The Accounting Podcast

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:04] According to recent reports. Doctor Mehmet Oz. President Trump's nominee to lead the centers for Medicare and Medicaid Services, also known as CMS, paid no Social Security or Medicare taxes in 2023 and only negligible amounts in 2022.

David Leary: [00:00:18] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:25] Hello, and welcome back to The Accounting Podcast, your weekly roundup of news and analysis in the profession. I'm Blake Oliver.

David Leary: [00:00:32] And I'm David Leary and Blake. I want to say congratulations on a very well done interview. I think it was our previous bonus episode, maybe two bonus episodes ago. You interviewed Jeff Johnson. He's the IRS employee who got laid off part of the DOJ's cuts. And what I liked about that interview is he's at a point in his career where he was already a lawyer and an accountant, and then he went, this is his second career. He was going to go give back to the world, and he really talks about how much he cared about getting this job at the IRS. And a lot of people there cared, because I feel like one of the things with Doge was people are just working at the government and they don't care about the work they're doing. And I don't know if that's necessarily true. I think people genuinely care about the work they were doing, like in this case at the IRS. But it was a good interview. Well done. I must commend you. Regardless of what everybody else thinks of you. I think that's a that was a good interview.

Blake Oliver: [00:01:26] Well, I appreciate your positive review. I was just looking at the reviews of our show on Apple Podcasts, and it doesn't seem like all of our listeners are so pleased with me and our coverage in recent months. Uh, I'm going to go through some of these. How about this? Uh, here's one. Well, this doesn't have to do with the coverage. This is just about me. It says David Fan four stars would like the show a lot more if Blake would stop talking over David.

David Leary: [00:01:55] Haha.

Blake Oliver: [00:01:56] That's from L to the K. I'll try my best. I'll try. David.

David Leary: [00:02:00] One time it was a technical defect of the microphone, though. We had an issue.

Blake Oliver: [00:02:03] That's right. I didn't turn down your microphone. That was on you. Here's another one. Weird political turn. One star. Been following the show for a while, but they've gotten weirdly defensive about political issues, and it's become a huge turnoff and makes you look at the rest of their insight differently. Just speak about accounting issues and stop trying to go to bat for Elon Musk. Do I go to bat for Elon Musk? David.

David Leary: [00:02:26] I think you.

David Leary: [00:02:28] Sometimes revert back to your young Republican eras in high school. Being the president of the Young Republicans. I think sometimes you might slip in there, but my opinion on this is every story is an accounting story. That's why we have to cover these things. It's all accounting related at some level.

Blake Oliver: [00:02:43] Well and tax.

David Leary: [00:02:44] And tax tax.

Blake Oliver: [00:02:45] Too. And all of this.

David Leary: [00:02:47] And the IRS specifically.

David Leary: [00:02:48] Right.

Blake Oliver: [00:02:49] Doge is impacting the IRS. And, uh, you know, I mean, I'm sorry if you don't like politics and you need a safe space. If you need a safe space where you're not going to hear about Donald Trump or Elon Musk, go listen to the AICPA Town Hall. You will not be offended at all by that show. Uh, I mean, look, I'm not this is the thing that drives me nuts, okay? Because I didn't vote for Trump. Right? And I don't agree with a lot of the policies of the Trump administration, but that doesn't mean that I can't appreciate some things that they're doing. But I feel like in this political climate, if you support anything about the other side, then you are persona non grata. I can't find any good in I'm not allowed to find any good in the Trump administration. If I'm talking to somebody on the left.

David Leary: [00:03:41] And.

David Leary: [00:03:42] This.

David Leary: [00:03:42] Is.

David Leary: [00:03:44] I feel like our show and what I was proud about our show. This went on with accounting. I was at the QuickBooks world. You were in the Xero world, and it was like green versus blue. And everybody was like, well, if I'm a QuickBooks person. Xero sucks and Xero people like QuickBooks sucks, and you and I were able to bridge that gap and become friends and have a business together and have a podcast together. And the more extreme people are on this. And it was like that blinders. People were like, I will never use Xero. I will never use QuickBooks. And that's too extreme. You have to do what's right for the client in that same it's the same maturity that happened in the accounting space needs to happen politically for the whole country in my opinion.

David Leary: [00:04:18] Mhm.

Blake Oliver: [00:04:19] So I'm sorry Michael, but we can't just talk about accounting issues without talking about Musk because it's intertwined now. And what's going to happen to the PCAOB. What's going to happen to audit regulation? What's going to happen to the SEC. This all impacts us. We're a highly regulated profession. So politics and accounting are intertwined. And that's why we're talking about it. And I think it is working I think people like it. The numbers are up. More people are listening to the show. So, uh, you know, I'm not always going to get it right, and you're not always going to agree with me, but I'm going to do my best to try to figure it out. And I have zero interest in just repeating political talking points that I've heard and taking one particular side or another. And as you'll hear in this episode, uh, I'm not really a big fan of Trump's pick to lead CMS. Doctor Oz, who didn't pay any Medicare taxes even though he's going to run Medicare. And we're going to dig into the tax treatment for how that happened. How did he avoid paying any Medicare taxes on his self-employment earnings? Here's another here's another one. One star. Okay. When sticking to accounting, this podcast is all straw man arguments. Who's against finding fraud and waste? Literally no one. But they ignore the fact that Doge, run by teenagers with checkered pasts and little experience, are indiscriminately firing federal employees. They ignore the conflicts of interest where Musk, who has 38 billion in government contracts, is dismantling 11 agencies that happen to be investigating his companies. They don't mention that these unelected, non vetted individuals are granted access to our most sensitive data. I mean.

David Leary: [00:05:51] I didn't argue.

David Leary: [00:05:53] Against the 20 year olds. And then I was countered with everybody saying that's who does the audits at big firms. And I would argue, like I rest my case at that point, all the audit problems we have, it's 20 year olds doing the audits. But yeah, we have issues. There's issues with them doing this. There's no doubt.

Blake Oliver: [00:06:09] I don't know, I don't have firsthand knowledge of this, but my understanding is that these Doge people and look, I, I don't know if they're teenagers. I don't know what they're employees of the federal government. They work in the office of the president, and they have become employees of the Treasury in order to get access to that information. And I assume that they have to go through these background checks. So to say that there's like non vetted, there's nothing going on. I mean that's not true. Um, so like you know, I if you want to if you want me to share some information on the show, come on the podcast feed on YouTube and chat with us and let us know what you think. Uh, but, like, I'm not ignoring this. I know it all. I read about it, and we can't talk about everything on the show, so, you know, I like you don't want this to become a show just about doge, right? So we're not going to, like, dig into everything that there is. Um, I do think it is interesting that Musk, of course, has all these government contracts and I think like, that's part of the reason why he's on a vendetta to dismantle the federal government is that he has been so frustrated with the overregulation of many of his businesses that he's on, like a personal mission to get revenge. I think that's very likely.

David Leary: [00:07:21] That was the problem with Reagan, right? Didn't Reagan got involved in politics because at that time he made like $250,000 on a movie and 90% of it got taxed, and he wasn't happy, and that's why he got into politics. So I think there is a direct relationship. And I also can see I can I can sympathize with Elon's point of view two years ago or whatever. He wrote that biggest check to the IRS in the history or something like that, some big, huge tax check. He paid in taxes. If you write a check for almost $1 billion, you want to have some say on how it's being spent. I can sympathize on his point of view on that a little bit. Now the methods I'm not totally on the same page with, but I understand if you sent if I were to check for $1 billion IRS, I'd want a little bit of say on how it's being spent in the federal government.

