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Blake Oliver

The IRS Now Knows Who’s Trading Crypto But Can’t Tell What Anyone Owes

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The IRS now knows who’s trading crypto, but it still can’t tell if anyone owes tax. That’s the reality of the new 1099-DA reporting system that just went live, and it’s about to affect every tax professional with crypto clients.

On a recent episode of the Earmark Podcast, host Blake Oliver sat down with Lawrence Zlatkin, Vice President of Tax at Coinbase, to explain what the new 1099-DA form reports, where the gaps are, and what changes Coinbase is pushing for in Washington. With a front-row seat to crypto taxation’s biggest challenges, Lawrence offered insight on where the system works (and where it doesn’t).

The problem is that the IRS’s new reporting brings crypto tax enforcement into the mainstream, but the underlying framework creates massive overreporting with little tax benefit. Treating stablecoins as property and requiring reports on tiny gas fees generates millions of forms that tell the government almost nothing about actual tax liability. Tax professionals must bridge the gap between what the IRS receives and what matters for computing taxes.

The 1099-DA: What’s There and What’s Missing

Think of the 1099-DA as crypto’s version of the 1099-B that brokers send for stock trades. The basic concept is familiar: the form goes to your client and the IRS, and the government matches what taxpayers report against what exchanges report. Tax pros have worked with this system for decades.

But this first-year version is bare-bones. As Lawrence explained, “We are implementing the system barely 18 months after Congress issued the regulations. The 1099-B system was developed over a period of five years, and even longer for gross proceeds.”

The result is a “skeletal version” that reports just two things: who the customer is and their gross proceeds from transactions. The critical missing piece is cost basis.

“We’re including basis for our customers for informational purposes, but that information is not actually going to the government,” Lawrence said. Next year, exchanges will start reporting basis, but only when they have it.

Blake walked through a simple example. Say your client sells Bitcoin for $100. The IRS gets a 1099-DA showing $100 in gross proceeds. But if your client bought that Bitcoin for $90, the actual taxable gain is just $10. That $10 is the only number that matters for taxes, but it’s invisible to the government this year.

The problem worsens with transfers between wallets and exchanges. When crypto leaves Coinbase for a self-custody wallet or another exchange, the basis tracking breaks. “The only person who knows what’s in a non-custodial wallet is you because you’re the owner,” Lawrence explained. When that crypto returns to an exchange, there’s no way to reconstruct what happened in between.

So what’s the point of all this reporting? Lawrence was candid. “The government’s concern has been that there’s been underreporting and noncompliance in the ecosystem generally. So what this achieves from their standpoint is they find out who’s really participating.”

Until now, the IRS’s only crypto signal was that checkbox on the 1040, which Lawrence diplomatically called “gobbledygook.” It asks about digital asset transactions. Now the IRS will see actual dollar amounts attached to names. They’ll spot whales with millions in proceeds. They’ll identify non-filers.

“There’s nothing nefarious or awful or evil about that,” Lawrence said. “It’s just that they will have that information they didn’t otherwise have before.”

The practical takeaway is, “you are in control of your tax data,” Lawrence emphasized. Clients who consolidate their activity on a single exchange will have better records. Coinbase provides transaction history and gain/loss data through its “position service.” But clients bouncing between exchanges and wallets need to maintain their own records. Nobody else can do it for them.

The Stablecoin Problem: When Property Isn’t Property

Missing basis data would be manageable if the tax framework made sense. It doesn’t, especially for stablecoins.

Since 2014, the IRS has classified all crypto as property rather than currency or cash equivalents. This includes stablecoins like USDC, which are designed to trade at exactly $1. Every time your client uses USDC, that’s a reportable disposition of property.

“Stablecoins are designed to be stable and consistent and traded at par with the US dollar,” Lawrence said. “99.9% of the time, it’s intended to trade within a fraction of a decimal of the US dollar. So in essence, we’re not reporting a gain or loss. So it’s over-reporting of data. There’s no fundamental purpose for that. I would argue that the only reason for that is surveillance.”

The scale is significant. Coinbase must report stablecoin transactions exceeding $10,000 to the government. Hundreds of thousands of customers received 1099s this year that include these transactions. And taxpayers must report even smaller amounts. Coinbase just won’t tell the IRS about those.

Blake offered his own example. Earmark uses USDC to pay vendors for international transactions where stablecoins are faster than traditional banking. Under current rules, every payment is a reportable property disposition. “It’s as if the IRS got every bank transaction,” Blake said. “Americans would never stand for that. We’d call that surveillance and overreach.”

