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The Earmark Podcast

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.

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.

Leading with Empathy: Building Accounting Teams That Thrive

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Earn free NASBA-approved CPE for listening to this episode. Visit Earmarkcpe.com, take a short quiz, and get your certificate.

“Star performers aren’t immune from accountability,” says Lisa Gilreath, Managing Partner at Acuity. “Often they perform really high. But you’re going to see the other half of your team suffer in terms of their performance.”

This frank observation cuts to the heart of one of accounting’s toughest leadership challenges—dealing with talented but toxic employees. It’s just one of many practical insights shared during this episode of the Earmark Podcast, recorded live in Atlanta during the Advisory Amplified tour.

Host Blake Oliver sits down with Lisa Gilreath and Valerie Heckman, Accountant Community Manager at OnPay, to explore what empathetic leadership really looks like in accounting firms. Their conversation goes well beyond feel-good management theories to address the real challenges firms face when deadlines hit and pressure mounts.

Why Empathy Makes Business Sense

When Blake asks Lisa why firms shouldn’t burn out their people, her answer is refreshingly honest: “They’re really hard to replace right now.”

This practical reality drives home why empathetic leadership isn’t just nice to have—it’s essential for survival in today’s talent market. Lisa explains that with staffing shortages and people tired of 60-80 hour work weeks, firms have to build healthier workplaces to succeed.

But deadlines don’t disappear. Tax seasons still come. Clients still have needs. The key is finding ways to meet those demands without destroying your team in the process.

Building Breathing Room Into Your Firm

Traditional firms plan for 100% utilization, assuming everyone will be productive every single day. Lisa takes a different approach at Acuity, planning for 75-80% capacity instead.

“You can’t run the people to the absolute end and expect not to be in a crisis situation if somebody has an issue,” she explains. This isn’t about accepting lower productivity. It’s about building resilience into your workflows.

Personal crises illustrate why this matters. “Personal crises, tragedy or challenges never check your calendar to see if you have time to deal with them,” Lisa notes. Over 20 years at Acuity, she’s seen it all—employees who unexpectedly passed away, team members losing spouses, medical emergencies that required immediate attention.

These aren’t rare events. They’re the reality of managing people over time. The question is whether your firm can handle them without falling apart.

Lisa recommends having your “phone a friend on speed dial”—an HR expert or advisor who can provide objective guidance when emotions run high. Small firms especially struggle when close relationships make it hard to separate business needs from personal loyalty.

How Systems Create Space for Humanity

Many firms see standardization as rigid and impersonal. Lisa flips this completely, showing how standard processes actually enable empathy.

“If you do have a standard scope of services for your transactional stuff, you can plug and play people,” she explains. “Paying bills is paying bills. Doing payroll is doing payroll. It’s just a matter of where you get that source data.”

When every client engagement follows similar patterns, any qualified team member can step in during an emergency. This protects both the employee who needs support and the client who needs continuity.

Acuity spreads work throughout the year using recurring CAS engagements rather than accepting the traditional feast-or-famine cycle. “We’re focused on being proactive in those interactions all year long,” Lisa says. This creates predictable workflows that allow for coverage when life happens.

The approach helps team members too. Lisa tells her people: “Build our workflows and build our communication patterns so that if you need to leave unexpectedly, we’ve got your back. Help us help you.”

Reading the Warning Signs

Technology provides new ways to spot problems before they become crises. But Lisa doesn’t just watch productivity metrics. She pays attention to communication patterns.

“I’m noticing when people are no longer engaging in Slack conversations at the same pace that they once were,” she explains. “They’re not showing up in meetings and being as talkative as they once were.”

These changes signal that something’s wrong before performance completely deteriorates. A normally responsive team member whose emails slow down. A strong performer whose deliverables lag. These whispers often matter more than what people explicitly say.

Valerie adds another important metric: PTO usage. “If people aren’t using it, that’s a sign,” she notes. “Are they afraid to use it? Do they feel like if they use it, they’re not contributing enough to the team?”