Blake Oliver: [00:08:06] Here's another one. Blake Oliver brainwashed one star. I was really looking forward to this podcast. Blake Oliver is clearly brainwashed and in love with Elon Musk. David Leary kept trying to be a voice of reason. Loyal Blake kept clapping back with ardent love for his master. It's repulsive. Now I see how followers of Hitler were eased into obedience. But not just obedience. Ardent love and praise of their master. Wow. I am being accused of following Elon Musk. Like. Like a servant. Like a slave to a master. And the Hitler comparisons man. You know you want to lose people in an argument. Like in terms of like they don't want to talk to you anymore, just make Hitler arguments, you know? I mean, I'm sorry. Um, here's one in the bag for Trump. One star. I've been listening to this podcast for a couple of years, but lately, these two are so in the bag for the Trump administration. I can't take it anymore. Do you even listen to this show? Like we're in the bag? Are you kidding me? We we talk for, like, two episodes about Doge, and I'm trying to, like, talk about the the federal debt and how this is, like, an existential problem for the country. And that that means I'm in the bag for the Trump administration. I'm starting to believe that Trump Derangement Syndrome is a real thing. Like, I always thought that was a joke, right?

David Leary: [00:09:21] It's triggering, but I.

Blake Oliver: [00:09:22] Think there are people who, just, like you, cannot say anything good about him or his administration or whatever. You can't. You're not allowed to.

David Leary: [00:09:31] So again.

David Leary: [00:09:32] I would relate this back to QuickBooks versus zero. There was a day where it was so separate, and now we've brought this together a little bit.

Blake Oliver: [00:09:39] It's so funny when you. Sorry I don't mean to talk.

David Leary: [00:09:41] Over.

Blake Oliver: [00:09:41] You, David.

David Leary: [00:09:42] You know.

David Leary: [00:09:43] We need to bring.

David Leary: [00:09:43] Back to the middle.

Blake Oliver: [00:09:44] It's just funny to me when you talk about the whole QuickBooks versus zero thing, because that feels like such a long time ago. And it was honestly like something that maybe like two people in the world really cared about. You know what I mean?

David Leary: [00:09:55] It was very.

Blake Oliver: [00:09:56] Nobody. You're right. Yeah. I mean, I guess, I guess, like in this tiny little community that actually cared about online accounting software at that time. Right? It mattered to them. I suppose it was kind of divisive, but, I mean, I didn't get invited to intuit events for a long time because of it. I suppose that that counts. Uh, welcome to our live stream, viewers. You can join us on YouTube and join the live stream, search for The Accounting Podcast. Subscribe. Hit the notification button and you'll get notified when we go live. Aaron says, almost all of my clients are making accounting decisions related to recent policy discussions. Yep. So it matters. All of this has a huge impact on us and our clients. So we got to talk about it. Uh, so, you know, if you want to do us a favor and you enjoy this show, maybe write like a positive review of us, um, to counter some of these negative ones. Blake is especially irritating. He just has bad opinions on anything political. I appreciate their accounting industry news updates, although it's mostly pertinent to those working in private accounting, industry and small firms, they are out of touch with the national firm, initiatives and operations, and provide misinformation for a podcast that spends a lot of time talking about accounting tech. Their sound technology is quite poor. I don't want to hear your breath or swallow. Hey man, at least we don't record on zoom. Do you know how many podcasts record on zoom? We like make effort to to make this sound good. So sorry. Apologies you don't like the sound, but, you know, if you think that we're spreading misinformation, tell us. Come on. Like, step up. Send us an email. The The Accounting Podcast at earmarked me that's The Accounting Podcast at earmarked me. Uh. So, David, we've already lost everybody who hates us when we talk about politics. Why don't we talk about politics?

David Leary: [00:12:00] Well, before we do that, I just want to thank our sponsors for this episode we have on pay and Relay, and so stay tuned for ads from them in a little bit.

Blake Oliver: [00:12:08] Let's talk about Doge and Elon Musk. My favorite. Oh man I love Elon Musk so much. Like yeah he is the best right? Like gosh anything he does is fantastic. I need to put like a sarcasm tag on that. So the AI doesn't assume that I'm now like a musk fanatic. I'm not serious. Future AI analyzing our transcripts. That was a joke. We talked last episode about how Doge Might cut 50% of the IRS. They've got 90,000 employees. Or they did until they started cutting. And the rumor was Doge was going to cut 45,000. That has been pared back, according to a CNN report. Doge has proposed cutting the IRS workforce by 20% by May 15th. It would eliminate nearly 6800 additional employees on top of the cuts of probationary employees. So we've already lost 6700 probationary employees. Jeff Johnson, who I interviewed in that bonus episode, was one of them. And 4700 employees took voluntary buyouts under that fork in the road program.

David Leary: [00:13:20] So that's about 10,500. And then now there'll be an additional nine. So when they say they want to do 20% of the workforce, is that going to be an additional 20% or does that include what's already been done.

David Leary: [00:13:34] I.

Blake Oliver: [00:13:35] I don't know. I think that's the total.

David Leary: [00:13:38] The total goal.

Blake Oliver: [00:13:38] That's what it sounds like, that the total is going to be about 20%, which is good news if you ask me, because 50% would be like a lot. And we know from years of covering this that every dollar you put into the IRS gets you back like $12 in taxes that are going uncollected right now. And the tax gap is in the hundreds of billions of dollars a year. So if we actually want to solve the budget crisis, if we want to solve the debt problem in this country, we need to collect revenue. And if we don't have revenue agents like Jeff Johnston going after high net worth individuals or corporations, they can continue to use questionable tax avoidance or tax evasion strategies like tax evasion.

David Leary: [00:14:24] They just don't pay it all doing it.

Blake Oliver: [00:14:26] Yeah. And and so you know, that'll just continue and get worse. Um, audit rates are already extremely low. We need auditors. We need IRS auditors. Now, the other thing I learned from that interview that was interesting is that IRS systems are extremely antiquated. Most people know this. This is not a surprise to the folks who work with the IRS. Jeff described having to log into a green screen system where you pull tax information, and it's extremely tedious. You can print to PDF. That's about all you can do. So he.

David Leary: [00:15:00] Said on the screen.

David Leary: [00:15:01] It wouldn't even fit as a table. It wraps. You have to in your brain. You have to train your brain how to read it. It's like the matrix, right? You have.

David Leary: [00:15:07] To.

David Leary: [00:15:07] You.

David Leary: [00:15:08] Have.

David Leary: [00:15:08] To see the numbers.

David Leary: [00:15:09] Yeah.