Lawrence revealed this isn’t hypothetical. Five years ago, the Treasury Department proposed requiring banks to report credit card transactions over $10,000 in aggregate. “That was quashed for the reasons you just described,” he said. Yet here we are with stablecoins.

There’s a small silver lining. “The tax system is based on income. If there’s no gain or loss, there’s no taxable income, and there’s no penalty,” Lawrence explained. You can’t underpay taxes on zero gain. But the reporting requirement still exists.

De Minimis Madness: When Pennies Become Paperwork

Beyond stablecoins, tiny transactions that generate enormous paperwork are another reporting nightmare.

Gas fees, which are the network costs for blockchain transactions, often involve disposing of pennies or fractions of dollars worth of Ethereum. Each one is technically a property disposition that must be tracked and reported. Each might have actual (if microscopic) gain or loss.

The volume is staggering. Coinbase files millions of 1099-DAs containing hundreds of millions of underlying transactions that feed into Form 8949. Lawrence estimates that about half qualify as de minimis, meaning they’re essentially meaningless for tax purposes.

“We’re not going to pave roads and solve the deficit on the backs of de minimis reporting for crypto,” Lawrence argued. He’s pushing for a threshold below which transactions become exempt from reporting or taxation. Should it be $5? $50? $200? Should it be income-based or transaction-based?

“At what point do we stop requiring reporting for transactions?” Lawrence asked. “If the IRS gets bombarded with billions of transactions that are tiny in nature because people are required to report them, the system itself breaks.”

These billions of transactions are being reported today, and the IRS’s ancient computer systems must somehow process them all.

The Washington Agenda: Common Sense Reforms in Political Gridlock

Lawrence came with a clear policy agenda that included ten priorities, although the conversation covered highlighted six in detail.

Beyond stablecoins and de minimis thresholds, Coinbase is pushing for the following reforms:

  • Crypto lending should work like securities lending. “You’re not disposing of crypto because you’re going to get the same amount back,” Lawrence explained. Under current securities rules, that’s not taxable. Crypto should be the same.
  • Staking rewards timing. The IRS says rewards are taxable when received. Others argue they shouldn’t be taxed until sold. “That’s a source of friction and debate,” Lawrence noted.
  • Charitable deductions are perhaps the clearest absurdity. Donate over $5,000 in Bitcoin, and you need a formal appraisal. “You can type it in Google and get a Bitcoin price, just like you get the price of any stock or security,” Lawrence said. Bitcoin has “readily ascertainable fair market value.” The appraisal requirement is “ridiculous.”
  • Foreign investment rules. The US has safe harbors that allow non-US persons to trade securities through US brokers without triggering US tax. No equivalent exists for crypto. “We’re the best and safest market in the world,” Lawrence said. “We’d like to preserve that for crypto, not just for regular old investment assets.”

So why hasn’t anything passed?

“I’m cautiously optimistic,” Lawrence said. President Trump has been supportive. He met with Coinbase CEO Brian Armstrong last week. The White House issued a report on digital assets, including tax provisions. Treasury has been “by and large very supportive.”

But Congress is the bottleneck. The House is narrowly Republican-controlled, and crypto has become more partisan than it should be. “This should not be a partisan debate,” Lawrence insisted. “This ecosystem benefits Democrats and Republicans.”

The Clarity Act for crypto regulation is under discussion. So is broader tax reform. But as Lawrence diplomatically put it, “Things don’t move as quickly as we might like in Washington.”

What This Means for Tax Professionals

The picture Lawrence painted is clear, even if the rules aren’t. The 1099-DA tells the IRS who’s trading and how much, but it lacks the cost basis needed to determine actual tax liability. Tax professionals must fill that gap by reconciling gross proceeds against basis records scattered across exchanges, wallets, and spreadsheets.

Meanwhile, classifying stablecoins as property without de minimis rules creates millions of reportable transactions with zero tax consequences. It’s all noise, no signal.

The reforms Coinbase wants make sense. But with narrow Congressional majorities and partisan friction, don’t expect relief before next filing season.

The message for practitioners is crypto is no longer niche. With millions of 1099-DAs arriving and IRS matching letters sure to follow, you need to understand what these forms show, how to help clients track basis, and where the traps are. Firms that build this expertise now will serve a growing client base. Those who don’t risk being blindsided along with their clients.