Her own mother exemplifies this problem, going years without taking vacation because she worried about work piling up. “She would never, ever take a day that payroll needed to be run or the day after in case there were mistakes,” Valerie recalls.

The flip side matters too. Excessive PTO usage might signal disengagement or job hunting. These patterns hide in payroll data most firms already collect but rarely analyze for team health insights.

The Toxic High Performer Problem

Every firm faces this dilemma eventually: what do you do with someone who delivers great results but poisons team culture?

“Toxic workers will take you down,” Lisa states plainly. While star performers deliver individually, the rest of the team suffers. The math is clear—protecting one toxic high performer often means losing multiple good employees.

But Lisa doesn’t jump straight to termination. “I start from a place of curiosity,” she says. “How did we get here? What’s going on with them?”

Sometimes it’s a personal crisis. Sometimes they don’t understand expectations. Sometimes they genuinely don’t realize they need to collaborate. Starting with curiosity creates space for course correction.

The same principle applies to clients. When Blake asks about unreasonable client demands on her team, Lisa’s response is swift: “They’re probably not going to be a client for much longer.”

Acuity holds both team members and clients to their values. “This is how we intend to operate,” Lisa explains. They regularly review their client base to ensure alignment, not just to cull unprofitable work but to protect team wellbeing.

Navigating Industry Change With Compassion

The pace of change creates another empathy challenge. Many experienced accountants built careers on consistency and process. Now they’re asked to develop entirely new skills.

“We liked that about them for a really long time—that they followed the process and they didn’t question the process,” Lisa observes. “Now we’re asking them to talk to clients, and they’ve never had to talk to clients. They just had to fill out the form.”

With AI transforming the profession, these changes feel overwhelming to some team members. The empathetic response isn’t to abandon these people but to “bring those people along at their pace as well as the pace of the industry.”

This is where hiring for adaptability becomes crucial. Lisa looks to new graduates who see AI as normal, not threatening. “They’re unafraid. They will just try anything,” she says. These digital natives may help bridge the gap for more experienced team members struggling with change.

Taking Action This Week

Valerie offers practical advice for leaders wanting to be more empathetic: pause.

“Taking that time when something happens, when there’s an experience with a worker or team dynamic and saying, okay, we’re going to sleep on it,” she suggests. This fights the instinct to immediately jump in and solve problems.

Pausing allows you to ask better questions rather than make assumptions. It could be personal challenges, professional struggles, or something else entirely. Without that pause, you might treat symptoms instead of root causes.

Lisa adds another suggestion: engage your team in discussing a problem and just listen. “They will often lead with things that are coming from a place of fear or concern,” she notes. Understanding these underlying worries helps you address real issues, not just surface problems.

Your Role as an Advocate

Perhaps the most important mindset shift involves how leaders see their role. “I am their number one advocate,” Lisa says about her team. “My role is not just to drive them to production, it’s really to advocate for their needs.”

This means creating multiple channels for support, recognizing not everyone feels comfortable approaching their direct supervisor. “If I’m not the person that you can reach out to, I promise you, I have paths for you to go raise your concern,” Lisa tells her team.

The business case remains clear throughout the conversation. In today’s environment where good people are “really hard to replace,” protecting team culture isn’t charity—it’s strategy. Firms that recognize their people as “the engine” and act accordingly will outlast those clinging to the burnout model.

Listen to the full episode to hear more practical strategies for implementing these changes in your firm. Lisa and Valerie share specific tips on creating buddy systems for coverage, working with HR consultants, and building workflows that respect both deadlines and humanity. Their insights offer a realistic path forward for firms ready to lead with empathy while maintaining business success.

The End of Data Entry and What It Means for Your Tax Practice

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Elizabeth Beastrom left public accounting 30 years ago because she was sick of rekeying data into tax returns. Now, as President of Tax and Accounting Professionals at Thomson Reuters, she works to make sure no accountant has to do that mind-numbing work ever again.

