons from the Journey

Looking back, Nick wishes he’d been more intentional from the start. “I started my firm without a big picture plan in mind,” he admits. “I wish I had set up processes, set up our service offerings at the beginning before starting, rather than trying to figure it out on the fly.”

Pricing confidence took time to develop. “We really didn’t get our pricing to a place that was solid for probably a couple of years,” Nick says. “Knowing the value you provide and being confident as you’re selling—that was a big thing for me.”

The past year has been one of regrouping after team and client transitions. “We’ve put a lot of effort into building the team, getting our processes down really well, and streamlining onboarding,” Nick explains. “We’re doing our best to set ourselves up for that next phase of growth.”

Working with an advisor through Collective by DBA has helped navigate these changes. “Having that sounding board and someone who has seen a lot of different firms at a lot of different stages has given us a really good perspective,” Nick shares. “It’s easy to feel a little bit isolated, especially with these bigger picture decisions.”

The Power of Focus

Nick’s journey demonstrates that specialization doesn’t limit opportunity—it creates it. By focusing exclusively on med spas, his firm can:

  • Market directly to a defined audience with measurable ROI
  • Onboard clients in half the time it used to take
  • Train team members more efficiently
  • Command premium pricing for specialized expertise
  • Better plan capacity

“Having that industry focus makes it a lot easier to say no to the clients that are not ideal,” Nick says. “And a lot easier to identify clients that are going to be a good fit.”

For accounting professionals considering specialization, Nick’s advice echoes what his father taught him in the family conveyor belt business: “Measure twice, cut once.” Think through the decision from multiple angles. Research your chosen niche thoroughly. But once you commit, the benefits compound with each new client you serve.

The firm now limits itself to onboarding just two new clients per month—not because they can’t handle more, but because they know exactly what it takes to deliver exceptional service. That’s the confidence that comes from knowing your niche inside and out.

Want to hear more about Nick’s journey and get detailed insights into building a specialized accounting practice? Listen to the full episode of Who’s Really the Boss?, where Rachel and Nick dive deeper into the specific strategies, challenges, and victories of transitioning from generalist to specialist.

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory.

When 37,000 Japanese Investors Discovered Their Dividends Were Now “Divine”

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Picture opening your quarterly dividend envelope in February 2007, expecting yen, one of the world’s most stable currencies, but instead finding paper vouchers denominated in “Enten,” which literally means “divine money” in Japanese. These heavenly tokens were only good in one man’s bizarre marketplace where you could buy bedding, socks, and produce, but definitely couldn’t pay your rent.

This actually happened to 37,000 Japanese investors who discovered their life savings had been converted into monopoly money.

In the latest Oh My Fraud episode, “Divine Yen, Devilish Fraud,” host Caleb Newquist unpacks one of Japan’s most absurd financial frauds. The story of Kazutsugi Nami and his Ladies & Gentleman company—yes, that was the actual name—offers critical lessons for accounting professionals in a time of growing cryptocurrency schemes.

A Career Built on Fraud

You might think a fraud conviction would end someone’s career in finance. Kazutsugi proved otherwise, repeatedly.

His criminal timeline reads like a fraudster’s greatest hits. In the 1970s, as vice president of APO Japan, he helped market fake exhaust gas removers through a pyramid scheme. The devices didn’t work, but 250,000 people bought in before the company went bankrupt and authorities came knocking.

Most people would have learned their lesson. Not Kazutsugi.

By 1973, he’d already founded Nozakku Co., selling “magic stones” that supposedly purified tap water. The timing was perfect, as Japan faced severe water contamination from rapid industrialization, and desperate people wanted solutions. At its peak, Nozakku pulled in roughly ¥2 billion annually (about $6-8 million in late 1970s dollars). The stones weren’t magic. They didn’t purify anything. By 1978, Kazutsugi was in prison for fraud.

