The Accounting Podcast

 

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Hasan Minhaj - Patriot Act: [00:00:18] Hello, everyone, it's Hasan Minhaj. Tax Season is officially here, and I know how stressful that can be ... Let's go ahead and talk about 1040 forms. 1040. 10 ... 40 ... (from Hasan Does Tax ASMR, Patriot Act Digital Exclusive, Netflix )

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This episode of The Cloud Accounting Podcast is sponsored by Jirav. Jirav sounds a lot like giraffe, and that's no accident. Giraffes are the tallest animal in the world. That gives them a great view. Our goal at Jirav is to give you a similarly great view of what's going on with your business. We do that by helping you understand where your business has been and, most importantly, predict where it's going. 

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Blake Oliver: [00:02:31] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.

 

David Leary: [00:02:34] And I'm David Leary.

 

Blake Oliver: [00:02:35] Well, it's July 12, and I just remembered that I need to do my taxes. Tax Day is coming up. 

 

David Leary: [00:02:41] Yeah, three days. Three days.

 

Blake Oliver: [00:02:43] I've got three days to get it together. I don't really want to.

 

David Leary: [00:02:46] I'm guessing, for a lot of our listeners, though, by the time they listen to this, they'll be done with Tax Day, so we should say congratulations and welcome back!

 

Blake Oliver: [00:02:52] You made it!

 

David Leary: [00:02:53] You've made it to the end, just in time.

 

Blake Oliver: [00:02:57] I've got some tax stories this week about tax fees jumping significantly. So, that's some good news, I suppose, if you are reaping the benefits of that yourself. As a partner, it's nice to know that tax fees are rising more quickly over the last two years than in the past. I've also got, of course, a ton of PPP news. The PPP loan amounts were released by the SBA, and Treasury last week; I think on the day we recorded. So, we missed it, but that's good because there's been a whole week of news all about all the people who received the PPP.

 

David Leary: [00:03:32] Oh, it's just great headlines.

 

Blake Oliver: [00:03:34] Oh, yeah.

 

David Leary: [00:03:35] The headlines, we could just read, and read, and read, and read, which ... I feel like that summarizes the whole week. Should we just start with the PPP? Should we start with-

 

Blake Oliver: [00:03:42] Yeah, let's do the PPP. That's the big news.

 

David Leary: [00:03:47] All right, the big news [crosstalk] 

 

Blake Oliver: [00:03:47] If you missed it, the big news is that, on July 6, Treasury, and the SBA released loan-level data regarding PPP loans. All loans over $150,000 were reported with names, addresses, NAICS codes, the industry code, zip codes, business type, demographic data, nonprofit information, the name of the lender, and the number of jobs that were supposedly supported by the PPP loans, allegedly, and then, a range.

 

[00:04:21] They didn't give the exact loan amounts, but they gave a range, such as between $350,000 and $1 million, or between $1 and $2 million. Because it was only loans over $150,000, it's only about 15 to 25 percent of the loan dollars approved. All the loans below $150,000 stayed anonymous, and the SBA just released aggregated information. So, David, I wanna ask you, of all the headlines that came out this week, what were your favorite? Who are your favorite famous PPP loan recipients?

 

David Leary: [00:04:54] All my articles are up here, and I have all my headlines, and I also have all the little thumbnails of images. To show you how vast and wide this went, one of them is about- it's a picture of The Westin, in Cleveland, and how a Ukraine money laundering company from a decade ago is tied to this loan here. I got a picture of Kanye West and his companies. 

 

Blake Oliver: [00:05:13] Yes!        

 

David Leary: [00:05:16] Grindr, the dating app, which I actually thought was my funniest of all, because - I'm gonna go back to seventh-grade humor - Grindr, the dating app, they were able to retain 69 jobs. I thought that was a little bit funny.

 

Blake Oliver: [00:05:28] Really?!

 

David Leary: [00:05:30] So, there's that, and then millions for hate groups. I got a picture of a Confederate flag. Religious organizations, P.F. Chang's again. My favorite - Ayn Rand Institute.

 

Blake Oliver: [00:05:41] Yes.

 

David Leary: [00:05:43] They took a loan. 

 

Blake Oliver: [00:05:43] I was gonna save that one for the end because that is my best, but you saw that, obviously. [Ann] Rand, author of- or Ayn Rand, I should say - Atlas Shrugged, The Fountainhead ... The whole philosophy of Objectivism, where you should not be dependent on the government at all. The organization that promotes her ideas took a PPP loan. Just the irony of that is fantastic. Grover Norquist, the famous anti-tax guy, who once said, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub," took a PPP loan; at least his organization, his Libertarian organization did. 