“Everyone wants to talk about tax,” Lawrence joked at the start. By the end, it’s clear why. The intersection of crypto and tax is where innovation meets regulation, and right now, regulation is playing catch-up.

Listen to the complete episode of the Earmark Podcast for Lawrence’s full breakdown of Coinbase’s policy priorities and practical advice on basis tracking. You can earn free NASBA-approved CPE credit by listening and taking a short quiz at earmarkcpe.com.

Fake Auditor Conclusions, Fabricated Board Minutes, and the Growing Cracks in Accounting’s Trust Infrastructure

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A compliance startup allegedly sold hundreds of companies fake SOC 2 reports complete with made-up auditor conclusions and board meeting notes that never happened. In Florida, legislators nearly abolished the state’s Board of Accountancy entirely. And AI companies now run ads that sound exactly like QuickBooks marketing copy.

These are just some of the topics Blake Oliver and David Leary tackled in their latest episode of The Accounting Podcast. The hosts dug into stories that show the systems meant to ensure trust in accounting face threats from multiple angles.

The (Alleged) SOC 2 Scandal

“This is wild,” Blake said, thanking a listener for sending him a detailed investigation about Delve, a VC-backed compliance startup. The company allegedly created fake SOC 2 reports at scale, using what the hosts described as a disturbing playbook.

According to a Substack series Blake reviewed, Delve’s platform pre-populated everything from policies to evidence and even independent auditor conclusions. The company then allegedly routed these pre-written reports through audit firms that simply rubber-stamped them.

“These are allegations. I have not independently verified any of this,” Blake was careful to note. “This is a very in-depth Substack report by an anonymous poster. So we should take this with a grain of salt.”

But the details were alarming. The investigation claimed to find board meetings that never happened, security simulations that were never performed, and trust pages showing controls as “implemented” before any actual work was done. Companies had written policies claiming they had mobile device management, VPNs, and intrusion detection systems, even though they had none of these.

The author analyzed 322 public Delve trust pages and found that 321 showed the exact same SOC 2 control set, which seems odd for supposedly customized compliance programs.

“The logo you get is an AICPA logo, right? You’re getting a stamp of approval from the AICPA,” David said, cutting to the heart of the problem. “Is the AICPA checking on all these badges that are on company websites?”

Blake explained how easy it would be to game the system. “All you have to do is find a firm willing to sign off without actually doing the work,” he said, comparing it to the BF Borgers case in Colorado, where a CPA firm was caught signing off on audits it never performed.

“This is the problem with assurance,” Blake continued. “If you have a few bad actors willing to just sign off, sign off, sign off, they can make a lot of money. And how do they get caught? And if they get caught, what happens?”

Florida Almost Killed Its Board of Accountancy

While fake compliance reports threaten the profession from within, Florida’s legislature almost destroyed a key piece of regulatory infrastructure from the outside.

House Bill 607 would have eliminated the Florida Board of Accountancy along with other professional licensing boards as part of a sweeping deregulation push. The Florida Institute of CPAs called it “the most serious threat to the profession in decades.”

“How do you regulate the CPA in Florida?” Blake asked, explaining the stakes. Without a Board of Accountancy, there’s no enforcement mechanism, no oversight, and no one to investigate bad actors.

The bill moved quickly through two committees before being stopped. But victory came at a cost. To focus on defeating the bill, FICPA had to table its own effort to create alternative pathways to CPA licensure that would have allowed candidates to qualify with 120 credit hours instead of 150.

The irony wasn’t lost on the hosts. Florida was the first state to implement the 150-hour rule. Now, while about 30 states have approved alternative pathways, efforts to defend against total deregulation have sidelined reforms.

“We want to streamline licensure, but we don’t want it to go away,” Blake said. “We’ve got folks who want too much regulation, and then we’ve got folks who want no regulation. There’s got to be a middle ground here.”

David predicted this won’t be the last such attempt. “I imagine we’re probably going to see more pushes for this because people are going to want the big, huge AI companies to have their AI do CPA work without a license in the way.”

When AI Ads Look Like QuickBooks Ads

Speaking of AI companies, David discovered something unsettling through a targeted LinkedIn ad. Anthropic is marketing “Claude for Finance” using language that sounds exactly like traditional accounting software.

The ad promised to handle recurring financial workflows, organize receipts into clean spreadsheets, build quarterly revenue models, and cross-reference documents for month-end close.