Blake Oliver: [00:15:09] It's so old school. And so like this is the problem is that the IRS for years has been trying to solve the problem by adding people, or at least in the last administration. That was the idea. We're going to hire a bunch of people. We're going to solve the problem with more people. But I think this is a problem that actually can't be solved with more people. It can only be solved with modern technology. So if there's a plan to modernize the IRS tech so that we can actually audit these complex returns in an efficient way, then you might not need all the people. You could probably do a lot more audits with a lot fewer people. So that's what I would love to see is a plan from the IRS to modernize its its technology, which I think they started doing under the Inflation Reduction Act. They started making moves to do that. I hope that doesn't get cut. That would be bad. Now, Jeff Johnston, who I interviewed, was fired as a probationary employee, and it's looking like he might actually get reinstated. A federal judge has ordered six federal agencies to rehire probationary employees who were fired last month. This is Judge William Alsup. He ruled that the Office of Personnel Management. Opm had no legal authority to direct those terminations, and one of the affected agencies is the Treasury, of which the Internal Revenue Service is a part, so it's possible that Jeff might get his job back. The judge called the terminations a sham and a gimmick to avoid statutory requirements for reduction in force procedures. The federal.

David Leary: [00:16:41] Government. Wait wait wait wait.

David Leary: [00:16:43] I'm going to hold back here. The judge said it was a scam and a gimmick or a sham.

David Leary: [00:16:49] He used a quote sham.

Blake Oliver: [00:16:51] Quote gimmick? Yes.

David Leary: [00:16:53] That doesn't.

David Leary: [00:16:54] Help, because then it looks like he had political, like.

David Leary: [00:16:57] Just.

David Leary: [00:16:57] Make the ruling. Like, these things don't help when people say things like that because the other side gets fired up, like, oh, you must be anti DDoS and anti Trump because you use those words like just make it feels like it's not impartial when you use terms like that in a ruling.

Blake Oliver: [00:17:12] Well you'll like this quote.

David Leary: [00:17:13] Okay.

Blake Oliver: [00:17:13] He said it is a sad, sad day when our government would fire some good employee and say it was based on performance, when they know good and well, that's a lie. And that's what they did. They said these were performance based firings, but how can that be true when your mass firing people? It's kind of obvious that it's not the case.

David Leary: [00:17:33] Intuit learned that lesson the hard way. Remember when Intuit had those layoffs a few months ago?

Blake Oliver: [00:17:37] Oh, they said it was.

David Leary: [00:17:38] Performance, but they told the whole.

David Leary: [00:17:40] City a whole building in the city. Yeah.

David Leary: [00:17:42] Yeah.

Blake Oliver: [00:17:43] So Justice Department lawyers, they had argued that the agency heads, not OPM, made the final decisions on the terminations, but the judge didn't buy it because they didn't follow the proper process. So this is a lesson that when it comes to the government, accountants know this. Well, tax people especially, you got to follow the correct procedure or you might get reversed.

David Leary: [00:18:09] So did you see that the AICPA is in pointless talks with the IRS about their service levels?

Blake Oliver: [00:18:14] How pointless are they? David.

David Leary: [00:18:16] Well, so.

David Leary: [00:18:17] The AICPA president and CEO, Mark Creuzot, in a statement on Friday, said the AICPA is having active discussions, discussions with IRS officials to clarify this information. We're actively monitoring developments as the IRS continues to assess the immediate and long term implications. And this is all about service levels and what's happening with the IRS. The layoffs. But my thing is like, that's like talking to somebody who's sick and like, tell me how sick you're going to be instead of going after the person making them sick. Right.

David Leary: [00:18:46] Right.

David Leary: [00:18:46] The AICPA should be calling out.

David Leary: [00:18:48] Like.

David Leary: [00:18:49] People are calling you out, Blake, for supporting Musk and Trump. Right. People should be calling out the icpa for not going after Musk and Trump like that. What needs to happen? They're the ones that are crippling the IRS. It's not the people at the IRS like the AICPA. Talking to the IRS is just not a good use of time. They need to be talking to the people that are crippling the IRS, like going to the IRS and be like, well, can you communicate if you're going to have service levels? It's just not good.

David Leary: [00:19:18] Don't do that.

Blake Oliver: [00:19:19] The AICPA is afraid to take a political stance on this for the same reason that in the past we've avoided talking about politics because, yeah, I don't want our listeners to get upset and think that I have a political angle, but at a certain point, I just I have to express how I feel about these issues in my opinions, and they don't have to necessarily be one side or the other. I don't consider myself to be a partizan. I'm just looking at these issues and calling it as I see it. And and I think you are too. And we both get crap for it. So, I mean, I understand why the AICPA doesn't actually take a real stand. They should, I mean.

David Leary: [00:20:00] But if you're really concerned.

David Leary: [00:20:01] About the IRS, don't go and talk to them about how sick they are. Attack the people attacking the IRS.

David Leary: [00:20:06] That's what.

David Leary: [00:20:07] They.

David Leary: [00:20:07] Should do, right?

Blake Oliver: [00:20:07] Yeah. So the AICPA could basically come out and say, hey, we don't think that at this time any reduction in force that the IRS is a good idea and that would have a meaningful impact if the if the AICPA pushed back against these cuts. But they're not going to do it because.

David Leary: [00:20:24] There aren't they protected like.

David Leary: [00:20:26] The Trump and Doge. Nobody can get to the AICPA.

David Leary: [00:20:29] The way their.

Blake Oliver: [00:20:29] Members can. They don't want to irritate their members. Right?

David Leary: [00:20:33] Think about one star reviews.

David Leary: [00:20:35] That's all. Not a big deal. They'll live.

David Leary: [00:20:38] Uh.

Blake Oliver: [00:20:39] So let's see. Let's talk about Trump's pick to lead CMS Medicare Doctor Oz. Have you ever watched Doctor Oz on TV? David I've only ever seen clips.

David Leary: [00:20:55] No, I think maybe occasionally. Ever. You ever get sick and you watch daytime TV and you're like, I'm glad I have a job. Like, if you're sick at home and you watch daytime TV and. Yeah, so I probably have watched Doctor Oz, but you know, it. All it did was make me want to go back to work. You know that.

David Leary: [00:21:10] It.

Blake Oliver: [00:21:11] Made you want to go back to work. Yeah. I'm not a big like I'm not a Doctor Oz fan. I never really watched him. I like I always felt that a lot of. Well, I don't want to piss off any Doctor Oz fans or anything like that, but.

David Leary: [00:21:22] You know, that'll be.

David Leary: [00:21:22] The next.

David Leary: [00:21:23] Reviews. Yeah.

Blake Oliver: [00:21:24] Let's just you know what? Let's let's skip the the unfounded opinion and just get to this issue here. According to recent reports, doctor Mehmet Oz. President Trump's nominee to lead the centers for Medicare and Medicaid Services, also known as CMS, paid no Social Security or Medicare taxes in 2023 and only negligible amounts in 2022. The guy's.

David Leary: [00:21:45] Security either.

Blake Oliver: [00:21:46] No. The guy picked to lead Medicare paid no Social Security or Medicare in 2022. Well, a little bit in 2022. Nothing in 2023. This tax strategy, which we will talk about, has drawn scrutiny from Democratic staff on the Senate Finance Committee as Doctor Oz faces confirmation hearings. At the center of the controversy is a tax strategy. Doctor Oz used what is known as the limited partner exemption to self-employment taxes.

David Leary: [00:22:16] Oh, I.

David Leary: [00:22:16] Saw this on TikTok.

David Leary: [00:22:17] Yeah, I.

David Leary: [00:22:18] Could do.

David Leary: [00:22:18] This.

Blake Oliver: [00:22:19] Oh, that. You can do this.