In a move that should make every accounting professional pause, in 1987, while his fraud record was still fresh, Kazutsugi founded Ladies & Gentleman (L&G). Eventually, 37,000 investors would hand over billions of yen to a convicted fraudster. One victim later justified their investment because L&G had been “in business for a long time.”

The bizarre culmination came on February 4, 2009, when police arrived to arrest him. Instead of hiding, Kazutsugi held court at a restaurant, charging reporters ¥10,000 each to attend his breakfast press conference while he sipped beer at 5:30 AM. He’d even packed spare underwear, expecting the arrest.

When asked about defrauding investors, his response was pure theater. “Do you think I could behave openly like this if there had been a fraud?” Later, he added, “Time will tell if I’m a con man or a swindler.”

The Divine Currency Revolution That Wasn’t

Kazutsugi didn’t just promise returns; he promised revolution. He called Enten the future of money, a currency that would break free from Japan’s economic system. He claimed governments would eventually adopt it and that he had a divine decree to eliminate poverty worldwide.

At investor events that resembled religious revivals, Kazutsugi styled himself as a modern-day Oda Nobunaga, one of Japan’s great historical figures, who unified Japan through military conquest in the 16th century.

The 36% annual returns Kazutsugi promised should have been an immediate red flag. In 2007, when Japanese government bonds yielded around 1.5%, 36% guaranteed returns defied financial gravity. Yet thousands of investors, many elderly and seeking retirement security, handed over their savings.

The scheme’s genius was its gradual escalation. Initially, L&G paid dividends in real yen, establishing trust. Then in early 2007, dividends became partially Enten. Finally, they were paid entirely in this imaginary currency that could only be spent in L&G’s internal marketplace, essentially a curated flea market offering comforters, vitamins, and produce.

As Caleb observes in the episode, these are exactly the products “multi-level marketing companies love because you can just claim it’s enhanced by whatever mystical bullshit you are selling that year.”

When Vision Meets Delusion

During the episode, Caleb and producer Zach Frank explore fascinating parallels between cult leaders and modern tech CEOs. Both sell transcendent visions that attract devoted followers.

“They see themselves as right. They’re cocky, they know the way, and they’re the only ones who know the way,” Zach observes.

This absolute certainty becomes magnetic. Caleb notes how Elon Musk, before his political involvement exposed his character. “He had this vision for the world. We’re going to Mars and we’re going to save the world. And people are like, yeah, I’ll follow you anywhere.”

Zach offers crucial insight about why these figures gain traction. “We’re in a time where gurus are becoming more popular than ever. It has to do with the lack of trust in institutions and science in general. People want to find someone to give them the answers to everything.”

When traditional systems seem to be failing, like during the 2007-2008 financial crisis when L&G was collapsing, the person who claims to have all the answers becomes irresistibly attractive.

The Spectacular Collapse

When L&G announced dividends would only be paid in Enten—no more real yen—investors understandably panicked. Some wanted to know whether they could exchange Enten for things like rent and food. They could not.

Like a classic bank run, investors crowded outside L&G locations demanding money and answers. The Japanese press pounced on the story. In November 2007, L&G filed for bankruptcy with estimated losses between ¥126 billion to ¥226 billion (roughly $1-2 billion USD). It was rumored to be Japan’s largest consumer investment fraud ever.

Even as police led him away, Kazutsugi insisted, “I am the poorest victim. Nobody lost more than I did.”

In March 2010, Kazutsugi was sentenced to 18 years in prison, a harsh sentence by Japanese standards. Even then, he insisted Enten was the future.

Lessons for the Profession

For accounting professionals, these patterns translate into specific warning signs:

  • Gradual shifts in payment methods that move from standard to non-standard practices
  • Closed ecosystems where value can only be realized within the company’s control
  • Recruitment-based growth models dressed up as community building
  • Attacks on regulators rather than substantive responses to concerns
  • Appeals to revolution that discourage traditional due diligence
  • Impossible guaranteed returns justified by proprietary methods

Distinguishing between legitimate innovation and sophisticated fraud requires more than technical knowledge; it requires understanding the psychology of persuasion.