“Third-party app developers and accountants and CPAs that use Claude essentially trained the model so they could just take everybody out of the middle,” David explained. He compared it to how the iPhone camera evolved. At first, you needed third-party apps for filters and editing. Now it’s all built in.

The hosts also discussed a Wall Street Journal article about how regular people are already using AI for tax work. Examples ranged from using Copilot to model Roth conversions to having AI explain confusing IRS notices. One person used Gemini to value charitable donations for their tax return.

“The takeaway is they’re avoiding getting an accountant or a tax professional,” David said bluntly.

But the technology isn’t perfect. One user found that Grok gave wrong answers about capital gains tax until he rephrased his question. A retired tax preparer tested ChatGPT on an IRS volunteer certification exam, and ChatGPT failed.

This leads to what David called the “fact check tax,” a term from Anthropic’s own survey. “An assistant that sounds sure but is often wrong forces you to treat everything as suspect. Instead of freeing attention, AI creates a permanent fact-check tax.”

The Bigger Picture

These stories paint a picture of a profession under pressure from multiple directions. Fake compliance reports undermine the attestation model. Deregulation efforts threaten the licensing framework. AI platforms are positioning themselves as replacements rather than tools.

As Blake noted about AI, “It’s going to be really hard for Intuit and Xero to keep up unless they’re just plugging into ChatGPT or into Claude. How can their own AI chatbots keep up with what these companies are doing, and how fast they’re developing?”

For accounting professionals, these are challenges that require attention and action. Listen to the full episode of The Accounting Podcast to hear Blake and David discuss these stories and more. 

The Privacy Excuse for Not Using AI in Accounting Just Lost Its Last Leg

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Blake Oliver needed to file a City of Los Angeles business tax return for his last remaining bookkeeping client. Instead of spending 30 minutes clicking through websites and copying numbers, he gave Claude Cowork a single instruction: “Search my email for info about the account and help me file it on the city website.”

What happened next, documented on a recent episode of The Accounting Podcast, shows exactly where the accounting profession stands with AI adoption. The AI agent searched Blake’s email, found the tax notice, extracted the business details from a PDF, logged into the city website, navigated to Xero to pull gross receipts, filled out the return, and drafted the client confirmation email. Total human involvement: one correction when it pulled accrual instead of cash basis numbers.

“This is a task that might take 15 to 30 minutes if you filled out a time sheet. Claude just did it,” Blake told co-host David Leary during their weekly news roundup.

The Numbers Show AI Closing In Fast

OpenAI didn’t just release another model update with ChatGPT 5.4. It specifically targeted the kind of work that fills an accountant’s day. As David read from OpenAI’s announcement, the company “put a particular focus on improving GPT 5.4’s ability to create and edit spreadsheets, presentations, and documents.”

The benchmarks back up that focus. Using something called GDPval—which measures performance on real-world knowledge tasks across 44 occupations—ChatGPT 5.4 now beats or ties industry professionals 83% of the time. On spreadsheet tasks specifically, it jumped from 68% accuracy to 87% in a single generation.

“It’s getting close to that 90% success now on everything,” David observed. For context, that means if you give an accountant and this AI the same spreadsheet task, the AI will match or beat the human’s performance nearly nine times out of ten.

Real Accountants, Real Work, Zero Software Costs

While Blake was experimenting with Claude for business tax returns, a developer went further. Fed up with TurboTax, he used Claude to complete a 42-page federal return plus two trust returns, all at zero software cost beyond his AI subscription.

His approach was surprisingly low-tech: Downloaded blank PDFs from the IRS, have Claude fill them out, then print and mail. The biggest challenge wasn’t getting the AI to do the calculations or understand the tax code. It was trying to make it work with the IRS’s online fillable forms. So he skipped that part entirely.

“The comments were like, ‘Can I quit doing my returns tomorrow? I’ve been waiting for this my whole life,'” David said, describing the reaction from tax professionals who saw the developer’s work on social media.

The timing is notable. These experiments happened during tax season, when practitioners are supposedly too busy to explore new tools. Yet here’s a developer replacing TurboTax with Claude, and Blake casually using an AI agent for client work.

The Privacy Excuse Just Disappeared

Most firms claim they can’t use AI because client data is too sensitive. This week, Zapier offered a solution to the privacy problem.

