The Accounting Podcast

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Blake Oliver: [00:00:04] Pope Leo the 14th, formerly Cardinal Robert Prevost, is an American citizen, a United States citizen, and has made history as the first American elected pope. The U.S. taxes global income of all U.S. citizens, no matter where you live. So there's a question as to whether or not the pope will have to file a U.S. tax return.

David Leary: [00:00:28] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:34] Hello, and welcome back to the Accounting Podcast, your weekly roundup of news in the accounting profession. I'm Blake Oliver.

David Leary: [00:00:41] And I'm David Leary Blake. My phone's been exploding nonstop. My phone and my inbox and my Twitter. Because this is the big story for me this week. It's almost distracting to other stories. Intuit rolled out a new They're Rolling out this summer, a new Intuit Developer program, and they're going to charge developers to use the APIs, and it's a pretty significant amount. They'll charge and we'll get into the details on that. And with that story, we're going to bring in somebody. I want to get an accountant's view on this as well as a developer's view. So we get a two for one guest today. And I will wait to say who it is.

Blake Oliver: [00:01:16] Well, it's Hector Garcia and we're going to have him on in a few minutes. But first I want to cover a few stories, some follow up on stories that we've talked about in the past, and then we should also thank our sponsors. So, David, who are the sponsors.

David Leary: [00:01:30] We have for this this week, sponsors our Reframe team up Bluevine and Pay Hawk.

Blake Oliver: [00:01:37] Thank you to our sponsors. Stay tuned for messages from them. Be sure to use those links in the um in the messages show.

David Leary: [00:01:45] Notes to.

Blake Oliver: [00:01:46] In the show notes. Use the links to visit those websites so that they know that you found them through us and support the show. All right, follow up and then we'll get to Hector. So South Carolina has ousted the state treasurer. We've covered this on a few different episodes in the past. Uh, the South Carolina Senate voted 33 to 8 to remove State Treasurer Curtis Loftis from office for willful neglect of duty related to a 1.8 billion accounting error. The resolution now moves to the House, where a two thirds majority vote would finalize his removal. Actually, when I save the story, I'm not sure if they actually have voted in the House yet on this, but seems likely that the treasurer will be, uh, kicked out of office. Um, for those who didn't hear this on a previous episode, this $1.8 billion error stemmed from a conversion from one accounting system to another. So if you've ever done an accounting system conversion and had some issues with opening balance equity, I mean, this is like the extreme example of that.

David Leary: [00:02:47] And I think the accounting system, it was I and I haven't found it concrete, but it sounds like it was a workday conversion. Another failed workday Migration Municipality.

Blake Oliver: [00:02:59] At first, people thought that the 1.8 billion was actual cash that was missing. It turned out it wasn't. It was like just double counted in some way. But it did create a lot of confusion. And, uh, the the reason that the treasurer got into such trouble over this is because he testified, uh, to the state House like that, that there was no problem, like he tried to cover it up, basically. Uh, it was not disclosed to the General Assembly in a timely manner. So if you discover an error, it's best to be open and honest about it than to try to cover it up. And it went on for years, and that's how it got up to 1.8 billion is because just like accumulated over time, and the state had to spend $3 million on an outside forensic audit, so wasted taxpayer dollars as well.

David Leary: [00:03:47] And I think that the root root cause of this is yes, it failed ERP rollout. But really the root cause is probably not enough trained accountants to do work to properly handle this raw and properly track this. There's probably the accountant shortage is probably the root cause of this whole thing.

Blake Oliver: [00:04:05] Another follow up deal, CEO Alex Bouaziz has relocated to Dubai amid the rippling lawsuit. We reported on a previous episode, this crazy story about how deal allegedly infiltrated rippling with a corporate spy in Ireland. Rippling went public with the accusations and now deals CEO has fled to Dubai, which complicates rippling efforts to serve him in their ongoing lawsuit. Because Dubai is not exactly a friendly, um, uh, I don't know what jurisdiction when it comes to that sort of thing. So we're not really sure what it's going to happen is, uh, is is deal going to be held to account? Is deal CEO going to be served? We will see.