Real innovations might disrupt industries, but they don’t violate mathematical laws. A 36% guaranteed return isn’t innovation; it’s impossibility. A currency that only works in one company’s marketplace is company scrip, a practice outlawed in most developed nations for good reason.

As Caleb warns, “If someone promises you a 36% annual return, but that return comes back to you in tokens that are only good for bedsheets, fruits, and the occasional pressure cooker, you are not diversifying your portfolio. You are subsidizing a cult with slightly better stationery.”

Listen to the full Oh My Fraud episode to hear the complete breakdown of this bizarre case, including more details about the victims and the reasons smart people fall for obvious frauds. The episode offers insights that connect historical frauds to modern schemes and the psychological vulnerabilities that transcend cultures and currencies.

Whether it’s cryptocurrency, NFTs, or the next financial revolution, the pattern persists: charismatic leaders promising transformation, impossible returns dressed as innovation, and schemes that create confusion where clarity is desperately needed. Our role as accounting professionals is to ensure that when someone claims to be building the future, they’re working with real materials, not divine intervention.

The Week Accounting Lost Its Professional Status and Dating Apps Became Job Sites

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After 128 years as licensed professionals, accountants just got told they’re not in the same league as doctors and lawyers—at least according to the Department of Education. In this episode of The Accounting Podcast, hosts Blake Oliver and David Leary dig into what this means for the profession, along with news about AI taking over audits, big firms making embarrassing mistakes, and job seekers using dating apps to find work.

The Professional Status Problem

The Department of Education wants to strip accounting of its professional degree status, which would slash federal loan limits from $50,000 to $20,500 per year starting in 2026. This hits graduate accounting programs hard, especially when states are already rethinking the 150-hour CPA requirement.

The proposal came from the One Big Beautiful Bill Act, but as David points out, Congress didn’t actually specify which professions should qualify. “Isn’t Trump supposed to get rid of the deep state where these government agencies just make up the rules?” David asks. Instead, bureaucrats decided that medicine, dentistry, and law are professional programs, but accounting, nursing, architecture, and education aren’t.

AICPA President and CEO Mark Koziel calls this lack of recognition “common sense” to oppose, while NASBA President Daniel Dustin reminds everyone that CPAs have been licensed professionals since 1896—longer than many professions that made the cut.

During the livestream, one viewer made an interesting point: “If we are no longer professionals, that means we are entitled to overtime.” Blake expanded on this, noting that the Fair Labor Standards Act exempts professionals from overtime. Without that professional designation, Big Four firms might suddenly face huge labor costs for all those 50-60 hour weeks their CPAs work.

Students already questioning whether becoming a CPA is worth it will think twice when federal loan support drops by more than half.

AI Is Coming Fast, But Not Always Successfully

While regulators debate whether accountants are professionals, tech companies are betting billions on replacing them with AI. PwC announced it will have “full end-to-end AI automation for audits by 2026.” That’s not some far-off dream; they’re already using tools that auto-populate audit planning documents and analyze walkthroughs.

But the AI revolution has had some embarrassing failures. Deloitte produced a $1.6 million healthcare report for the Canadian government that included completely made-up academic citations. One fake paper was titled “The Cost Effectiveness of Local Recruitment and Retention Strategies for Health Workers in Canada,” which doesn’t exist. This came after a similar mess in Australia with over 20 fake citations.

“Deloitte’s website markets its AI and data teams,” David notes. “Deloitte should hire that team before they do any more AI work with clients.” The irony is that Deloitte sells itself as the company that helps others avoid exactly these AI mistakes.

Meanwhile, EY’s new leader Dante D’Egidio got promoted after cutting their audit deficiency rate from 46% to 9%. How? They fired clients, built support teams, and invested in technology. As Blake explains, “EY had too many clients and their staff and managers and partners were overworked. Quality went down.”