 

[00:06:19] As you mentioned, Kanye West, and Yeezy - it's a billion-dollar company - received millions of dollars. Catholic Church got a bunch of money, which, depending on your position on the Catholic Church, that's either good or bad, given that a bunch of these dioceses that got the money also are paying millions of dollars into settlements for sexual-abuse cover-ups. You mentioned a few others- P.F. Chang's. I had Pearl Jam; Pearl Jam, the band.

 

David Leary: [00:06:45] Oh, I did not know that- 

 

Blake Oliver: [00:06:46] They got a loan between 350K, and a million. Jeff Koons, the famous artist. He got a loan of $1 to $2 million, or at least his business did. Fun fact, Robert Mnuchin, the current Treasury secretary's dad once bought one of his paintings last year for $91 million dollars. The Soho House Members Only Club, TGI Fridays ... Church of Scientology got a loan. Paul Pelosi, Nancy Pelosi's husband, one of his businesses got that. Of course, a bunch of businesses connected to Jared Kushner, and Ivanka Trump got loans. I thought that there were some political outlets or some news outlets to try to go after the Trumps for this, and I felt like it kind of fell flat because basically everybody took this money on both sides of the aisle - liberal, Democrat, Republican, conservative- as we saw, Libertarian even, which I think is the funniest thing about all of this. 

 

David Leary: [00:07:40] Everybody is being called out. There's an article from Stephen Brown. He and his wife have an accounting firm, Ledger Gurus, and he wrote an article on LinkedIn; an editorial type article about let the Paycheck Protection Program shaming end. Because this is very- it's very headline-based; it's very sensationalized. He tells the story about how their firm, themselves, they took a loan and how it really helped them. Then, to see the help that it's caused for all their clients, as well, right? 

 

Blake Oliver: [00:08:09] Right. 

 

David Leary: [00:08:10] There's a lot of good that has come out of the PPP loan from the people that actually got the money. But, in a way, I don't have a problem with who got the money. My thing is it was stacked unfairly in the beginning.

 

Blake Oliver: [00:08:23] Right, as we have- 

 

David Leary: [00:08:24] It was supposed to be first come, first served, and it was not set up to do that.

 

Blake Oliver: [00:08:30] Mm-hmm. 

 

David Leary: [00:08:30] As long as the money was- the loans were taken out, and the money was used to pay employees on payroll, and that all reconciles through, I don't think there's problems with this ... You're right, it made great headlines this week, but as soon as you dig into the articles, there's really not much there - over, and over, and over again.

 

Blake Oliver: [00:08:48] Well, some businesses knew that the negative PR was coming and wisely decided not to take the money. Venture capital companies, in particular, were very aggressive with telling their portfolio companies not to apply for PPP money. One of them got caught up in some of the loan-database errors. I don't know if you saw this story on CNBC; came out right after the big CSV file came out from SBA.

 

[00:09:16] Apparently, two big names were on that list in the tech world - Bird, the scooter company, got listed as having received a loan, so the press was going after them. Apparently, they only talked with their bank about applying, but they never did; but they got on this list because the bank- it sounds like the bank applied for them in advance, but then never filled out the loan, or never completed the loan.

 

[00:09:41] This is one of the issues with the whole SBA database and process that we've pointed out in the past, which is that the information is only flowing one way to the SBA. That document, the big CSV file, that's like 125 megabytes with- they have hundreds of thousands of loans on it. That's just what was applied for, not necessarily what was actually disbursed. We only have a partial picture in this information, and there are a lot of errors. So, Bird is listed, even though they never received it. A Wisconsin woman, named Geraldine Brimley, is listed as having been approved for a loan worth up to $10 million - an individual. She apparently-

 

David Leary: [00:10:21] I think I read in the article, didn't she only get like $3,200 or something? So, completely- 

 

Blake Oliver: [00:10:26] She applied for $9,300, less than $10,000, through Radius Bank. She only received $2,300, but because of an error when somebody entered her loan, they put in a bunch of extra zeros. So, it showed her as having applied for $9.3 million, and that's what made it onto the SBA's spreadsheet. She was obviously very confused, when CNBC contacted her to try to find out how she, as an individual, got a loan for that amount. 

 

[00:10:51] Something close to our industry, in particular, our world, Pilot, the online accounting-bookkeeping company, is listed. So, this is very strange. Index Ventures, the firm that- it was one of the investors in Pilot ... Pilot is like Scale Factor, one of those accounting firms with engineers ... Their firm, their VC firm, one of their investors, Index Ventures, was listed in this document as having been approved for a $2 to $5 million loan. CNBC and the press started calling up Index Ventures because they're one of the only ones.