Its new AI Guardrails can detect over 30 categories of personally identifiable information, redact sensitive data before it reaches AI systems, block workflows when it detects problems, and identify attempts to manipulate the AI. You insert it as a step in any workflow, and it sanitizes the data before AI ever sees it.

“If you have client data being passed through Zapier into any AI tool, go add this step to your workflows,” David advised listeners.

Blake was even more direct about the implications. “I totally see this being a huge tool for accounting firms, because we have all this information we want to use with AI. But a lot of it is too sensitive. That’s the main reason most firms aren’t doing anything with it.”

Beyond AI: The Week’s Other Bombshells

While AI dominated the discussion, Blake and David covered several other major stories that accounting professionals need to know about, including:

The Botkeeper Collapse Gets Messier

In an interview with Accounting Today, CEO Enrico Palmerino claimed the company went from healthy to dead in eight days. But Blake uncovered how Botkeeper engineered its financials by selling their bookkeeping clients to a firm called Benchmark Cloud Accounting. It then had that firm buy a multi-million dollar Botkeeper license. “That is how you turn service revenue into SaaS recurring revenue,” Blake explained.

Iran’s Drone Economics

The cost disparity between Iran’s drones and America’s million Interceptor missiles raises questions about the financial sustainability of current military strategies. “We’re spending $3 million to shoot down something that costs $20,000 to $50,000,” Blake pointed out.

KPMG and Polymarket

Anonymous accounts on the prediction market Polymarket have been suspiciously successful at betting on earnings for companies audited by KPMG- (and only KPMG) audited companies. The amounts are small so far, but as David noted, “Are they doing it on the real derivative markets as well?”

Record 401(k) Withdrawals

Vanguard reports hardship withdrawals have tripled since 2020, jumping from under 2% to 6% of participants. Despite positive business sentiment, individual financial stress is climbing.

What This Means for Your Firm

General-purpose AI agents can complete multi-step workflows across email, accounting systems, and government websites. The privacy barriers that kept firms on the sidelines now have concrete, deployable solutions. The capability exists. The safety tools are live. The only question is timing.

Blake’s Claude experience offers a preview of the emerging division of labor. AI handles the execution, humans provide the judgment. The AI pulled the wrong basis for the numbers. Blake caught it. That’s where professional value lives now, not in the clicking and copying, but in knowing what the AI doesn’t know to check.

The message might seem poorly timed to practitioners overwhelmed by tax season. But accountants are eager for tools that eliminate the drudgery, even in the thick of deadline pressure.

Listen to the full episode to hear Blake walk through his Claude workflow step by step, get David’s take on what ChatGPT 5.4’s benchmarks really mean, and understand why the Botkeeper story matters for anyone considering AI-powered bookkeeping solutions. The episode reflects a profession at an inflection point—not in some distant future, but this week.

A Private Equity Insider Explains What Happens After Your Firm Gets Acquired

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Devin Mathews has a 14-year-old dog that had never been sedated for a dental cleaning—not once in 14 and a half years. Then a private equity firm bought his veterinary office. Suddenly, the dog needed his teeth cleaned twice a year, at $1,000 a pop.

“I never knew my dog needed so many dental services,” Devin tells Blake Oliver on the latest episode of the Earmark Podcast. “It’s the upsell opportunity.”

This small anecdote captures the anxiety spreading through the accounting profession as private equity floods in. What really changes when PE takes over? Who benefits? Who gets hurt? And what about artificial intelligence? Is it going to make all these PE investments obsolete?

Devin brings an insider’s perspective with an outsider’s freedom to speak plainly. As a partner at ParkerGale Capital with 30 years in private equity, he knows the playbook. But since his firm invests in software companies, not accounting firms, he can share what really happens without affecting any deals. He regularly fields calls from employees at freshly acquired firms trying to figure out what just happened to their careers.

The Satisfaction Gap: Partners vs. Everyone Else

Blake starts with data that sets the tone for the entire conversation. An Accounting Today survey found that over two-thirds of partners at PE-backed accounting firms say they’re satisfied with their experience. But only about 15% of non-partner employees feel the same way.

“Let me get this straight. The partners who got paid in the transaction are ecstatic because they have terminal value,” Devin says. “And the rank and file who probably didn’t even know the business was for sale, their lives have completely changed, and expectations have gone through the roof.”

That’s the core issue. When PE acquires an accounting firm, the capital is there to buy out the existing owners, not fund operations. Partners cash out. Staff wake up to a Zoom call announcing new ownership and dramatically different expectations.