“I was a lazy CPA,” she admits with a laugh during this episode of the Earmark Podcast. “I didn’t want to spend my time doing work that I didn’t think was necessary.”

In this conversation with host Blake Oliver, Elizabeth and Kirat Sekhon, Thomson Reuters’ Head of Technology, map out their vision for automating the entire tax workflow, from gathering documents to delivering returns. They want listeners to know that AI-enabled firms are going to outcompete everyone else, and the shift from compliance to advisory isn’t optional anymore.

Why Tax Firms Can’t Keep Doing Things the Old Way

The numbers tell the story. Fewer people are taking the CPA exam while more accountants retire every year. Meanwhile, tax complexity keeps growing, which means more demand for services with fewer people to do the work. Throw in private equity firms buying up practices and pushing for efficiency, and you’ve got a perfect storm.

But it’s not just about headcount. The new generation of accountants expects modern tools that actually work together—not the clunky desktop software their predecessors put up with.

“They expect to use intuitive and connected tools,” Kirat explains, “so they have a better experience while they deliver value to their customers.”

So why has tax software stayed stuck in the desktop era while cloud accounting tools have taken off? Kirat points to two reasons. First, tax calculations are hard to get right, and once you build something that works, nobody wants to break it. Second, accountants themselves haven’t pushed for change. When you’re working 80 to 100 hours during busy season, the last thing you want is to learn new software.

“The term SALY—same as last year—still comes through,” Elizabeth notes. “You found a way to do it and you like to replicate that. Change is hard, especially when you have to introduce that to the firm when you’re working 80 to 100 hours a week.”

But resistance to change is becoming dangerous. Elizabeth’s own exit from the profession 30 years ago shows what happens when the work becomes too tedious. Back then, she discovered she loved the advisory side, including talking to clients, understanding their businesses, and making recommendations that actually helped them improve. But she was stuck doing data entry.

“I would spend time talking to my customers,” she recalls. “Some of my best inputs came from the people in accounts payable or accounts receivable. I would get a detailed understanding of their process.” But then she’d have to go back to rekeying tax data, and the contrast was too much.

Building the “Bookends” Around Tax Prep

Thomson Reuters isn’t trying to fix one piece of the tax workflow; they’re automating the whole thing. Their strategy focuses on creating what Elizabeth calls “strong bookends” around their core tax engines (GoSystem Tax, CST, and UltraTax).

The front bookend came through their acquisition of SurePrep three years ago. Practitioners dump all their client documents into the system, and SurePrep automatically classifies them, pulls out the relevant numbers, creates a binder for review, and fills in the tax software. No more manual data entry.

“That’s a huge time savings when you don’t have to spend time doing all of that manual data entry,” Kirat says, “and they can actually focus on the return.”

The back bookend arrived with SafeSend, acquired earlier this year. It handles return delivery, e-signatures, and payment collection, eliminating what Elizabeth remembers as the nightmare of printing, mailing, and faxing documents back and forth 30 years ago.

What’s different about Thomson Reuters’ approach is they’re keeping these tools open to work with competitors’ software too, not just their own tax products.

“It is an open, curated ecosystem,” Elizabeth emphasizes. “If customers find value in part of their workflow, we want to make sure we connect to it.”

Beyond just automating existing steps, they’re trying to eliminate unnecessary work entirely. Take the client questionnaire—that paper organizer Blake’s mom still fills out by hand every year. Thomson Reuters wants to “kill the questionnaire” by using AI to pre-populate information from prior returns and only ask for what’s actually new or missing.

The next frontier is what Kirat calls “agentic AI,” systems that don’t just handle one task but orchestrate entire workflows. These AI agents can use multiple Thomson Reuters products in sequence, making decisions along the way to get a return from start to finish with minimal human intervention.

But everything the AI does needs to be auditable. Kirat stresses that any AI handling tax work must show exactly what decisions it made and why.

“Our customers expect the work product of an accountant to be 100% accurate,” she explains. “Without providing that audit log with the decisions and choices and confidence levels, we’re missing the mark.”