David Leary: [00:22:19] It's a TikTok.

David Leary: [00:22:20] Strategy.

Blake Oliver: [00:22:21] So do you want to explain it?

David Leary: [00:22:23] I never saw it.

David Leary: [00:22:24] He just made that up. I don't know.

David Leary: [00:22:25] If it's made it or not.

Blake Oliver: [00:22:26] I'm so. I mean, I.

David Leary: [00:22:27] Wouldn't surprise me. It should.

David Leary: [00:22:29] Be. It sounds like.

David Leary: [00:22:29] It should be.

Blake Oliver: [00:22:30] Maybe we should go make a TikTok about this after and see. See how maybe that'll. Maybe we can just quit the podcast. We'll just become TikTokers. Um, so let's do a brief review of self-employment taxes. David. They are imposed under the Self-Employment Contributions Act. Self-employed individuals must contribute to Social Security and Medicare. So you don't have a traditional employer. You're self-employed. You've still got to pay into Social Security and Medicare, and it's 15.3%. It's assessed on your wages as a self-employed, and it's two components, 12.4% social security applied to the first 168,600 of income tax in or of income in 2024, and the Medicare tax ranges from 2.9% to 3.8% based on income levels, and that has no cap. So for a very high earning individual, the Medicare tax can be a lot, because if you make $1.

David Leary: [00:23:29] Million, it.

David Leary: [00:23:30] Just keeps.

David Leary: [00:23:30] Going.

Blake Oliver: [00:23:30] It just it's on all million dollars. So trying to get out of that, trying not to pay that is, you know, a great if you can do that, that's a great way to minimize your taxes. And the IRC, the Internal Revenue Code provides an exemption from self-employment tax under section 14 02A 13, known as the limited partner exemption exemption. The. The provision excludes the distributive share of any item of income or loss of a limited partner as such, other than guaranteed payments from net earnings from self-employment. And it was originally intended to stop people from contributing small amounts in limited partnerships and therefore gaining eligibility for Social Security benefits, but now it's used to avoid paying into Social Security and Medicare. So what you do is you classify yourself as a limited partner, and then you don't have to pay that self-employment tax on your earnings from the partnership. Now what is a limited partner. Right. It's ambiguous because the IRS and the Treasury regulations do not provide a clear definition of what a limited partner is. And all these this rule about limited partners, right. This this law under the IRS, it was all created before we had LLCs and Llps that were generally created in the 90s. So Doctor Oz, the way he got out of Medicare tax is he said he was a limited partner of his limited liability company, Oz Property Holdings LLC, which looks like it's here in Here in Arizona. And by doing that, by classifying himself as a limited partner, he may have underpaid Social Security and Medicare taxes by approximately $440,000 over the examined period, which I guess is 2022 and 2023. It sounds like. And the committee staff, the Democrats on the Senate committee are saying, well, you can't have been a limited partner because you were actively involved in the company. He has a TV show.

David Leary: [00:25:47] He's he's he's he's.

David Leary: [00:25:49] He's the brand.

David Leary: [00:25:49] He's the face.

Blake Oliver: [00:25:50] He's the brand and he's actively the brand. And so it's ironic, right? They're highlighting the irony that here he is avoiding paying into Medicare and he wants to run Medicare. Um, now there was a case, a recent case that is called, uh, soroban Capital Partners L.P. v Commissioner. It was decided by the Tax Court in November of 2023, and Sorbonne Capital Partners is a hedge fund organized as a Delaware limited partnership. They did not report their limited partners distributive share allocations of income as net earnings from self-employment on partnership tax returns, and the Tax Court rejected the argument that a limited partner can never be subject to self-employment tax on their allocable share of partnership income, and they said that no, there has to be a functional analysis to determine whether a limited partner is receiving its distributed share of income or loss as a limited partner. So it's how active are you in the business? But of course, the court didn't make this easy and they didn't establish any test on what a limited partner is, whether you're actively involved in the business. So there you have that gray area that you can exploit like Doctor Oz, to not pay Medicare taxes. Just call yourself a limited partner of your LLC. I mean, we should be doing this, David. Nobody's ever going to audit us.

David Leary: [00:27:17] And I'm sure he's lawyered up.

David Leary: [00:27:18] And he has accountants that have given him the strategy. I don't think he came up with this on his own.

David Leary: [00:27:23] No, of course not.

David Leary: [00:27:23] He has a very good tax accountant who helped him figure this.

David Leary: [00:27:25] Out.

David Leary: [00:27:26] And told him to do this. And they probably got a piece of that action, you know, because he's I think his net worth is 80 million or something. He's maybe more than that or. Yeah, it's between 100 million and 300 million is his net worth. So there's real money involved in this thing.

Blake Oliver: [00:27:42] So what's fascinating about this is that I bet you this would never have come to light, and Doctor Oz would never have been audited and asked to pay this Medicare tax, Social Security tax, unless he had become political. That's when everybody starts to dig into your tax returns. But just think about this, right? How many people are doing this, classifying themselves as limited partners when they're actually actively involved in the business. Probably lots, because it seems like it's a fairly easy thing to do because of the gray area involved. Back in 1997, the IRS proposed some rules, some regulations that would have formalized, you know, the definition of a limited partner, but they never actually finalized them.

David Leary: [00:28:32] So so that was ex. A court ruled on it, but then it never became codified the legal.

Blake Oliver: [00:28:39] So the court decided against a particular taxpayer but then never established a test for what is an actively involved person. You know, what is a limited partner? How active do you have to be before you're not limited anymore in all of this?

David Leary: [00:28:53] So people either.

David Leary: [00:28:54] Keep doing this today or it'll be like, remember when the Clintons got in trouble for the whole nanny tax and everybody ran out and started running payroll with taxes taken out for nannies? Like maybe because of this, uh, attention, this is going to get. Maybe people will stop doing it.

Blake Oliver: [00:29:09] Well, I think it's a great strategy. I mean, if Doctor Oz gets away with it. I mean, like, I would be doing this all day long, right? Like, so, um, but of course, you know, it all comes down to what the court says, because there is not a hard line. There is. There are no rules. It's up to you to document it. So it's like in my interview with Jasmine Dellucci on the earmark podcast, go listen to that, because she talks a lot about this. She says, to paraphrase her, it doesn't matter how clever your tax strategy is if you don't execute it properly. And executing it properly means having the paperwork, having the documentation to back it up in court. So if you're going to do something like this, make sure that you have documented. Make sure that you have proof that you are a limited partner and that you are not actively involved in the business so that you can.

David Leary: [00:30:06] And you're safe.

David Leary: [00:30:08] Obviously, we don't know which accountant helped him with this. I imagine this accountants probably doing this with all their clients, which seems to me risky too, right? Like, you don't want to use the same strategy with every client you have, because that'll eventually get some attention, too.

Blake Oliver: [00:30:20] Well, and this is very similar, it seems to S Corp compensation, single member S Corp compensation where there's actually a lot more guidance on that from the IRS. But it's still a matter of discretion. And there's some folks who go really aggressive with the super low salary. And there's some people who are really conservative and and pay a really high salary, and there's this huge area in between. And so as a tax pro, you're getting pressured because here are these influencers on social media saying, no, no, you only have to pay yourself like, you know, $30,000 a year and the rest you can take as a distribution, right? So, um. It's tough. I think we'd actually, in many ways be better off as tax pros, like most tax pros, would be better off if the rules were clearer, because right now they are. They are not. But if you are helping really high net worth individuals avoid taxes, it's actually great if you have all this ambiguity, and it's great if you don't have a lot of revenue agents going after you, because then you can do you can really push the envelope. You can go really hard for your clients and save them a lot of money, and there's very low risk to doing it.