David Leary: [00:04:55] And the spying activities may have impacted rippling at all. I don't know if you saw rippling, just erased $450 million at a $16.8 billion valuation. And they say that they're not in any rush to do an IPO. And this is up from their $13.5 billion valuation and raise a year ago. So the all the spying apparently it didn't steal sales away.

Blake Oliver: [00:05:21] Maybe still maybe going public about it all helped to boost Ripple's presence in the market. That could be the case. Welcome to our live stream viewers. Matt is first to the YouTube comments. Hello Matt, we've got Gator NYC Hector's in the comments as well. Hello Hector. And he's going to be on the show in just a few minutes. Light him up. Says good morning afternoon morning for us here in Arizona. Welcome. If you want to let us know your thoughts on any of the stories that we are covering. If you want to let us know something that we missed? Put your comment in that chat. Whether you're on YouTube or LinkedIn, we will see them. All right. Let's go ahead and welcome. Well, should we read an ad first. Let's do our first sponsor message. Then we'll get Hector on. Okay. So our first sponsor is, uh, is very appropriate. It's reframe. Are you an accountant? Feeling threatened by I overseas outsourcing and tech companies muscling into your territory? Here's a sobering truth. The narrative that AI and automation can replace. What you do is gaining momentum, making clients question your value. But what if accounting could be seen as the most creative and innovative field in a post AI world? Introducing Reframe 2025, the transformational conference themed pricing with confidence, created by industry leader and CPA Hector Garcia, Reframe teaches accounting professionals to think beyond spreadsheets and reposition themselves as irreplaceable and deep thinking human advisors. This isn't your typical accounting conference. You'll learn a new approach to confidence based pricing strategies inspired by best selling authors like Ron Baker and Blair ends master client conversations that command premium fees and join a supportive community of forward thinking professionals who refuse to be replaced by algorithms. Reframe is an annual event, but it is also a permanent movement to make accounting the most human of all professions. Get your ticket before the 2025 event sells out. Head over to The Accounting Podcast Reframe 2025. That's The Accounting Podcast promo for. 2025. And now joining us is the creator of Reframe, Hector Garcia, CPA. Welcome to the show, Hector.

Hector Garcia, CPA: [00:07:37] Hey. It's so fun. So such a coincidence, too, that the the one episode that we that reframe sponsored as a headline sponsor is the one where you call me up to to chat about this because, you know, I texted Dave David, I said, hey, this has to be big news. This whole Intuit Developer Program thing. And I got my own thoughts.

David Leary: [00:07:55] So yeah. And I'm.

Hector Garcia, CPA: [00:07:57] On.

David Leary: [00:07:57] A tweet storm yesterday about it last night. And then you jumped on can I chat? I have some opinions and I'm like, but I'm it makes sense because Hector is a CPA and he's an accountant. He has small business clients. He uses all the QuickBooks and Intuit products, but he also is an app developer using the QuickBooks API. So Hector gets to bring us a nice, well-rounded perspective on these changes. Should we talk about the changes first? Blake, just fill you in because I.

Blake Oliver: [00:08:24] I am brand new to this. All I know is that Intuit is going to start charging developers to access QuickBooks through the API.

David Leary: [00:08:32] So correct.

Blake Oliver: [00:08:33] Give me the details. Like what are we talking about.

David Leary: [00:08:35] So the charges is one part of this. So they're rolling out a bunch of changes this summer. Um, first thing they're going to do is they're splitting the API, defining the types of calls. So they have what they call our core API calls. So this is going to be your data operations. You send an invoice, you update an invoice, you send a bill, you send a bill payment, you change an address of a customer. Those are core operations. Then they have something called core plus API calls. And these are really the data out operations. When you suck out data or you're querying company information, you're fetching reports and the Core Plus API calls are going to be metered and charges might apply to those.

Blake Oliver: [00:09:12] What about those first ones you mentioned? Is those are those.