Most employees don’t realize how much analysis has already happened before that announcement. “Some 26-year-old in New York has run all that math,” Devin explains, “and they literally know you and your business better than you know it.” PE firms have sorted every employee by bill rate and utilization. They’ve hired McKinsey or Bain to benchmark everything against industry standards. They know exactly where they can push harder.

The first target is the person who gets paid a lot but doesn’t bill many hours. “This guy has been around for a long time,” Devin describes. “Maybe they’re great at business development, but they’re just not billing the hours anymore.”

How PE Actually Makes Money in Accounting

The mechanics are straightforward: bill more hours, raise bill rates, get more efficient, and make acquisitions. When revenue equals people times hours times rates, those are your main levers.

But Devin acknowledges the challenge with professional services. “The assets walk out the door every night.” Push too hard, and those assets can walk across the street to one of the 44,600 CPA firms in North America that aren’t owned by private equity.

Blake raises a critical point based on his own experience as a manager at a top-25 firm. The traditional path of working your way up, becoming a partner, and receiving ownership and profit distributions disappears under PE ownership. Instead, you get RSUs or phantom equity that only pay out if there’s an exit event.

“You drive home after that speech,” Devin imagines, “and you say to your spouse, ‘Remember that path I had to be a partner? That’s gone. Now I only get paid if there’s an exit.'”

Good PE firms try to address this through transparency and communication. Devin describes his ideal post-acquisition speech: acknowledge the surprise, address the fear directly, and promise that resources will match the higher expectations. “Expectations of ten out of ten, resources of ten out of ten. That’s a great combination.”

But the reality hits later on. “I walk you through the PowerPoint and it sounds really great,” Devin says. “Then six months later you’d be like, ‘Where’s Devin? What happened?'” The speech is easy. Delivering on it is where most PE firms struggle.

AI Changes Everything, But Not How You Think

The conversation takes an unexpected turn when they start talking about artificial intelligence. AI is threatening the entire economic model PE investments depend on.

Devin’s firm is all-in on AI. Every Friday is “DIY Friday,” and everyone spends two hours experimenting with AI tools, trying to replicate workflows, and testing what works. They pay for all the major models. They’re true believers.

But the results aren’t quite what they’re hoping for. “A lot of times it takes me twice as long to review and audit what the AI built than it would have taken me to build it on my own,” Devin admits. The tools hallucinate. It’s “wildly confident about things it knows nothing about.”

The key insight is that AI is a “ceiling raiser, not a floor raiser.” It makes experienced professionals amazing. It makes entry-level people only slightly better because of domain knowledge. An experienced accountant can spot what the AI got wrong and fix it. An entry-level accountant doesn’t know enough to catch the mistakes.

“An entry-level developer, like an entry-level accountant, doesn’t have enough domain knowledge or experience to see what the AI did wrong,” Devin explains.

“It’s a great time to be mid-level or experienced. It’s a bad time to be entry-level,” Blake observes, noting the cruel paradox. The routine tasks that used to train new accountants, like sampling, confirmations, and rolling forward work papers, are being automated first.

The legal profession offers a preview. Harvey, an AI platform for law firms, raised about half a billion dollars. It claims to work at the level of a fifth-year Harvard Law associate. Every major firm supposedly uses it. “But Kirkland and Ellis isn’t charging me any less than they used to,” Devin notes. The efficiency gains aren’t reaching clients. Firms capture them as profit.

Your Options Are Better Than They Appear

So what should accounting professionals actually do? Devin has specific advice.

First, if you’re at a PE-backed firm, demand transparency. “Show me Bain Capital’s value creation plan,” he suggests. “How did they underwrite this, and how are they going to get there?” Understanding the plan helps you align your work and see your compensation trajectory. If they won’t share it, that tells you something, too.

Devin identifies three problems that plague most firms before PE arrives. There’s no clear plan (or too many plans), no communication about why leaders make decisions, and nobody understands how compensation works. Good PE ownership can fix these issues. Bad PE ownership makes them worse.

The good news is, PE has bought only about 400 of the 45,000 CPA firms in the US. “There are 44,600 CPA firms in North America that aren’t owned by private equity,” Devin points out. “And you can leave.”

Devin has advice for early-career accountants facing pressure from private equity and AI automation: Start your own firm.

“Get really good with the AI. Way better than the 35-year-old or the 45-year-old. And start your own firm. Be an AI-first accounting firm, and you own all of it.”