David Leary: [00:31:41] And the people that can afford.

David Leary: [00:31:42] That are going to have.

David Leary: [00:31:43] A.

David Leary: [00:31:43] It's going to be higher net worth. People that have more money involved, they have motivation to skirt the system a little bit and avoid this. Now, maybe if he was using a payroll system like on pay, if you want to read the on pay ad, Medicare would have been taken out of his paychecks properly.

Blake Oliver: [00:31:59] Thank you Onpay for sponsoring this episode, Forbes and CNBC rank on pay number one for small business payroll. Onpay really knows how to get payroll done right for every client you serve, no matter how complex their software is, easy to use and backed by outstanding service levels, they handle new client onboarding for free and have experts on call to keep you and your clients on track. The system includes multi-state payroll, local tax filings, integrated HR tools, and more with no hidden fees. When you join an Pays partner program, you get a custom dashboard to easily manage all clients in one place. Plus, you can gain exclusive perks like revenue sharing or discounts, free payroll for your firm, co-branding opportunities, premium swag, and more. Onpay helps you run your practice efficiently while providing exceptional payroll that your clients can count on. To learn more about using Onpay for your firm and clients, that could be farms, start ups, restaurants, bars, doctors, nonprofits, gyms, franchises, dentists, or more. Head over to The Accounting Podcast dot promo Onpay. That's The Accounting Podcast dot promo forward slash Onpay.

David Leary: [00:33:07] And you should send all your clients there, because then the Medicare will be pulled out of their pay stubs properly and hand it over to the government. So you should use a payroll service.

Blake Oliver: [00:33:16] Well, we got lots of comments here. Uh, Edwin? Yeah? You can ask something. Go for it. We've got the rogue independent complaining about Trump. Sorry. We're not going to talk about cancer research or nuclear scientists. That's not our thing here. But feel free to keep chatting in the comments. Maybe accounting or tax related. That would be great. And okay, you want to talk more about what else do we got here? Uh.

David Leary: [00:33:54] I definitely want to get to accounting apps. Digits. Yeah, let's let's get into the AI and digit stuff because I have some an I story too. But let's talk about digits first. So digits announced a new product and they're officially going to take on QuickBooks now. And arguably CAS practices as well or CAS divisions at firms based on the new product offering. We can play the video if you want. Let me flip over.

Blake Oliver: [00:34:15] Go for it.

Speaker4: [00:34:18] Receipts. Bills. Invoices. Credit card statements. Your passion is building your product or serving your customers or growing your team. But it's amazing how often the back office becomes front of mind. So we asked ourselves why? Why are founders, small business owners, accountants and finance teams stuck in this past, spending nights and weekends sifting through bank statements, categorizing transactions, running reports? And why is accounting software so painful to use? What if it didn't require all this manual oversight? What if it could operate on its own and track your business's cash flow as it happens at digits? We've spent six years building this future accounting software so advanced that it redefines the role of business finance from tedious time sync to real time decision maker. Digits is the world's first AGL, the first autonomous general ledger.

Blake Oliver: [00:35:13] How long is this video? Oh, wow. We're like racing through a city that looks like a computer.

Speaker4: [00:35:19] Trained on over $825 billion in small business transactions. The AGL is. David.

Blake Oliver: [00:35:24] How much do they pay you to run this ad?

David Leary: [00:35:26] Your company didn't pay me anything to run the ad.

Speaker4: [00:35:27] It's integrated directly into every facet of your business. Are you getting.

Blake Oliver: [00:35:32] Something on the side?

Speaker4: [00:35:33] Data analysis.

David Leary: [00:35:34] And so the the gist of this is they've launched this accounting. What do they call it? The the accounting.

Blake Oliver: [00:35:40] Autonomous general ledger.

David Leary: [00:35:42] General ledger. It's quote unquote the first AI powered general ledger. Um, they had a press release come out. They trained this on $825 billion in small business transactions, and they're using human feedback loops. So they have US based accountants there internally because they now offer bookkeeping services. Right. And it's very it sounds very similar to the pilot model where you have accountants using the model in-house, talking to the engineers, maybe in the next desk over doing code on the AI. So it's very similar to the pilot model a little bit. And they're really going after QuickBooks. If I go to the pricing page here.

Blake Oliver: [00:36:17] Yeah. But okay, I mean going after QuickBooks.

David Leary: [00:36:21] And we heard.

Blake Oliver: [00:36:21] This story before.

David Leary: [00:36:23] Yeah, we've heard this story before and they're going out many times. Full service. They're going after firms on their pricing pages about all the features you get. They had a pop up that was better. Where did it go? Sorry about that. I'll find it here in a second.

Blake Oliver: [00:36:39] So okay, so they're using AI and they're doing what. They're categorizing transactions automatically categorizing transactions.

David Leary: [00:36:46] It's like not it doesn't.

Blake Oliver: [00:36:47] It's okay. Go ahead.

David Leary: [00:36:49] Yeah. They're categorizing transactions. And then what I was really interested in is I'm thinking a lot about the output, like they're they're closing the books, but I don't think they're delivering your typical here's your profit and loss and balance sheet. You know, they're trying to deliver interactive reports or they're delivering, you know, the we've all seen the digital dashboards with all the fancy graphs and the AI giving you quote unquote insights. Right. So their their output is different than what a traditional firm does. And I've been thinking about this a lot lately because if you notice, I was at the airport yesterday. I was on a trip. Every place is selling bowls now. Everybody and everybody's buying bowls of food. Nobody buys sandwiches anymore. It's all bowls of food. And I'm starting to think the reason why is the restaurants. It's going to be easier to train a robot to put slop into a bowl than it is to stack little slices of cheese and meats and lettuce into a sandwich.

Blake Oliver: [00:37:41] Or fold a burrito, which humans can eat.

David Leary: [00:37:43] Burrito.

Blake Oliver: [00:37:44] Properly.

David Leary: [00:37:45] Yes, it's very, very difficult. Humans can hardly do it because if you think about it, all you're doing is you're going up to that counter and you're saying, put that in the bowl. Put that in the bowl. Put that in the bowl. Put that in the bowl and they hand you a bowl. That's it. In the future it'll probably be a kiosk and just a robot scooping whatever you typed on. You're going to touch the pictures on the kiosk of what you want in your bowl. And they're going to put it in the bowl. But where I'm going with that is.

Blake Oliver: [00:38:05] I was about to ask you, like, what the what does.