 

[00:11:21] Apparently, it's listed as Pilot having applied for the loan, but somehow, Index Ventures' name got on the list. So, the question is, did Pilot get an SBA/PPP loan? If so, is Index Ventures gonna make them give it back? This is all a big deal because they are VC-funded, and it's kind of considered bad form to take a loan if you're VC-funded. A little bit of a PR nightmare, I imagine, for the folks over at Pilot.

 

David Leary: [00:11:49] Well, Going Concern is tracking ... They have already, apparently, been tracking a layoff database, or a layoff spreadsheet of Top-100 firms who are laying people off. They've been tracking this during the COVID pandemic. Now, they've crisscrossed it with the people who've taken out loans. Now, they're now they're tracking the Top-100 accounting firms who've taken out PPP loans, because that's in the data, as well.

 

Blake Oliver: [00:12:12] Yes. A lot of firms got PPP loans. So, I'm also cross-referencing this with the CPA Trendlines analysis that they did. CPA Trendlines says that 6,610 tax, accounting, payroll, and bookkeeping firms, so far, received millions in SBA-PPP money. Then, you have that Going Concern article with the Top-100 firms. Somebody on Reddit went through and correlated the firms with the Accounting Today Top-100 list. So, this is really interesting.

 

David Leary: [00:12:43] Yeah, it's a crisscross of some data from ProPublica, as well.

 

Blake Oliver: [00:12:46] Yeah. 

 

David Leary: [00:12:46] Again, this was a great headline: "Here Are the Accounting Firms That Received PPP Loans Because We Know You Want to Know." Essentially, it's just kind of like a blanket report of data. It's not even- it was more exciting to read it, the headline, than when I sat down to digest it and look at it. I was like, okay, they're just ... Somebody's crisscrossed all this data. Ultimately, if anybody should be taking these loans out, it should be the accounting firms because they're the ones that had to employ people to actually process them for everybody else.

 

Blake Oliver: [00:13:15] Well, but there's also a question as to did these firms really need the money? Did they have that need, given that accounting firms are busier than they've ever been? We have more work than we can handle. Isn't that what everyone's complaining about?

 

David Leary: [00:13:28] And that was supposedly one of the first qualifying factors is you have this economic uncertainty.

 

Blake Oliver: [00:13:33] Right, which just proves that that term is completely meaningless. If 68 firms on that Accounting Today Top-100 list, who are probably busier than they've ever been because they're helping clients with PPP; everybody's needing new cashflow projections ... If you're a good accountant, you have more work than you can handle right now, as long as you're willing to do different things than you've done in the past.

 

[00:13:55] So, 68 firms out of the Top 100 got these loans. I think everybody above 20 was too big because you had to have 500 or fewer employees. Of those 68, eight of them have done layoffs or have cut pay. That includes Carr, Riggs & Ingram, Friedman, Prager Metis, Whitley Penn, Berdon, Aprio, Grassi & Co., and   SingerLewak. Singer, for instance, laid off 25 percent of their staff and got a $2 to $5 million PPP loan. The spreadsheet says that they retained 291 jobs. But I guess you can do that- you can lay off 25 percent of your staff and get a reduced forgiveness amount because you have to keep 75 percent of your staff or 75 percent of your payroll employees. 

 

David Leary: [00:14:44] You didn't even have to take the loan out for your entire payroll, either.

 

Blake Oliver: [00:14:47] Right. 

 

David Leary: [00:14:47] You could've figured, hey, when this is all said and done, we're only gonna have 75 employees and just take out the loan for 75 employees. Then, if you have a layoff, it's not- you're not breaking any part of the deal here [crosstalk] 

 

Blake Oliver: [00:14:57] You can keep partial forgiveness. You can make that choice. So, interesting, right? There's some comments in the thread. Goodwill_Impairment said, "It's super-frustrating that our elected officials did not make these loans need based. I saw a ton of businesses that remained open and are likely in their best fiscal year ever. They took out loans that essentially act as a bonus for the owners." Then, a reply to the comment is, "If that were the case, it would have taken months at best to get the money issued. They said that they knew it wouldn't all go to the places that needed it, but they wanted the money to be issued and jobs to be saved as soon as possible. Had they waited, people would have been asking what took so long?" That's your argument, David, in the past, which is we've got to get the stimulus money out as quickly as possible, so we can't put all these strings attached to it, right? 

 

David Leary: [00:15:42] Yeah, it can't be locked up.

 

Blake Oliver: [00:15:43] No. 

 

David Leary: [00:15:43] The point is, it has to be spent. It's got to get out there and spent. There's some good positive PPP news that's kind of out there- 

 

Blake Oliver: [00:15:51] Okay, what's that?