David Leary: [00:09:15] Unmetered and uncharged. So so if you put data into QuickBooks, that's free. But if you start just sucking data out, you have to pay for that.

Blake Oliver: [00:09:23] Gotcha.

David Leary: [00:09:24] Essentially the plan and then they're adding other they're adding a API for the projects, custom fields like right now developers can only get to, I think, three custom fields. Now they can access up to 12 through the API's, um, a sales tax API, and also a payroll compensation API, which we can talk about more as I I'll tell a story about platforms and gusto and winds and payroll and the power of developers as we talk about this, probably. And that'll tie to these payroll compensation APIs.

Blake Oliver: [00:09:53] Okay. So the big story is charging for API access, which have they done this before or is this new.

David Leary: [00:10:01] Well, they tried it one time way back in the QuickBooks desktop days. And that was because with desktop and the way you do revenue rec, it could the API, could it be free? It was kind of weird. So they had to charge developers $5 a connection and developers revolted. They hated it. I remember David Barrett of Expensify did a mic drop type how wrong it was to charge developers, and he was right. Intuit eventually removed that, and honestly, I believe the open free API access is what helped grow QuickBooks in the QuickBooks online ecosystem. Um, so they're not charges, but the dream. Everybody wants their 30% like Apple. Like we pay for earmark, we pay Apple, they take 30% of our revenue by just gone. And so I think that's always been the dream of 15%.

Blake Oliver: [00:10:47] Because we're under $1 million.

David Leary: [00:10:49] Okay. 15%.

Blake Oliver: [00:10:50] 15.

David Leary: [00:10:51] Oh. 15. 15. Yes. And I think this has always been the dream of Intuit. And zero zero does the same. They've played games trying to figure out how to charge developers for API access. I think at some level it feels like it's a business model, but it's really not because the whole ecosystem grows in small business, innovation grows and you get everybody's stickier. They use QuickBooks longer or zero longer. They use the apps longer. That's really where the win is from having third party ecosystem.

Blake Oliver: [00:11:19] You know you get to have your opinion, David. But let's talk to a real developer, somebody who's actually building on the QuickBooks online ecosystem with the API. Hector, what are your thoughts on this change?

Hector Garcia, CPA: [00:11:32] Okay. Well, first of all, I'm not super excited about my cost going up as a developer. It's important for everybody to know what developers pay for in terms of variable costs. So we pay for processing power. So every time a a post or a get. So whether data is coming in or out a server has to run that transaction has to run that that call or that post. And then we have our database call. So that's storing. Usually most app developers have basically a copy of the customer's database or that company files database on their customers accounts so they can manipulate the data. So those two, those two are the costs that you generally think about when you, uh, create an app or you create a, a company that's going to serve in the QuickBooks world, the API has always been free. So you never even thought of this ever being a cost. So now other cost detector.

David Leary: [00:12:28] Those other costs are not Intuit charges. Those are what you're paying for Amazon Web Services, things like that.

Hector Garcia, CPA: [00:12:33] Microsoft. Yeah, we pay Amazon Azure or Amazon Web Services. So all of a sudden now we have to think about paying into it as well. Now if zero doesn't charge then we have to think, okay, do we want to serve zero customers or QuickBooks customers of QuickBooks has a million, you know, 5 million customers versus less than a million in the Xero world or whatever it is in the US comparison. So you want to go where you have more customers, but this is a new cost that we have to think about, which means, in essence, that we probably have to change our cost structure to our clients, which is why I think this is kind of a tariff. You know, like, you know, Intuit could be saying, well, developers are paying for this. It's not you customers, but developers are going to translate that cost over to the customer. So it works the same way. It's the same argument as the tariff. And I have another.

David Leary: [00:13:21] Fear will happen that for sure will happen, because that's exactly what's happening with all the API companies right now. Use an app that has API. Well, that app has to pay per usage of the API call for the AI companies, and then they're just passing that directly on to the consumer. And that same thing is going to happen is apps are going to be more expensive. They're going to pass this cost course on, you have to.