David Leary: [00:38:07] So so here's, here's how you can connect this in. Think about you know, how Starbucks got people to order drinks based on weird names instead of small, medium large. They trained they trained the customers. I think the fast food industry is training customers to enjoy eating from bowls they're playing. Oh, it's healthy. It's an alternative. It's convenient because in order for them to automate restaurants, they're going to have to have a way for robots to scoop that food. And it's much easier to scoop and dump into a bowl. Robots can do that, but it's going to be really hard to make a robot do the other, other work. So from an accounting industry, maybe we're trying to automate stuff that for our existing deliverables maybe doesn't make sense. Right. And that's where maybe digits is attacking this differently. You're automating an output that might make that's possible to automate, like changing the changing the mindset of this whole thing is where my brain's at. You're not going to if we change what we're delivering to clients, to something that I could do now, we really can utilize AI a lot more. We're trying to shove AI into an output that maybe it's not the best for. Maybe it is, maybe it's not. It could be argued, but I just it's a behavior thing, right? If we can train the clients to expect a different output from accountants or a different product, maybe I could be used better or this could be automated. And I feel like digits is kind of doing that because they're not giving a traditional here's your PDF of your profit and loss.

Blake Oliver: [00:39:33] I don't even know what they're giving us, because that slick marketing video had no shots of the product and nothing on their website like that, I can tell actually is the product, which always makes me suspicious. And this has always been, I mean, like in the video, I can't tell if what I'm looking at on the screen is a mocked up version of the product or the actual product. And that always makes always look that slick.

David Leary: [00:39:55] Yes, it's always it's always looked like that.

Blake Oliver: [00:39:57] And, you know, I'll repeat my criticism of all of these I bookkeeping accounting apps is that they don't have enough information to give you useful information just from what's coming through on the credit cards in the bank. You can't apply AI to that limited set of information and expect to get some great insights. Sure, you can do like a variance analysis. You can say, we spent this much on this vendor this month versus this much on this vendor last month, but that's only so useful. That's not what I need to run the business.

David Leary: [00:40:34] And that's what's not clear because they do have like a communication portal where transactions that need clarification, it'll send that back to the client to clarify. But it's not sure if the AI is figuring that out and sending that, or if that's the accountants review, who reviews the financials, who needs that clarification. They're saying that that part you can't really grok from the videos and the marketing pages.

Blake Oliver: [00:40:53] Right. So anyway, that's I'm always skeptical of anyone that tries to take on QuickBooks because QuickBooks is a standard. People understand it, they know how to use it. You can take it with you and go to another accountant if you sign up for something like a digits. Good luck! If you want to go get an accountant to work with you, you have to find one who understands digits. That was always the problem that Xero had in the US was even if you wanted to use zero, which is a legit double entry accounting system that is arguably far more robust than QuickBooks in terms of the GL structure, you have to find somebody who wants to use it and knows how to get the reports out of it, because in the end, it doesn't matter what goes into the system. If you can't get the reports, you need to run your business and do your taxes.

David Leary: [00:41:38] Or somebody has the skills to get it out again, you can't just it's not just going to be I only pumping it back out.

Blake Oliver: [00:41:43] Yeah. So like the the benefit of using AI to categorize transactions is limited because there's so much else that has to go into accounting in order to get you useful reports. But what if.

David Leary: [00:41:55] You change the definition of what is the output? What are these useful reports. And this goes back to my bowl theory. Right. Right.

Blake Oliver: [00:42:02] So okay here's an example David. Like we have revenue coming into our company and it comes in from stripe. Is the AI going to know what the different sources of revenue are and categorize it properly into the different revenue accounts if all it gets is stripe deposits? No. Probably no. Okay. So maybe you could figure out how to connect that AI to stripe. And then it could go and pull reports. But I have not seen an AI agent yet that is capable of like logging into stripe and running reports and then figuring out how to split or do journal entries in the accounting system to get that revenue into the right buckets in the accounting system, because that's a pretty difficult task and we're not there yet with AI as far as I've seen. So like, I'm super skeptical of all this stuff. It works great for startups that have very predictable expenses. Like you said, everything is salaries and and software expenses.

David Leary: [00:42:59] That's about it.

Blake Oliver: [00:43:00] Software expenses. So that's easy to do the accounting for, right. But let's say you're a construction business okay. I've got all these spent expenses coming through on the credit card. Uh, are you going to classify these into the appropriate jobs using AI? How are you going to do that? How are you going to know what this expense is for? For this job, this job, this job. You don't have all the information. So you got to figure out how do you get that information into the system so the AI can use it? Well, if I have to do that anyway, it doesn't matter if I have to do that work to get the information into the system, I might as well just do it myself. So there's sort of like this limited utility of AI until it has access to all the information it needs.

David Leary: [00:43:43] And their price still hitting that same barrier that everybody hits with these types of stuff, they are in their press release. They're claiming that at digits, we've pioneered application specific AI accounting models to automate over 90% of SMB SMB bookkeeping workflows. There's that 99%, that 90% number. Again, getting that next 10% is so hard.

Blake Oliver: [00:44:03] And that's the self-driving car problem.

David Leary: [00:44:05] Yeah, that last ten they.

Blake Oliver: [00:44:07] Got they got to 90%. Years and years and years ago that last 10% extremely challenging. And now they're at like 99%. And they still have to get that 1%. That's even harder.

David Leary: [00:44:20] Well no they're at 90%. They're still not at 99.

Blake Oliver: [00:44:22] Oh, I'm saying like self-driving cars.

David Leary: [00:44:24] Oh, self-driving.

Blake Oliver: [00:44:25] Cars, 99%. But it's still hard to get approval and the public to trust you if you're only at 99%, even though that's better than human drivers.

David Leary: [00:44:36] And that ties into I had an article from Saster magazine, and this had the calendar's head of user experience and their chief product and their Chief product officer did a session or a talk at a conference. And there's kind of the highlights from that. So we've all used Calendly link right to either on our own Calendly booking tool, or we've used it to book a meeting with somebody else. Everybody's familiar with Calendly.

Blake Oliver: [00:45:01] Calendly.

David Leary: [00:45:02] I assume this.

Blake Oliver: [00:45:02] You create a booking link, you can put it in your email signature, send it to people. They can find time on your calendar. Create the meeting. It's beautiful. It sends invites to everybody. I use it, yes.

David Leary: [00:45:11] So they talked about how they rolled out I at Calendly. And I think some of this can apply when people think about how they're rolling out AI at their own firms. So the first off, the most important thing is it has to solve a real problem. The the AI solutions are only used when they solved real user problems. If you just create AI for AI and it doesn't solve a problem, the feature doesn't get used or stick you don't want to build AI to replace stuff you're already good at. So if you've already solved a problem and it's working, don't build new AI to solve an existing problem. And they learn that that folks kind of hated their UI, their I'm sorry, their AI chat to book meetings because the previous UI was great. People could just click, click, click book a meeting. It was very easy to use. So you don't want to use the AI to do that. So you can't don't use your AI to solve problems at your firm that you're already solving really well. Use it for problems that you don't have an answer to yet or you haven't built for your customers. They talk about building an ROI framework and for AI and measuring what matters. So the framework you want to do customer value right? Will this mean meaningfully improved outcomes, cost structure? Can we sustainably deliver this data quality requirements and user experience impact.

David Leary: [00:46:26] And then you want to measure the user engagement with the AI features, task completion rates, impact on core product metrics, and customer churn and expansion. And they also talked about personalizing experiences. And think about this at your firm. Maybe you got an AI to answer the phone calls from your clients, another AI doing text back and forth, maybe another AI that's delivering some services. You want to make sure that experience is the same and all that AI feels the same across the board and not these disjointed AI experience, because people just they feel like they're being blown off when it's a different experience over and over again. So you want it consistent. And then in general, and this is the most important one, everybody is getting AI fatigue, probably even listeners of this podcast sometimes according to the reviews. So you want to make your AI invisible and just focus on the outcome, not the AI. Like like people get really skeptical when they see, like, look at this AI powered thing. People are like, I don't want to use that. That's what's happening right now. And that's actually some risk digits as there are two forward with their AI that people are going to get very skeptical and look at it with a fine tooth comb and be extra critical of that AI feature. So you want to make your AI invisible if you can.