 

David Leary: [00:15:52] A couple of things that are interesting. The AICPA had another one of their weekly webinars. The real takeaways in this is A) people are gonna be doing forgiveness applications all the way in 2021; then, they're kind of half-hinting that we're gonna see a lot more clarity and more sophisticated forgiveness tools and finally, more complete guidance. There's so many questions that need to be answered to just kind of wait before you apply for forgiveness.

 

Blake Oliver: [00:16:21] Well, that's why they're saying, "Don't apply now. Wait until we have more information."

 

David Leary: [00:16:26] Yeah.

 

Blake Oliver: [00:16:27] That's why what's gonna push all this into the fall is it's quite a long timeline in terms of the deadline for applying for forgiveness. We've got quite a while.

 

David Leary: [00:16:35] Then, your buddy, Steven Mnuchin, he is talking about, they wanna do another PPP. They wanna do an extension.

 

Blake Oliver: [00:16:40] Mm-hmm. 

 

David Leary: [00:16:40] He's working with Marco Rubio and Ben Cardin, so it's across party lines- on doing another extension, but this extension would be super-super-targeted to just businesses that really need the money and small businesses. He's talking about that's on the table. We were talking about before, the PPP-four with the four Ps. 

 

Blake Oliver: [00:16:58] Yes.

 

David Leary: [00:17:00] If you've taken a loan, and you've used it, there's gonna be this program to take another loan. That's starting to come down the pipe, as well. He does get into a little bit about PPP forgiveness. This is where - we talked about it before, 100-percent rubber-stamp forgiveness could be coming. He said, "In terms of PPP loan forgiveness, the vast majority of these loans were hardworking businesses where the money went to pay employees, and they will be forgiven." Mnuchin indicated that PPP loans in excess of $2 million will go through a thorough review before they are forgiven. So, essentially, the way he's saying this is, if it's more than $2 million, it's gonna get reviewed. If it's under $2 million, it's just gonna be forgiven. I think we're going to see rubber-stamp forgiveness come through.

 

Blake Oliver: [00:17:43] We're talking millions and millions of loans. They're gonna have to be really picky. So, by the way, if you want to go look at this data for yourself, ProPublica put together an interactive website, where you can dig into the PPP loan data. It's at projects.ProPublica.org/coronavirus/bailouts. It's really cool. You can put in your zip code, and you can see what companies got PPP loans over $150K in your zip code. You can put in an industry; you can put in a specific business name; you can put in a business type. Just type it into the search, and it filters the list for you. Really neat.

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This episode of The Cloud Accounting Podcast is sponsored by AccountingSuite. AccountingSuite is cloud accounting software that acts like a customizable ERP system. It lets you start out with just the features you need today and, in the future, as your business grows, you can easily add AccountingSuite extensions to give you the features you need.

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David Leary: [00:19:36] So, we've talked about Wells Fargo in the past-

 

Blake Oliver: [00:19:38] Yes.

 

David Leary: [00:19:38] -because of boneheaded things Wells Fargo has done, et cetera, et cetera. Wells Fargo has actually done something really interesting with their PPP loans. They brought in $400 million in processing fees from processing PPP loans. What they're gonna do with it - sure, it's a save face, but, hey, they're stepping up; they're doing it - they're gonna take that $400 million dollars and turn it into a small business aid program. I don't know if it's grant-based, or loan-based, but essentially they're gonna create a fund to really help small businesses and nonprofit organizations, which is kind of good, right? They just didn't pocket that $400 million dollars; they're putting it back to work for small businesses.

 

Blake Oliver: [00:20:16] Yeah, and I read that Chase and B of A are doing something similar. They took in even more in fees from the PPP, something like $1, or $2, or up to $3 billion in fees. So, they are going to- they have committed to donate their profits from the PPP to something charitable that targets small businesses; targets their clients, basically. For those who have forgotten, the banks actually did pretty darn well in taking in $24 billion in fees from all of this.

 

[00:20:49] Some of the smaller institutions, more than 30 banks who did PPP loans, could earn, this year, as much from the PPP loans as they reported in net revenue for all of 2019. That's according to S&P Global Market Intelligence. They did pretty good. I haven't heard much recently about any of those agent fees being honored or anything like that, so I don't think that's gonna happen. There were the CPA firms, who were angling to force the banks to pay agent fees. There was a lawsuit that, I guess, people were being recruited; a class action lawsuit against the banks to force them to pay the agent fees. I haven't heard anything about that. Probably, that'll take years to go through the courts.