Blake agrees enthusiastically, sharing his frustration with current AI tools that don’t show their reasoning. “I want to know why it matched this transaction,” he says. “There’s an AI conversation for each one of these transactions. Why not give that to us?”

The Shift to Advisory Can’t Wait

If machines can prepare returns faster and more accurately than humans, what exactly are clients paying for? Two-thirds of Thomson Reuters’ customers say they want to shift to advisory services, but most don’t know how to actually do it.

Enter Ready to Advise, launched in June 2024. The tool takes everything from a completed return and analyzes it against potential tax strategies based on that client’s specific situation and goals.

“It will quantify the savings,” Elizabeth explains. “It will ask for more information to get to a range. It will allow you to have that discussion where you can say, ‘Hey Blake, I noticed from your 1120-S filing some potential strategies you should take.'”

Then it walks you through implementing those strategies and produces client-ready documentation. For firms struggling to move beyond compliance, this is huge.

But technology alone won’t fix the business model problem. Clients have been trained to expect strategic advice for free. “I might call my accountant and say, ‘Hey, tell me what this big beautiful bill does for me this year?,’ which is code for don’t charge me for this,” Elizabeth says, capturing the conundrum perfectly.

That’s where Practice Forward comes in. It’s Thomson Reuters’ tool for helping firms understand their worth and develop advisory pricing models. The goal is shifting from hourly billing for returns to year-round advisory subscriptions.

Ready to Advise also solves a talent problem. Traditionally, you needed years of experience before you could offer meaningful tax advice. But with AI assistance grounded in Checkpoint’s content (maintained by over 4,500 subject matter experts), newer staff can contribute to advisory work much sooner.

“That junior associate’s experience, paired with all the knowledge that there is available in generative AI today, is incredibly powerful,” Kirat notes.

Blake shares a personal example that drives home the value of advisory over compliance. His tax preparer advised setting up a C-Corp to potentially qualify for QSBS treatment, which could save millions in taxes someday.

“I can’t even quantify the value of that,” Blake says. “But that’s why I’m willing to pay thousands of dollars for a tax return. It’s that insight, not the return.”

Meanwhile, DIY tax software keeps getting better. Blake describes doing a business return himself using consumer software with ChatGPT open for research. The same process would have taken hours of manual work just a few years ago.

Firms that stick to just preparing returns are going to get squeezed from both ends.

“AI-enabled professionals and firms, they’re going to outcompete and outperform,” Elizabeth warns, “because they’re going to be able to do it faster, better and get to this advisory, which our clients want.”

What to Do Right Now

So where should a traditional tax firm start? Elizabeth recommends figuring out what you hate doing.

“What are your pain points that you hate to do?” she asks. “There’s a pretty high likelihood that I or a talented person on my team is going to be able to say, ‘This is how we can solve that for you.’”

The technology exists today. SurePrep can handle document gathering. SafeSend can automate delivery. Ready to Advise can help you identify tax-saving opportunities. CoCounsel can answer complex questions using curated, expert-verified content. The audit logs are there to verify everything the AI does.

The harder change is mental: accepting that the compliance work that defined the profession for decades is becoming commoditized, and the future belongs to firms that embrace automation as the foundation for higher-value advisory services.

Elizabeth even suggests bringing these concepts into accounting education to attract new talent. Currently, tax courses focus on rules and calculations rather than strategy. After all, accounting is still “the language of business,” as Elizabeth was told as an undergraduate. The difference is that AI can now handle the grammar and spelling, freeing professionals to focus on telling the story.

The transformation won’t be easy, but it’s not optional. As Elizabeth learned when she left the profession out of frustration with mundane tasks, talented people won’t stick around if the work doesn’t engage them. The good news is that automation finally makes it possible to eliminate the drudgery and focus on what really matters: helping clients succeed.

Listen to the full conversation with Blake, Elizabeth, and Kirat for more insights on preparing your firm for the automated future of tax.

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.