Hector Garcia, CPA: [00:13:42] Yeah. Something else you want to consider is that most app companies. Let's say you're an accountant, right? You want to connect an app you'll be paying. Per client. Okay. Because traditionally we don't we never looked at the volume of transactions as how we're going to charge traditionally, even though some of the some of the apps like SaaStr and Transaction Pro importer, they look at transaction numbers just because of the the processing time and the database costs that we talked about earlier. But now, uh, these apps, the apps are seemingly are not necessarily big apps per se. They might have a lot of transaction volume. So, for example, you look at the biggest apps like Bill.com or, uh, avalara or Expensify, like even though these apps are like really, really big, their transaction costs for the API calls are going to be very, very small because most of them they're pushing data into QuickBooks, not pulling data out, although, you know there will be a narrative saying, don't worry, developers putting data in won't cost you anything. Well, even if you put data in, you got to get some data out because you have to validate the customer name is correct and the item name is correct and the account name is correct.

Hector Garcia, CPA: [00:14:54] So for the most part, you will be querying data first, which you're paying for before you write data. Now, in theory, apps could go straight to just writing data without querying it. But what's going to happen is every time a customer is not found, or a vendor or an account or whatever, you're going to get an error. So that's not sustainable, or it's automatically going to create a new customer, a new vendor, or a new item to avoid getting that call. Like to to get the data to be able to validate it. So some apps might try to circumvent this by going straight into writing and not reading. But it's going to make a hot mess. So no matter what, don't let the narrative that. Don't worry, getting data into QuickBooks don't cost you anything. It's going to be irrelevant because you have to get the data out before you get it back in.

Blake Oliver: [00:15:35] Right. You have to read it to validate it and to make sure you're pushing the data the correct way.

David Leary: [00:15:40] And the we haven't talked about the actual what these numbers are. So essentially for they have different tiers builder silver, gold, platinum and platinum would be a developer that has 3000 QuickBooks users connecting their QuickBooks or more. And they're going to charge a monthly fee of $4,500. That's just the fee. And then you get a bucket of API calls. So if you do the math on that, that's about $54,000 a year for an app developer, which I mean, connector, you're an app developer, Blake, you and I are an app developer. We have to pay engineers. That's for an entry level or a decent engineer that's half their year salary. So that's going to result in less innovation, right. If you you have to hire half an engineer less. Now that's features you're not going to put in your product which you're not going to enrich the ecosystem. It doesn't make sense. There's no win in this.

Hector Garcia, CPA: [00:16:34] Well I have a different theory. So recently. If you're a QuickBooks user, you've seen the new, uh, beta version of what they're calling the fusion, uh, design. So it's basically a UI facelift. I don't know if you've seen it. Uh, you guys, have you guys.

David Leary: [00:16:49] Seen the.

Hector Garcia, CPA: [00:16:49] New version? Okay, so basically, QuickBooks rearranged the home page like none of the functions have changed, but the navigation has been rearranged. So it looks like every function is an app. Like just the way like it has icons, the way you you kind of mimic the way you look at apps on your phone. So before you used to have a traditional menu item where you go into transactions, bank feeds and you go into the bank feed screen, now bank feeds is a button, so it feels like the bank feed is an app and the invoicing area is a button. So I'm in the invoicing app. So what ends up happening? What I think is ends up happening, and you actually match that to Intuit connects narrative that they're not they're a they're a platform now. Right. The Intuit platform. Right. That's the big narrative you're getting from into it. What I think this is going to do in the long term is a lot of the small app developers are just going to go out of business. They're not going to want to pay this. So it gives Intuit an opportunity, obviously, to have less competitors and to reinvest on solving those solutions in-house. Therefore, giving the small business owner the impression that all the apps that they ever need are inside of the Intuit platform. And also, you know, if these companies start struggling financially, like I think of my little app, you know, if I can't afford it anymore, they'll be able to acquire me much cheaper, right? Because I don't make as much money as I could before. So I think I think my theory again, this is just my track, my crackpot conspiracy theory is that this is not really a strategy to monetize APIs. This is actually a strategy to control everything, right? It's a strategy in the long in the long term. That's what I think anyway.