 

David Leary: [00:21:31] I have an article about a small bank that became a top 10 PPP lender, or actually, they were number 13 of all the U.S. lenders. It's a New Jersey bank, Cross River. They distributed $5.4 billion in PPP funds.

 

Blake Oliver: [00:21:45] So, I used Cross River. That's how I got my PPP loan. They had an online application through their website. It was super-easy, and I was really impressed. 

 

David Leary: [00:21:54] What they did is they automated the process. When it was all said and done, their entire net revenue last year was $96 million. They pulled down $160 million in fees.

 

Blake Oliver: [00:22:06] Wow.

 

David Leary: [00:22:07] They did more than Citi; they did more than BNY. They just had this home run. The way they did it is they partnered with all the tech companies.

 

Blake Oliver: [00:22:17] Hmm. 

 

David Leary: [00:22:17] So, yes, they'll probably have to share this revenue, but they partnered with Gusto, Kabbage, Veem, QuickBooks. They basically turned the gears behind a lot of those loan programs because they built APIs and automation and figured out what they could automate and they didn't have- you've heard about these bank stories of these people working 40 hours a day, just processing the loans physically- the paperwork for these loans. 

 

Blake Oliver: [00:22:42] Yes. 

 

David Leary: [00:22:42] They just automated the whole process and because of that were able to compete with the big boys.

 

Blake Oliver: [00:22:46] That's amazing.

 

David Leary: [00:22:47] Then, on top of that, they didn't have a lot of bugs; they just were a well-oiled machine, so they just crushed it. That's kind of a good story, and kind of transitions us out of PPP into apps and tech, maybe. I don't know, unless you have another PPP story-

 

Blake Oliver: [00:23:00] No, we can jump into- I wanna hit tax, but we can jump into app news first.

 

David Leary: [00:23:08] So, Xero, they had their blog post of some new features that were in Xero. I think the big takeaway there is there's a lot of this catch-up. You can do one thing in QuickBooks, and you can do it in Xero; one thing in Xero, you can do it in QuickBooks ... So, now that QuickBooks rolled out the ability to email in bills to QuickBooks Online and then, they rolled that out in Australia. Now, Xero, you can email a bill to Xero.

 

Blake Oliver: [00:23:35] I thought you could do this already. I thought this was a thing that existed. I saw this, too, and it didn't make sense to me. I don't know ... 

 

David Leary: [00:23:41] I think it was just receipts before, and now, you can send bills.

 

Blake Oliver: [00:23:44] Oh, okay ... 

 

David Leary: [00:23:45] Xero got Hubdoc. Then, you could send those, first. Then, QuickBooks built their own, and that was just receipts. Then, QuickBooks added bills, and now, Xero added bills.

 

Blake Oliver: [00:23:54] Gotcha.

 

David Leary: [00:23:55] You can now email bills to Xero. This functionality is available to all customers on Starter, Standard, or Premium plan, Early, Growing, and Established plans in the U.S.; it sounds like you can do this in the U.S., as well. It's just not in Australia. So, now you can do receipts and bills through email.

 

Blake Oliver: [00:24:09] Oh, there's one that I really liked that I used, in this update. Now, you can export to PDF from the layout editor of all your reports in Xero - the new type of reports. They've still got the old ones, but then they've got that new layout editor. Now, when you are editing, and you're laying out the report, which is in a separate screen, you can preview it very quickly so that you don't have to then save the layout and then go view the published report. Saves so much time; so much better that way.

 

David Leary: [00:24:36] Oh, so the previous workflow was like it prints to a PDF; you have to go open that up in a PDF. You were like, "Aww, I don't like how that's laid out," delete it; go do it again- 

 

Blake Oliver: [00:24:44] The previous workflow was actually worse than that. It was you go into the layout editor, you lay out the report using the hierarchy, then you save that. That takes you back to the view of the report in your web browser. Then, you have to click a dropdown to expert to PDF to see what it actually looked like printed out. So, it was a three-step process. It was terrible. This is much easier.

 

David Leary: [00:25:07] Was this on one of your lists? You know, you had your list of Xero issues you've always wanted fixed forever ... Did they finally solve one of Blake's list issues?

 

Blake Oliver: [00:25:15] No. This was not even on the list, because I'm still annoyed that you can't do a recurring 'spend money,' or 'receive money' transaction. I think that is the most idiotic thing. If I have an automatic debit from my bank account for my rent, I don't wanna have to make a recurring bill that then matches up with that debit. I just wanna put in a 'spend money' transaction on that date every month ... Anyway, I won't go off on a rant. 