The OpenAI connection to accounting firms gets even stranger. OpenAI is investing in Thrive Capital, which owns Crete Professionals Alliance, a company that buys accounting firms and forces them to use AI technology. OpenAI will even send teams to work inside these firms. “This would be like Intuit buying accounting firms and making them buy QuickBooks,” David says. “People would lose their minds if that happened.”

The Job Market Reality Check

The economic news isn’t great. Small businesses lost 120,000 jobs in November while large companies only added 39,000. Three in ten companies plan to lay people off during the holidays. Americans are planning to spend $73 less on holiday shopping this year.

But there’s useful advice for job seekers. According to data Blake shared, 54% of workers got their current job through personal connections, while only 13% succeeded through job boards. Yet 60% of job seekers don’t use their network at all, mainly due to lack of confidence.

Here’s where it gets interesting: one-third of dating app users are now swiping for jobs, not dates. And it works: 88% made professional connections and 37% got job offers. “LinkedIn is the red water,” David observes. “You can’t stand out there. But if you say on a dating site, ‘Hey, I’m looking for a job,’ there’s nobody competing for jobs there.”

What’s Actually Changing

Beyond the headlines, several big shifts are happening. Xero is raising prices on developers specifically to stop AI models from accessing data. They’re banning developers from using their API to train machine learning models, the same thing Intuit did with QuickBooks.

Speaking of Intuit, the company now shares small business data with The Trade Desk, one of the world’s largest advertising networks. This lets advertisers target small businesses using QuickBooks data. “Your small business client data is now being sold to third party advertising networks,” David warns.

The Department of Government Efficiency (DOGE) quietly disbanded after cutting 300,000 government positions. They haven’t posted anything new since early October, and David suspects “Republicans are cutting away some of this bad press stuff.”

Looking Ahead

The hosts make some predictions for the coming year. David expects a partnership between OpenAI and the AICPA or CPA Academy by 2026 because “there’s just too much money” in CPE and they’re going to go after some of it. He also shared advice for young people: make a podcast interviewing professionals in your desired field. “If you’re in high school and want to become a dentist, make a podcast where you interview dentists. Even if nobody listens to your podcast, when you’re all said and done, you’ll know 40 dentists. And when you finish school, you probably have a good chance of getting a job.”

The accounting profession faces real challenges, from regulatory dismissal to AI automation to economic headwinds. But as Blake and David demonstrate each week, staying informed and adapting creatively matters more than protecting old definitions of professionalism.

Want to hear the full discussion, including details about PCAOB changes, tariff impacts, and why accounting firms might have to start paying overtime? Listen to the complete episode of The Accounting Podcast. You can even earn free CPE through the Earmark app while you listen.

The Math Behind Tax-Free Employee Discounts That Most Businesses Get Wrong

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Picture an airline employee boarding a flight home after visiting family, slipping into an empty seat at the last minute without paying a dime. Is this a tax-free perk or unreported income? The answer hinges on one crucial detail that could mean thousands of dollars in tax liability, whether that seat was reserved or simply excess capacity.

In this first episode of a multi-part series on tax-free employee benefits, Tax in Action host Jeremy Wells, EA, CPA, breaks down the complex world of no-additional-cost services and qualified employee discounts under IRC Section 132. As Jeremy explains, “Employers are constantly trying to figure out ways to encourage either prospective employees to want to come work for them, or for current employees to want to stay.” These benefits have become essential recruiting tools, yet their tax-free status depends on following precise technical requirements.

The Starting Point: Everything Is Taxable Unless…

Jeremy begins with a reality check that sets the stage for everything that follows. “IRC 61(a)(1) includes in compensation for services, commissions, fringe benefits, and similar items in gross income,” he emphasizes. “So in other words, if you get some sort of fringe benefit from your employer, it’s taxable unless there is some specific exception in the code.”