Blake Oliver: [00:18:25] Well, you have these companies like digits that suck all the data out of QuickBooks online in order to do reporting, in order to do basically their own version of of QuickBooks. Right. And this basically shuts that down. I don't see how a company like digits continues.

David Leary: [00:18:42] They'll burn through that $60 million. They raised like nothing because these API calls, right?

Hector Garcia, CPA: [00:18:47] I mean, it's it's doable, but it just costs more. This is the thing the business model is going to change. And where this is going to get really interesting is apps that are not predominantly QuickBooks driven apps like you think of Zapier or or make. So I think that Zapier or make are now going to have to create multiple layers of subscriptions where you have, like your basic subscription accesses, all these apps that have free API's, and then a premium subscription that access the apps that charge for API's because the the whole business model changes.

Blake Oliver: [00:19:21] Yeah.

Hector Garcia, CPA: [00:19:22] And I feel like it's unfortunate.

Blake Oliver: [00:19:23] It's just it's it's the beauty of QuickBooks online was 600 apps that you can integrate into QuickBooks to build a custom solution for yourself or your client. And now that is going to shrink as a result of this. Just like tariffs on foreign goods reduce the size of the economy like they they reduce by raising prices, you reduce demand and thus reduce economic activity. This tariff essentially on API access is going to reduce innovation in the in the app ecosystem.

Hector Garcia, CPA: [00:20:01] And this is my theory why I think it's more what I'm saying that it's more of a strategy to do more things in house, because the supposedly the purpose of the tariff is to increase domestic manufacturing. Right? In theory. So I equate domestic manufacturing to Intuit building the solutions in house. And if you think of you look at the narrative of Intuit enterprise Solutions as well. Uh, it's also all about the platform and the fact that Intuit got you covered in any, in any angle. So I just don't see a future where into it. It's actually encouraged to play nice in the ecosystem. I think they must have an ecosystem because otherwise it wouldn't make sense. There wouldn't be competitive. But I believe the ultimate goal is to invest on solving more things in-house. So I think the pendulum is swinging back. So with QuickBooks desktop, it was all about building an all in one tool that became bloated and bloated and bloated, and all of a sudden people are tracking leads in QuickBooks desktop, something that's like, that's not what accounting software does. And then they said, you know what? This is too much. It's too much to to support, too much to handle. And they basically try to kill desktop in the process of killing desktop, moving to Qbo and trying to go lean in qbo and letting the third party apps do stuff. And it looks like the pendulum is swinging back, like, okay, you know what, let's have third party apps do less and us control more of it.

Hector Garcia, CPA: [00:21:20] And and I think it's because I think when Intuit looks at the revenue they get from Qbo and the revenue that all the apps get from connecting to Qbo, and they say they're thinking that they're missing out on a big pie of like, small business solutions type, you know, type of services. So I think that's what makes sense. And you look at, um, the, the recent probably like a year and a half ago where they added, uh, bill payments. Right. So now that's, that's a new business model for Intuit is, uh, making vendor bill payments, the, the incoming QuickBooks payments, they raise their prices like, like crazy and brand new QuickBooks users. The first thing that pops up in the screen is get paid by your customers. Like you're almost forced to, even without knowing to to apply for a merchant account when you first get QuickBooks online. So they're also leading with, uh, getting revenue from the payments and also cross-selling financial services and loans and stuff like that. So I don't think Intuit wants to be best in class in a small category, which is GL software. I think they just want to be able to have as many opportunities to, to cover any of the small business services that a small business could possibly need in connection with their accounting.