It’s never been easier, he argues. You can set up an LLC on LegalZoom. You can reach clients directly through LinkedIn or YouTube. The barriers that kept young professionals locked into traditional firm hierarchies are crumbling.

“It’s pretty obvious most adults have no idea what they’re doing, and they’re mostly full of BS,” Devin says with characteristic bluntness. “So don’t wait for your turn. Go get it.”

The Bottom Line

The traditional accounting career ladder is being dismantled. PE is removing the path to partnership, and AI is removing the entry-level work that trains new accountants.

But professionals who understand what’s actually happening have more options than they might think. There are still 44,600 independent firms. Starting your own practice has never been easier. And if you’re staying put, you can at least demand to see the plan and understand where you fit.

As Devin puts it, “Why do you need to wait in line and have some private equity firm tell you how you get to run your business? Go find some other people who believe in it the way you do, and go build the firm in your image.”

For the full conversation, including Devin’s stories about his own podcast journey and more details on how PE firms evaluate acquisition targets, listen to the complete episode of the Earmark Podcast.

A Startup Claims AI Can Do Partnership Tax Returns Autonomously, But Where’s the Proof?

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Can an AI agent really complete a partnership tax return by itself? A two-year-old startup just raised $100 million claiming it can, but the hosts of The Accounting Podcast want to see the receipts.

In a recent episode, Blake Oliver and David Leary tackle the biggest AI claims hitting accounting right now. A startup called Basis says it built an AI that can prepare partnership tax returns autonomously. Intuit mentioned AI 150 times in one earnings call while announcing deals with both OpenAI and Anthropic. And new desktop tools let accountants automate recurring tasks without writing any code.

But that’s not all they covered. Trump’s tariffs were just ruled illegal, setting up a gold rush of refund claims. There’s finally a Senate bill to regulate tax preparers, because believe it or not, there are currently zero requirements. And one tax expert bet his life savings against DOGE and won.

A Billion-Dollar Claim (But Where Are the Receipts?)

The most jaw-dropping news comes from Basis, a startup founded in 2023 that just hit unicorn status. They raised $100 million at a $1.15 billion valuation, with money from Google Ventures and former Goldman Sachs CEO Lloyd Blankfein. The company claims it built an AI agent that can complete a partnership tax return autonomously.

Blake explained why this would be huge if true. “When you use TurboTax and you go through the wizard, it’s basically just taking your information and plugging that into the correct boxes on the forms. Partnership returns are much more complex because your balance sheet has to tie out, and you have to make all these adjustments and basis calculations. It gets really complex with the partners’ different shares of ownership.”

If Basis really pulled this off, accounting firms could skip having staff accountants prep these returns entirely. Everything would go straight to manager review. That’s a massive cost savings.

But David isn’t buying it without proof. “Their whole website’s optimized to raise money from investors,” he said. Until just before the fundraising announcement, Basis had no screenshots, videos, or demos anywhere. Its blog posts focus on the money they’ve raised and internal software development rather than showing how the accounting agents actually work.

“Where is this great blog post showing how they’re doing this return?” David asked.

Basis claims 30% of the top 25 accounting firms are “using” their software. But David, drawing from his Intuit days, knows better. “Using and using are not the same two words. A big accounting firm would buy 2,500 seat licenses for QuickBooks. A year later, they rolled out two to clients.”

Blake’s message to Basis was simple, “If you’re listening, we want to see it.”

Get Ready for the Refund Rush as Trump Tariffs Ruled Illegal

While everyone’s debating AI, there’s real money on the table right now from Trump’s tariffs. The Supreme Court ruled them illegal, and companies are scrambling for refunds.

“Eighteen hundred companies have already filed refund lawsuits against the federal government,” Blake reported. Big names like Costco, Goodyear, Barnes and Noble, and FedEx are in the mix. Through December 10th, at least 301,000 importers were subject to these now-illegal tariffs.

The kicker is Trump immediately announced new 15% global tariffs under a different law. But Blake thinks these are probably illegal too. “We have trade deficits, but we don’t have balance of payments deficits,” he explained. Trump is using a law from the 1970s when the U.S. was on the gold standard. Those conditions don’t exist anymore.

The administration’s own lawyers previously argued companies could get refunds if the tariffs were ruled unlawful. Now they’re stuck with that position. As one viewer commented during the livestream, “Only the richest companies will get tariff refunds, and consumers will get hosed in the end.”