 

David Leary: [00:25:42] It's the same thing ... In QuickBooks, whenever I view open invoices, or the Invoices screen, I always click and sort the date column in reverse order because I want the newest wants the top of the report, the ones I just recently entered; not an invoice I made in January to be at the top of the report. I've been doing a lot of Zoom calls with accountants lately, and they all do the same thing. As soon as they get there, they click the date and resort it. I'm like, yeah, this is a problem.

 

Blake Oliver: [00:26:07] Yeah, it should just stick with how you sorted it the last time. It should just remember, right? 

 

David Leary: [00:26:11] Yeah. It's such a simple little thing that would be a huge victory for everybody - the amount of wasted clicking; that date doesn't stick.

 

Blake Oliver: [00:26:18] It's so annoying, and these are the things that really bug us, but they never seem to get priority because they don't bring in new users. They're not big, flashy features that generate revenue. I think they do, long term, because people get frustrated with enough of these little things, and they're like, "Screw it. I'm gonna go to some other system."

 

David Leary: [00:26:39] So, what else? Square bought Stitch Labs.

 

Blake Oliver: [00:26:43] Square is the giant payment processor. Stitch Labs, what is that, for our listeners who aren't familiar?

 

David Leary: [00:26:49] Stitch Labs is kind of an inventory player. When e-commerce really started coming on, there was really hard ways to get your e-commerce data into accounting systems; arguably, it's not perfect yet. I think there are some companies that are doing it better than others, but it's still a little messy to get your e-commerce data moved into your accounting system because inventories have to be kept in order, especially if you're on multiple e-commerce systems.

 

Blake Oliver: [00:27:13] Yes. 

 

David Leary: [00:27:14] If you sell a medium shirt on this site, the inventory's gotta be updated on the other site. They kinda played- they're stitching, all those things together. They built up some expertise, and some inventory management, channel management, fulfillment, and those types of things. They got acquired by Square ... Because Square has their whole seller organization, Square wants to get into the inventory game a little bit. 

 

Blake Oliver: [00:27:34] Well, this makes total sense, because Square started out for in-person point-of-sale transactions with their little card swiper, but that's not exactly the best business to be in, right now, because traffic into physical stores is declining or has, since the pandemic started. Stitch is perfectly positioned for multi-channel e-commerce.

 

David Leary: [00:27:54] Shopify is coming after Square; Square's going after Shopify. This is a way to make Square more robust on the e-commerce side of the business. The interesting takeaway in here, because I know some people have used Stitch Labs before with their clients and connecting it to QuickBooks. I think a lot of people always thought it was a little on the expensive side. So, Square already has stated, "Stitch Labs won't take on any new customers, and the product will continue to operate for existing customers until spring to 2021." But longer term, they just plan to sunset the whole thing and let the team focus on building tools for Square.

 

[00:28:25] This really reminds me of QuickBooks and Intuit's acquisition of Lettuce. That's probably five years ago, six- maybe seven years ago, now. Intuit acquired Lettuce Apps, which Lettuce Apps was a really small add-on for QuickBooks that did inventory. The thought was that's gonna become the inventory of QuickBooks Online. Basically, it's the same model - buy it, kill the app, and use that team to bring their knowledge, et cetera, to the existing platform. So, it seems very, very similar to that acquisition Intuit made of Lettuce back in the day. 

 

[00:28:58] Then [inaudible] some small news ... Venmo is now going to introduce a feature to allow business payments. Right now ... You've probably even done it. You've probably paid somebody. I've done it; I think I've paid a landscaper. I think I've paid a housecleaner before on Venmo. I know it's not a business account, but they're avoiding fees, so they just have their Venmo set up, and I just paid them the money. I mean, ultimately, it's on them. If it's not a business [inaudible], it's on them. I'm just a consumer. They're dipping their toes into the small businesses to accept payments. I saw an article that Zelle is also gonna now offer the ability for peer-to-peer payments for small businesses, as well, for new clients. 

 

Blake Oliver: [00:29:38] Canopy did a survey of tax-prep fees, and there was a big jump in the last two years. That's the big takeaway from this survey that tax-prep fees increased by over 10 percent in two years. Normally, it's about five percent a year. Last two years, it's basically increased annually, at double the rate, which makes sense, given all of the changes in the tax system that have happened recently, right? 

 

David Leary: [00:30:06] These are fees that I'm going to charge my clients to do their returns.

 

Blake Oliver: [00:30:09] Yes. It's broken down by the type of the firm. For an itemized 1040, the percent-fee increase over two years was 11 percent on average; a 1040 with Schedule C, also 11 percent. Now, a non-itemized 1040, that went up 26 percent. Oh, and one other little tidbit from the survey - flat-fee billing has become much more popular now. 81 percent of respondents are using flat-fee billing for tax returns versus the 19 percent that are still using hourly billing.