David Leary: [00:22:31] Yeah, I just did back in napkin math. So this is probably a non needle moving 4 or $5.54 million for Intuit that they'll probably get from developers when their annual revenue is 17 billion. So it's not needle moving. So it doesn't make sense from a revenue standpoint. But I do think it's risky because third party app developers could drive people to other GLS. And this happened. I'll tell you a story about at the time it was Zenpayroll, which is now gusto. Way back in the early days of QuickBooks API's, there was no payroll API, but there was lots of timesheet apps because that was some of the first apps. It was an easy business problem to solve. The API's were good. People created lots of timesheet apps. But then if your timesheet app tracked over time, you couldn't pass the overtime to QuickBooks. You couldn't. There was no payroll connection to do that, and that's one of the things they announced. They're now finally going to have payroll APIs now this summer. So that's like what, 12 years later, Finally, our payroll APIs. But what happened is all these developers, when their customers would contact them and say, what do you mean I have to edit the timesheets in QuickBooks. I used your app to track the overtime. They would say, well, it works perfect with Zenpayroll. And the early growth of Zenpayroll slash gusto occurred because Intuit did not have proper APIs for developers. Developers can control where customers go and what products they use, and that's what's risky about this. For $12 million or $5 million in revenue, Intuit is risking developers driving people to other other gels. It seems silly, silly to me.

Hector Garcia, CPA: [00:24:03] And not just driving them to the gels is developing their own gels. So you have companies like digits, for example, right, who are charging very little to pull the data out of QuickBooks to show reports or whatever. Any company that's mostly pulling data out of QuickBooks and pulling all of it, like all the transactions to run custom reports or whatever those are going to be paying the most. Those are going to be that's going to be the most costly app out there is the one that is constantly pulling data out. So any any reporting apps that are that are pulling transaction line data. Because keep in mind that pulling a report from the API is one API call, but pulling 100 transactions, that's not particularly prepackaged in a report, it's 100 API call. So this number will skyrocket really quick because remember this is not per customer or per company file. This is for the entire app. Right. So these apps are mostly pulling data out and investing a lot and pulling data out for them. It's going to be they're going to think, you know what. Let's just let's just have a built in GL. We already have all the customer data anyway. All they have to do is press a button and all of a sudden they already have all the data and they're ready to, to, to offer their, their GL solutions. So I think it's extremely risky.

David Leary: [00:25:14] And the other risk of this is yes, there's a risk that companies like digits and others are pulling all the data could spin up their own GLS. But Intuit already learned this lesson the hard way into that bank feeds their bank feed APIs. They had a weird name before. It doesn't matter. And they really shut those down. And from developers accessing those bank feeds because the thought was, that's the magic sauce of QuickBooks. What's happened is Plaid is just this Plaid is this multi-billion dollar company. They're, what, $110 billion or whatever their market cap is now into it because they when you stop API development and you block developers from doing things, you stop innovation. And Intuit missed out on a huge revenue opportunity because they didn't let developers access the APIs because they wanted to control, you know, have that closed moat. And it's just a really it's such short term thinking and you end up burning your bridges long term and opportunities.

Hector Garcia, CPA: [00:26:10] Yeah, I.

Blake Oliver: [00:26:10] Think the only thing that I think is smart is if you are into it, the value, the value of QuickBooks is, a lot of it is in the data that you have. And so you want to prevent other developers from sucking all that data out at the transaction level, because that is a risk to you. If they can do that, and then they can kind of clone what you do, then you've created competition that you didn't have to create. So I get why they're doing this. It seems to me that it's like you said, it's not about revenue. It's a tiny, minuscule amount. It's about putting these companies out of business that suck all the transactions out of QuickBooks. And unfortunately, it's going to hurt some really great apps like keeper, for instance, pulls out transactions, all the transactions so that you can work with them and then push them back into QuickBooks. I don't know how they deal with this. This is going to make it really expensive.

Hector Garcia, CPA: [00:27:03] They charge eight bucks a month. It's just not it won't be sustainable.

David Leary: [00:27:07] Or apps like Cat, they charge five bucks a month. I mean yeah, small companies are going to get hurt. Now, there is something good I thought about on this. It is going to force apps with sloppy and horrible QuickBooks integrations to get better. So if you think about these apps that like sink to clearing accounts because they never built a good integration. So they have their syncing twice as much data to clearing accounts, reading it, rethinking a different journal entry to adjust it. It's going to help force those app developers to take a look at their code and write a better integration. So we could all win from this a little bit. But I just this is the history of platforms. Microsoft did it with windows 3.11. Apple did it with the iPhone. Facebook's done it. Um, YouTube's done it and OpenAI is doing it as we speak. They let developers build a bunch of stuff, then they either steal it, charge them for it, force block the APIs from the developers just for the almighty dollar, short term thing. Every platform does this, every platform does this.