Blake Oliver: [00:47:33] Here's a way to do that. I have a suggestion for all the product managers out there. If you have a current rules based system in your product, add AI to that to automatically suggest the creation of new rules. Missive. Our email application that we use at earmark just released this. So in missive now you can say create rule on an email and it will analyze that email and create offer to create an AI rule based on the what's in the content of the email. And so you can say, if an email comes in that looks like a prospect that we haven't worked with before, put that with the sales team. If an email comes in that looks like it's an existing customer, send that to the support team. And so you can create an AI rule inside of your existing rule set. I think that would be a great way to implement this in QuickBooks or in zero because they already have these really great rules based categorization systems. So allow me to create an AI rule and give me the ability to specify the conditions for that in plain English. Yes. So I don't have, you know.

David Leary: [00:48:46] Recognize the new the new, the new car. If I go to a I have a rule for Starbucks, then I go to a different coffee place. It should be able to know what I taught it about Starbucks to apply that rule.

Blake Oliver: [00:48:55] So right now the rule has to be set up as if the vendor field has Starbucks in it, or if the description has Starbucks in it. Categorize this as meals and assign the vendor a Starbucks. And I have to do that for every single vendor. What if I could just create an AI rule that said, if something looks like it's a coffee shop, categorize it as a coffee shop, and then allow me to put the vendor in or just put in coffee shop. And then that rule now runs, and I can see the rule being applied and I can accept it or reject it. That to me is a great implementation of AI is just take away all that conditional logic that I have to normally do and just let me say what I want in English. And then if it doesn't work, I can just hit edit rule and I can maybe change the conditions, I can rewrite that prompt.

David Leary: [00:49:49] And that was basically the gist of their stuff. All right. We should do another ad.

Blake Oliver: [00:49:53] Let's thank our next sponsor relay. David I'm happy to read this one. I can just okay. You got.

David Leary: [00:49:59] It. I'm good. Yeah.

Blake Oliver: [00:50:00] Thank you. Relay.

David Leary: [00:50:01] Between Blake and myself. We now have three, four, maybe five business entities, 20 or so checking accounts and dozens and dozens of virtual cards. It would be impossible to manage all of this if we weren't using relay as our small business bank. Relay is truly the part of the tech stack we use to run our businesses. Relay allows Blake and I to each have our own logins. We can grant access to our team and even our accountant without ever sharing passwords or two factor authentication codes. Relay allows us to grow and scale our banking needs without ever going into a physical branch. I recently added an account to receive inbound merchant services with just a few clicks and to create payroll checking. Again, a few clicks and I instantly had access to my ACH info to give to my payroll provider on pay with relays virtual cards, we can issue debit cards to our team around the world for needed business expenses. I can instantly spin up a new visa debit card and set both daily and monthly spending limits. And when the team member doesn't need their card, I can freeze it until they need to use it again. They also recently relay has launched receipts. So now when they do charge something, they can upload the receipt straight to relay and that shows up into my QuickBooks or the GL relay also has an automation features to sweep money automatically from one account to another based on dates, amount or target balances, or even percentages. For example, inbound payments could be split daily to your payroll sales tax payable operating in savings accounts based on predefined rules. To learn more about using relay for your firm and clients, head over to The Accounting Podcast dot promo slash relay that is The Accounting Podcast dot promo forward slash relay. Thank you relay.

Blake Oliver: [00:51:34] Catching up here on the chat. Looks like we've got Jeff Johnston here in the chat. He says hey this is Jeff on the IRS terminations. My termination letter was on IRS letterhead. There is no mention of OPM in the letter. I think the judge in that case, I think the judge was saying that OPM directed the IRS to do these layoffs, and it didn't have the authority to direct the IRS to do that. The Treasury could do that. So maybe they did some of the substance or some of the form, like they did some of it on the right letterhead. But the actual directive came from OPM, and therefore the judge is saying that violated the rules set up for federal workers. Um. Let's talk about remote accounting jobs. We haven't talked about remote work in a little while on the podcast. Sadly, I love remote work. But sadly, remote work is declining. In accounting, only 2.85% of accounting job postings now advertise fully remote positions. A little over 70% of postings require fully on site work, and then about 2,829% offer hybrid arrangements. So we've got. 29% hybrid, 71% wait, is that all adding up? 29%. Hybrid, 71% fully on site, 1%. Fully remote, very few.

David Leary: [00:53:22] And for a while there we were telling firms, younger modern firms like use that as a hiring differentiator. If these numbers are dropping that low, that means even modern firms may not be allowing remote working as much anymore.

Blake Oliver: [00:53:35] To be fair, this is all accounting job postings, corporate accounting and accounting firms, big accounting firms, small accounting firms, large companies, small companies. This is an analysis. This is an analysis by Vintagerock.com, a remote recruiting company. I think it's probably more in the small accounting firm world. Interesting stat here in the survey, 72% of postings are seeking senior level professionals with substantial experience. There is a high demand for senior level accountants with a lot of experience. The majority of all available roles are within larger corporations across various industries. Accounting firms represent just 6.7% of total job postings. So there you go. That's why it's so small. Most corporations want their accountants in the office. Here's another survey from Cfo.com about remote work. Only 7% know wrong. Only 9% of SMB finance teams are still working fully remote, fully remote, small and medium business finance teams have decreased to 9%. That's down 2% from last year. 66% of respondents prefer hybrid work models. That's a 10% increase year over year. 24% are fully on site with no remote options, a category expected to grow in industries like manufacturing, construction, healthcare and retail. 9% though working fully remote, right? That is um, that's still pretty good. That's better than it has been in the past. And we can expect a pullback right.

David Leary: [00:55:27] Well I mean I think it overcorrects. It went from we can never work remotely. Covid hit everybody to remote work remotely. And you're going to it's going to be a pendulum a little bit. But I think when it comes to it's not so much working remote. It's people want freedom in their lifestyle to balance out that the work. They don't mind going to the office, but they want the ability to. If I need to check out early because my kid's playing a baseball game, they want that freedom, flexibility to work different hours and work remotely. It's not it's not an all or nothing. I only want to be remote. I think people want to have a balanced lifestyle and that's that's the root cause of this.

Blake Oliver: [00:56:05] And you mentioned parents having children. They got to go pick up. That's a big group that really benefits from hybrid or remote work. Kpmg did a survey of a thousand US based working parents. Among those surveyed, 76% said that having children has boosted their motivation at work. But they also many also report juggling issues such as limited childcare options and workplace policies. Over half struggle with ongoing childcare arrangements and half lack company sponsored backup care. 50% desire more flexible work schedules, such as a four day workweek. Interestingly, fully in-office parents feel more satisfied with career growth than hybrid or fully remote. If you're in the office, you're more likely to be satisfied with your career growth. And that makes sense, because putting in face time with management means you're much more likely to get promoted. If you are out of sight, you are out of mind, and it's much harder to get promoted. You got to work a lot harder. You got to make yourself seen. People tend to want to work with people they like, and if you're around, it's easier to like you if you're at the office, so that makes sense. Working parents cite guilt and time management difficulties as significant challenges with women experiencing these pressures more acutely. So if you want as an employer, to make your firm better for working parents, giving them hybrid schedules is the way to do it. Given that so many parents, and especially women, struggle to balance the work with parenting in the early years, and I experienced that myself extremely difficult, I can't imagine trying to be like a dad who's involved with his kid, like who's actually a decent parent and not have flexibility. It's so difficult. Like, if you're at the office all the time.