 

David Leary: [00:30:42] That's a huge jump. 

 

Blake Oliver: [00:30:42] Yeah, although we don't know how many previously were using flat fee versus hourly. That's not detailed here, over time, but it seems like a lot. It seems like a lot more than in the past.

 

David Leary: [00:30:53] Yeah, because I've seen surveys about this from Intuit before. I just don't remember it being in the 80-percent range.

 

Blake Oliver: [00:31:00] So, the Tax Day is, of course, July 15, which is in three days, as we record this. We talked last episode about how the AICPA declined to advocate for an extension- or not an extension, a delay of the tax deadline to the fall. But they are, interestingly, advocating for the IRS to waive failure-to-file, and failure-to-pay penalties until October 15, automatically.

 

[00:31:27] So, I was confused as to what is the difference? If you're gonna waive the penalties, why not just push the deadline out? I guess the reasoning here, which kind of makes sense to me, is that you wanna start the statute of limitations sooner rather than later because the longer you wait, then, the longer the IRS has to do audits. So, you start it now, and you get them to waive the penalties. It's effectively delaying the deadline - effectively - in many ways, but it also pressures your clients to get their paperwork in because they know the deadline is July 15, not October 15. So, it's kind like the best of both worlds. It actually is kind of making a lot of sense to me. Kind of a clever approach.

 

Blake Oliver: [00:32:08] The last bit of tax news I've got is President Trump's tax returns. Believe it or not, we're still talking about that, four years later. Nobody ever got to see Trump's tax returns before the last election, and it looks like we are not going to see them before this upcoming election. The U.S. Supreme Court issued a few decisions. They basically said that the State of New York can still seek President Trump's tax returns. They're not barred from that completely, but they also stopped the House from getting them before the election.

 

[00:32:38] So, the takeaway is, after the election, at some point, the State of New York might be able to get Donald Trump's tax returns. The big thing, in terms of presidential power, it was actually a big decision in that the court rejected the Trump administration's argument that the president is completely immune- a sitting president is completely immune from prosecution. They put a high bar on it, but they said that the State can still proceed, which I think is good, right? Because do we really want a sitting president who is completely immune from all prosecution? I don't think so. I don't think very many people would want that.

 

David Leary: [00:33:14] Yeah, I think it's a sound decision. We're not constitutional lawyers, here, but you're right. The president's, "Hey, just lets me be immune to all laws," doesn't really make a lot of sense.

 

Blake Oliver: [00:33:26] I mean, the president is not above the law, but it's also difficult because you don't want the president getting bogged down in lawsuits by the opposing party constantly, all the time, so it's a tough-

 

David Leary: [00:33:37] Unless they bring it on themselves. Yes, but I agree, this is unprecedented, the volume of this that's happening on there. I have something tax related.

 

Blake Oliver: [00:33:49] Okay. 

 

David Leary: [00:33:49] This goes back to the old stuff we covered before. Remember TurboTax, Free File- all this went down- 

 

Blake Oliver: [00:33:54] Seems like a long time ago.

 

David Leary: [00:33:57] Seems forever ago. Well, it's bubbled up again. There's a short Netflix, and I don't even know how to describe the show. It's called Patriot Act. It's a single host guy. He, I would argue, is a comedian, but what he does is he takes a topic for about a half hour, 25 minutes, and he goes really deep on one topic.

 

Blake Oliver: [00:34:19] Oh, yeah. This is the show with Hasan Minhaj.

 

David Leary: [00:34:22] Yes. He went deep on why doing taxes is so hard and essentially covered the whole ... Which we talked about for episode, after episode, after episode of the TurboTax Free File Alliance, and the Google suppression with the Google AdWords, and the ... This has been covered really deeply. He even played the same clip that we played on our show.

 

Blake Oliver: [00:34:46] I've gotta watch this.

 

David Leary: [00:34:47] If you've listened to us, you're not gonna learn anything new from doing this, but the fact that it's so mainstream, being covered like this is  pretty amazing. What he did, which is really genius, and I don't know why nobody's done this in a decade ... He created a website that says TurboTaxSucksAss.com. It's so simple. All he did is he went, and he got the free file link for TurboTax, H&R Block, TaxAct, TaxSlayer, ezTaxReturn ... Because all these companies are doing the same game. They've been hiding the free-file link [crosstalk] getting into the pay wall, and blah-blah-blah ... 