This means every perk, discount, or free service an employer provides is taxable compensation by default. Section 132 provides specific exceptions, but only if employers and employees follow the rules. Miss one requirement, and that tax-free benefit becomes taxable wages subject to withholding, penalties, and interest.

This episode focuses on two of the most common Section 132 benefits: no-additional-cost services and qualified employee discounts.

No-Additional-Cost Services: The Excess Capacity Exception

The concept seems simple enough: if providing a service to an employee doesn’t cost the employer anything extra, the employee can receive it tax-free. But as Jeremy explains, employers have to meet multiple requirements.

A no-additional-cost service must be “one provided to an employee for personal use,” Jeremy notes. “It’s ordinarily offered for sale to customers, and it incurs no substantial additional cost or foregone revenue when provided to the employee.”

The Reservation Problem

Jeremy returns repeatedly to airline examples because they perfectly illustrate the distinction between acceptable and problematic benefits. When discussing an empty airline seat, he explains, “The airline wasn’t going to sell that ticket anyway. So the airline isn’t losing anything. It’s not paying any more than it had to to add one more passenger to that flight.”

This is true excess capacity. Once the plane door closes, that empty seat has no value so letting an employee use it costs nothing.

But Jeremy warns about a critical limitation. “Employers can’t exclude reserved services.” If an employee reserves a seat while customers can still book the flight, “that airline potentially loses revenue if a customer wants to book that flight but can’t because the employee took the last seat.”

The employee could still take that reserved seat without paying, but “the airline would need to add the value of that ticket to the employee’s compensation as taxable income as part of the employee’s wages.”

Calculating Substantial Additional Cost

Determining whether a service incurs “substantial additional cost” requires careful analysis. “The employer has to include the cost of labor incurred in providing the service,” Jeremy explains. For modern service businesses, this can be challenging. While a manufacturer can easily track labor hours per widget, service businesses often struggle to allocate labor costs to specific services.

Jeremy offers some relief through the concept of “incidental services.” If a service is secondary to normal operations, it “generally doesn’t incur substantial additional cost.” This gives employers a near-safe harbor for ancillary services.

However, there’s a catch: “The employer incurs substantial additional cost if the employer or its employees spend a substantial amount of time providing the service to employees.” The vagueness is frustrating. “We don’t really get more detail than that,” Jeremy points out.

Reciprocal Agreements: Trading Services Tax-Free

One interesting provision allows unrelated companies to trade services. “An employer has to have an agreement with an unrelated other employer,” Jeremy explains, outlining three requirements:

  1. It must be a written reciprocal agreement
  2. The employee could exclude the value if their own employer provided it
  3. Neither employer can incur substantial additional cost

Jeremy emphasizes a crucial restriction. “If there are any payments involved between the two companies, then that is by definition a substantial additional cost and the entire agreement breaks down.” The exchange must be pure barter—services for services, no money changing hands.

Qualified Employee Discounts: Different Rules for Products and Services

While no-additional-cost services focus on excess capacity, employee discounts involve mathematical calculations that vary dramatically between services and products.

The 20% Rule for Services

For services, there is a clear bright-line test: “A discount on a service can’t exceed 20% of the price offered by the employer to customers.”

Using a simple example, “If your business provides a particular service to its customers for $100, then you can offer that same service to your employees for no less than $80” without tax consequences. Charge $70, and that extra $10 becomes taxable wages.

Gross Profit Calculations for Products

Product discounts follow a completely different formula. “The discount can’t exceed the gross profit percentage on the price offered by the employer to customers,” Jeremy explains. This requires complex calculations.

Jeremy walks through a practical example using a lawn equipment retailer offering employee discounts on push mowers. The store can’t just pick one model; it must aggregate. “Let’s look at the aggregate sales price. So of all of our push lawn mowers, what is the aggregate sales price of all of them?”