David Leary: [00:58:10] You're not allowed to leave. You're expected to be there.

Blake Oliver: [00:58:12] And you know, we can we can see in our numbers here on this live stream. It's about half of what it normally is. And I assume it's because people are working, working, working because we've got that March corporate tax deadline, you know, and it's Thursday as we record this people are chugging away at those returns getting them done.

David Leary: [00:58:33] So I have a a good job or an attaboy for Deloitte possibly here at Deloitte. And maybe the Pcaob's data in their fines are finally working. So remember it was 2022 was the when Pcob started or the 2023 inspection and 56 of Deloitte and Touche was audits. They found that 12% or 12 of them, so 21% were deficient. Well, Deloitte just um, announced that they found material weaknesses in the internal controls over financial reporting at San Antonio based Biglari Holdings, the parent company of fast food chain steak n shake. They also own Maxim and Abercrombie. Abraxas Petroleum Corp. They rendered their opinion on Saturday and put it in the annual report since then. Biglari responded, saying that they've hired a third party provider of internal control services to assist in improving these things. But the the piece that's impressive with me about this. Deloitte and Touche has served as their auditor for more than two decades. So obviously, the pressure of not being called out by the pcob or being fined by the PCAOB, probably one internally at Deloitte, because I could see pressure. Right. You were going to call out your client in their financials and they did it anyways, regardless of having, you know, because they've been making a lot of money on them for 20 years. Right.

Blake Oliver: [00:59:57] What did Deloitte do?

David Leary: [00:59:58] Deloitte found material weaknesses and then published it in their financial reporting.

Blake Oliver: [01:00:03] So they did their job.

David Leary: [01:00:05] They did their job. Okay. Okay. That's another way to look at it. Yes. They did their job.

Blake Oliver: [01:00:09] And you're saying like, good for them. Good. Why is the PCAOB getting a shout out?

David Leary: [01:00:14] Well, I think.

Blake Oliver: [01:00:15] Because they exist.

David Leary: [01:00:16] Well, they. Okay. Yeah, I guess they did their job like they're supposed to. But I think there's pressure. They're starting to feel that because if it's a 20 year client, you probably don't want to jeopardize the relationship by failing their audit or putting.

Blake Oliver: [01:00:29] Yeah.

David Leary: [01:00:29] Yeah.

Blake Oliver: [01:00:30] Good job. You did your job.

David Leary: [01:00:31] Yeah. I guess at the end of the day, they did. They did their job, but. All right. That's that's the way to look at it. But maybe that's the thing. Like so many times jobs aren't being done. We have to call it the good job.

Blake Oliver: [01:00:42] Well thank you. Yeah, I guess that's that's nice. I'm glad you brought that story to the show. It's a nice feel good.

David Leary: [01:00:47] Feel good. It's a feel good story.

Blake Oliver: [01:00:48] Yeah. All right.

David Leary: [01:00:50] You got to get going. So we got to wrap up. I don't know if you have any other small stories.

Blake Oliver: [01:00:53] I just got one more story I. Little IRS drama. Going back to that, the chief counsel has been removed after a clash with Doge over tax information. William Paul, the IRS acting chief counsel, has been demoted and replaced. Uh, he was reportedly removed because he clashed with DOJ's alleged push to share tax information with multiple agencies. So this is an example of the battle happening within the federal government over access to tax information by Doge.

David Leary: [01:01:26] And was he the counsel for IRS, or was he counsel for Treasury or.

Blake Oliver: [01:01:30] Chief counsel at the IRS? So top lawyer at the IRS.

David Leary: [01:01:35] And he resigned or got replaced.

Blake Oliver: [01:01:37] He was demoted and replaced. Demoted. Andrew de Mello and de Mello is described as an attorney deemed supportive of Elon Musk's Doge.

David Leary: [01:01:46] And going back to my point about the ispa having this discussion with the IRS, they should be raising flags on this. They should be against this and supporting this poor person that got fired because they had a disagreement over data safety of IRS taxpayers.

Blake Oliver: [01:02:03] Yeah, David, I got to go pick up my kid from camp. So I'm going to leave the podcast a little early today, but, you know, I'm going to log in later and and finish up tonight. Um, thanks for giving me the flexibility to do that. I, I really appreciate, you know, the workplace that we have here at the accounting podcast. You're a great boss. It's it's really nice. Thank you. You know, makes me makes me happy to work here even though I'm underpaid and boring.

David Leary: [01:02:35] Accountant just showed up right at the very end. Still got the three coffee emojis in. I was looking for that for the last hour. He finally showed up and gave us the three coffee emojis.

Blake Oliver: [01:02:44] And if you were listening and you like this show, even though you don't always disagree with us, do us a favor and write a review on Apple Podcasts. Just find the show on Apple Podcasts and you scroll down and you'll see that option to add a review. Uh, you know, honestly, at this point, I'll just be thankful if it's not one star. That would be really nice. Like help.

David Leary: [01:03:04] Us. That's where we're at. Now we're asking for two star reviews.

Blake Oliver: [01:03:07] I mean, we're at like a 4.4 rating, which on Uber, like nobody will pick you up at that point. So we really got to get our average.

David Leary: [01:03:14] Came down a lot.

Blake Oliver: [01:03:14] Yes. Yeah. Yeah. So help us out guys. Um, you know, and look, if you don't think that I'm being fair or balanced in our coverage, don't just, like, throw a hissy fit and give us a bad review, send us an email or chat with us like I'm a reasonable person. I hope if you listen to this show.

David Leary: [01:03:30] You we can bring you on if you want.

Blake Oliver: [01:03:32] Yeah, we're always looking for different points of view. So if you have a strong point of view on this, let us know. We are the accounting podcast at earmarked me. Don't forget the The Accounting Podcast earmarked me. Find us on social media. I'm on LinkedIn. You can message me. Um. And don't forget, you can earn free continuing professional education for having listened to this episode. Get the earmark app. Go to earmark app. Earmark app in your web browser or download the app on iOS or Android. Sign up for free. Earn a free CPE every week if you want to support the work we do. Subscribe for just $150 a year. As one of our recent users subscribers said, this is a real review. Best CPE provider out there. Can't see it because it's too bright. Cheapest, most efficient way to earn CPE. Wide ranging content for casual CPE and technical content for enrolled agents. Way better than CPA Academy or Luebke or anything else I've used in the past. Five stars. Thank you tall CPA for that review and you can help us out and leave a review for earmark. We've got like 500 reviews on the App Store. If you disagree with my political opinions, please don't take down my app with bad reviews. I would that would be really cruel. Do that. Save that for the podcast. Okay. Um, David, great to chat with you, I gotta go. Bye, everyone.