 

[00:35:23] The IRS has a web page like this already that you can go to and get links to every one of these. It's not like anything's new here, but the fact that nobody else has really taken the time to do this before - just spin up a one-page site with the five links on it, which would just solve this confusion. He's done that. He made fake commercials for it, and everything. So, it's worth a watch. If you have Netflix, go watch this, and go to the site. It's TurboTaxSucksAss.com.

 

Blake Oliver: [00:35:53] Okay, so there's this one video on there. The title is Hassan does Tax ASMR. Do you know what ASMR is? I think it's like when people make- they do sounds into microphones that some people really like hearing, like people eating.

 

David Leary: [00:36:05] Oh, yeah. That's it. It's a really long 20-minute. It's like a 15-minute promo video he has that doesn't even get into the details of the actual thing.

 

Blake Oliver: [00:36:14] I'm just gonna play a little bit of this video for our listeners.

 

Hasan Minhaj - Patriot Act: [00:36:19] Hello, everyone, it's Hasan Minhaj. Tax Season is officially here, and I know how stressful that can be. That's why I put together this soothing ASMR video to help you relax. So, go ahead, put this on in the background, and let's begin. Let's go ahead and talk about 1040 forms. 1040. 10 ... 40 ... 

 

Blake Oliver: [00:37:07] Now he's running his hands over a 1040.

 

Hasan Minhaj - Patriot Act: [00:37:10] Go ahead. Pull it out. Make sure you unclip them ... 

 

Blake Oliver: [00:37:22] So, that's TurboTaxSucksAss.com. Wow.

 

David Leary: [00:37:26] He even had a slide from Intuit. It had the old Intuit logo on it. That slide had to be at least 12 years old, maybe older. He had some video of Brad Smith doing the moonwalk in India. It's worth watching. I mean, I don't think- if you're a  listener  of The Cloud Accounting Podcast, and you were following this story, you're not gonna really learn anything new on it. Also, because you and I are a little bit more in this, in the weeds more, you actually also ... Because of that, I know the parts where maybe he wasn't totally correct.

 

Blake Oliver: [00:38:01] Well, what did he miss?

 

David Leary: [00:38:02] He made it out that Intuit and the tax companies are the ones that 100-percent, no matter what, are the ones keeping the government from doing any tax reform. Missing the point that there's a whole set of people in this country that actually believe that the IRS should not be doing our taxes for us and just sending us a signed statement. So, he kind of left out that piece of it, I really feel. This was done to attack TurboTax, specifically, and rightfully so. ProPublica ... the research has been done. It's hard to deny what happened. Again, if people have never heard about it, for the millions of people that don't listen to The Cloud Accounting Podcast and just watch things on Netflix, they're gonna be exposed to this story now.

 

Blake Oliver: [00:38:44] Well, that's good. He needed to make this stuff interesting, because if it's not interesting, then people don't pay attention. The only way you get change to happen is enough people have to pay attention, and we're not that entertaining- 

 

David Leary: [00:38:52] Well, I'm still mad. We should have spun up a one-page site presented by ... Why didn't we do this? That's what I'm really upset about. We should have spun up a one-page site and had a link to all five of these links on there.

 

Blake Oliver: [00:39:05] Well, next time. Next time, David.

 

David Leary: [00:39:06] Easy, easy ... 

 

Blake Oliver: [00:39:06] We have day jobs. So, did we get any reviews this week?

 

David Leary: [00:39:11] No reviews this week.

 

Blake Oliver: [00:39:14] Oh ... Okay. So, if you want to leave us a review, we really appreciate that. Where's the best place for people to do that, David?

 

David Leary: [00:39:19] Apple iTunes is always easy to do. You can do that from inside the-

 

Blake Oliver: [00:39:23] It's Apple Podcasts. 

 

David Leary: [00:39:24] Apple Podcasts. You can do that right from inside the app. Then, Podchaser's good because then that is really for the non-Apple people. That populates across a bunch of players eventually.

 

Blake Oliver: [00:39:34] So, review us on Apple Podcasts or Podchaser. Let us know what you think. You can actually write that in the review, and we will read it on the air. If you want, you can give us a call. We have a number. It is (202) 695-1040. That is (202) 695-1040. Leave us a message. We'll take a listen, and we might even play it on the air. If people want to get in touch with you, David, where can they do that? 

 

David Leary: [00:39:58] I'm @DavidLeary on Twitter, and I'm @DavidLeary on LinkedIn. If you contact me on LinkedIn, please just say you listen to the show. The amount of inbound I get on there, of which I'm sure are robots, is out of control.

 

Blake Oliver: [00:40:10] You can find me on Twitter at @BlakeTOliver. Until next week, David, stay cool; stay healthy.

 

David Leary: [00:40:17] Enjoy your vacation, folks. 

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