The calculation averages across the entire product line. “Some of them are going to be cheap. Some of them are going to be expensive. Some of them are going to be top of the line.” The employer calculates both average selling price and average cost to determine the gross profit percentage and that becomes the maximum tax-free discount.

The 35% Group Discount Rule

If a business regularly offers discounts to customer groups, such as seniors or military, and those sales comprise at least 35% of total sales, the discounted price becomes the baseline. “We’re trying to avoid inflating the price to act like we can afford a bigger discount for our employees,” Jeremy explains.

When multiple discount groups exist, employers can “choose the most common discount, the one producing the largest share of total discounted sales as the benchmark. Or if there’s a tie, it can average between them.”

What Can’t Be Discounted

Jeremy identifies surprising exclusions, including real estate, buildings, and land, and personal property usually held for investment, such as securities, commodities or currencies.”

Even businesses that primarily deal in these items, such as real estate brokerages and securities firms, cannot offer tax-free employee discounts on their main products.

Unlike no-additional-cost services, Jeremy makes clear that employee discounts have a major limitation. “You can’t create a reciprocal arrangement with another company to provide discounts on goods or services.”

The Compliance Framework: Who Qualifies and How to Document

Beyond the mathematical requirements are administrative challenges that can transform simple perks into compliance nightmares.

Nondiscrimination Requirements

Highly compensated employees—those earning over $160,000 in 2025 or owning 5% or more of the business—face special restrictions. They “can exclude no additional cost services, but only if the employer offers that service on substantially the same terms to each member of a group of employees.”

Jeremy provides a practical example of acceptable classification. “Once a new employee works for the business for at least six months or one year, then that employee is now eligible for the fringe benefit.” This creates an objective standard applying equally to all compensation levels.

Line-of-Business Limitations

This requirement emerged from the corporate consolidation era. “You started seeing businesses merging and acquiring other businesses,” Jeremy observes, “and pretty soon a business didn’t offer just one type of good, it might offer ten, 20, or 50 different kinds.”

The rule is, employees can only receive tax-free benefits for goods or services related to their line of business. Jeremy offers a clear example: “A bank can’t provide discounted apparel or groceries to its employees if it doesn’t also primarily sell clothing and groceries to its customers.”

However, employees supporting multiple divisions qualify more broadly. Administrative staff, IT professionals, and other infrastructure workers who benefit multiple lines of business can receive benefits from any division they support, even indirectly.

The Outdated Classification System

Determining lines of business relies on the Standard Industrial Classification system, which Jeremy notes was developed in 1938 and hasn’t been updated since 1974. Many modern businesses operate in industries that didn’t exist when these codes were created. While the Treasury proposed updating to the modern NAICS system in August 2024, employers must still navigate using pre-internet classifications.

Documentation Requirements

Jeremy concludes with essential documentation advice:

  • Document employees’ regular work to prove line-of-business compliance
  • Confirm services/products are offered to customers ordinarily
  • Quantify any costs or foregone revenue for no-additional-cost services
  • Calculate and document gross profit percentages
  • Maintain pricing records from when benefits were provided

“Document the terms of the benefit, ideally in writing,” Jeremy emphasizes, suggesting inclusion in employee manuals.

Looking Ahead: More Benefits to Come

Section 132 benefits reveal how simple concepts, such as free services and employee discounts, become complex compliance exercises requiring careful calculation and documentation. Yet for employers competing for talent, mastering these rules is essential for offering competitive compensation packages without triggering unexpected tax consequences.

Jeremy promises to continue this series in the next episode: “We’ll keep looking at Section 132 with working condition fringe benefits and de minimis fringe benefits.”

For tax professionals advising clients or business owners designing benefit packages, understanding these requirements is about maximizing value for employees while avoiding costly mistakes. The difference between a valued perk and a tax liability often lies in a single detail, such as whether a seat was reserved or whether discounts were properly calculated.

Listen to the full episode of Tax in Action to hear Jeremy break down each requirement with the clarity that makes complex rules immediately applicable in your practice.