“Offer this as a service at your firm,” David says, offering accountants a business idea. “Spin up a service and help importers get their tariff refunds.”

Intuit’s Playing Every Side of the AI Game

Intuit CEO Sasan Goodarzi mentioned AI about once every 30 seconds during the company’s recent earnings call, a total of about 150 times. But the real story is its strategy of partnering with everyone.

They’re working with OpenAI and Anthropic’s Claude. Plus, they’re building their own AI. David compared it to Microsoft in the late ’80s. “Microsoft was working on Windows. At the same time, they were in bed with Apple working on Mac OS, and they were working with IBM on OS/2. Nobody knew which OS was going to win.”

Intuit’s betting that no matter which AI platform wins, it wins too.

Goodarzi made an interesting point about why AI companies want to partner rather than compete. “Frankly, in some ways, this addressable market is too small for them to even worry about.” Accounting AI is tiny compared to the trillion-dollar AI market. These companies would rather partner with Intuit than build their own accounting platform.

The company claims its AI saves customers 12 hours per month on accounting and 17 to 18 hours a week on financial statements. But David called BS. “I just can’t imagine any small business owner spending 18 hours a week building a P&L or a cash flow statement—maybe one week a year.”

But Blake sees why Intuit will survive. “They have the data. They are the trusted database for accounting, financial, and tax information. Somebody could build a QuickBooks clone, but you’re not going to get everyone to switch.”

The AI Tools You Can Actually Use Today

While companies make billion-dollar bets, there are tools available right now that work. Blake’s current obsession is Claude Cowork, which can access files on your computer and click around your desktop.

“You could say every time a new file is added to this folder, look at it and analyze it and figure out what to do with it,” Blake explained. “Maybe I want you to plug those numbers into some practice management system. Maybe I want you to take that file and create an invoice.”

Blake built his own automation that takes meeting notes from Google, extracts all the tasks he committed to, and automatically adds them to his task list with due dates. “I don’t have to wait around for somebody to have that bright idea. I can just build it myself right now.”

The workforce impact is already showing up. According to a Kantata survey, 87% of professional services firms plan to manage AI agents as part of their workforce. But it’s changing the nature of work. The study found that while AI makes workers faster, people end up taking on more tasks and working longer hours without being asked.

For accountants, you’re either a reviewer or you’re in trouble. “It’s hard to get an entry-level job or a job where you’re the doer,” Blake said. “But if you are a reviewer or manager, if you have experience and you know what you’re looking at, you are super in demand.”

Other Big Developments This Week

Other news Blake and David covered in this episode includes:

  • A Senate bill to regulate tax preparers. There are currently zero requirements to be a paid tax preparer in the US. A new bipartisan bill would let the IRS deny or revoke preparer ID numbers and crack down on ghost preparers who don’t sign returns.
  • SEC considers biannual reporting. Public companies might only have to report twice a year instead of quarterly. Blake likes the idea. “One of the problems in the US is that companies are expected to beat earnings estimates quarter after quarter. It incentivizes them to make short-term decisions.”
  • Washington’s CPA problem. Washington State issued a record 2,086 CPA licenses last year, but 60% went to international candidates. You don’t even need a Social Security number to get a CPA license in Washington. “Is the accounting shortage actually getting solved, or is Washington just becoming a gateway for outsourcing?” Blake asked.
  • The DOGE bet. Alan Cole, senior economist at the Tax Foundation, bet $342,000 of his life savings that the Department of Government Efficiency wouldn’t cut spending. He won $128,000 when the government spent more in 2025 than in 2024. “We were smart enough. We could have done this,” David observed.
  • IRS scam alert. A Michigan man lost over $1 million to scammers claiming they needed to move his money to a “federal IRS locker” for protection. “Send all your clients an email telling them that this doesn’t exist,” David advises accountants. “It’s a good story. Your clients will open it, and it looks like you’re providing value.”

The accounting profession is at a crossroads. AI agents might really be able to do complex tax returns. Legacy software companies are scrambling to stay relevant. And the tools available today are already changing how work gets done.

But as Aaron Harris from Sage pointed out, “Technology shifts faster than customer trust.” And David added, “It’s probably even worse with accountants.”

Want to hear the full discussion, including why IBM lost $31 billion in market cap when Claude learned COBOL programming? Listen to the complete episode of The Accounting Podcast.