Blake Oliver: [00:28:05] Well, Hector, thanks for joining us. And, um, really excited about reframe. Anything you want to add about reframe before we go.

Hector Garcia, CPA: [00:28:13] Yeah. Thank you. Very fun speculation. Keep in mind that Intuit in that article, they they announced that two hour webinar. I mean, like, what company does a two hour webinar for developers on like June 12th? So you probably should find those links and put it there. Because a lot of this stuff, you know, the speculation we're talking about could get clarified. And Intuit has backtracked before sometimes. So who knows. You know, whether or not they did this announcement to kind of see what happens. You know.

Hector Garcia, CPA: [00:28:40] I heard.

David Leary: [00:28:41] They already backtracked it already. First they showed it to like a sample set of developers first. And they already dialed a lot of it back as my the rumor I hear I've heard. So you're right, it could get dialed back again because Intuit's famous at that. Yeah, 100%. Pull it back.

Hector Garcia, CPA: [00:28:54] Yeah, yeah. So so we'll see what happens. So obviously this is this is the information we have now that's on into a developer website on Reframe. Uh, we have two things coming up. So if you are listening to this prior to June 9th, uh, come to our mini reframe event in New York City. It's a one day event called Exactly What to Say, how to Communicate your Values so you can raise your prices without getting pushback. And that's a one day event in New York City. And then we have the big event in November called the Reframe Pricing with confidence, which for two and a half days, we're going to talk about the science of pricing, not just value pricing, but just pricing in general and how to boost your confidence to price better and how to boost the client's confidence. So it makes sense for them to pay more of your services and again, getting less pushback. Our profession. Not only has to rebrand, but we have to change how we create value and charge accordingly.

David Leary: [00:29:49] And now I'd say I think your conference is really targeting accounting professionals, but maybe a lot of app developers are now going to have to reframe how they price their app, or probably should probably attend as well.

Hector Garcia, CPA: [00:29:58] We have plenty of app developers that have signed up and bought tickets for this conference, so. So it's going to be an accountant plus app developer conference, third party app developer conference.

Blake Oliver: [00:30:09] Hector, thanks for joining us. Hope to see you around soon.

Hector Garcia, CPA: [00:30:11] Thank you.

Blake Oliver: [00:30:12] See you later. All right.

Hector Garcia, CPA: [00:30:15] David.

David Leary: [00:30:15] I'll read the second ad and then we'll jump to the rest of the news.

Hector Garcia, CPA: [00:30:18] Sounds good.

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Blake Oliver: [00:31:31] Since we talked about Intuit's tariff on developers, I want to talk about Trump's tariffs on manufacturers. Do you like what I did there?

Hector Garcia, CPA: [00:31:41] I learned.

Blake Oliver: [00:31:41] Something new. I learned something new today or this week. Foreign trade zones. We have these in the United States and they are basically tariff shelters haven't been such a big deal recently. But now with Trump's tariffs going up 145% on China, now they're back down to 30%. It matters. It's making a difference.

David Leary: [00:32:06] So are these kind of like those I think in the art world. Like people would store artwork at the airport or at the port in a warehouse.

Hector Garcia, CPA: [00:32:13] Yeah. In that for.

David Leary: [00:32:14] A long time.

Blake Oliver: [00:32:15] That Christopher Nolan movie featured it, too. What was that, uh, tenet in tenet like that? One of those, um, I think I think that was what it is. It's like, uh, like you said, it's a warehouse at an airport where you can store artwork and you don't pay the import tax because it's not it's on the air side. It's not technically in the country from a legal standpoint. Uh, it didn't come through customs. So this is sort of similar where, uh, the example is SKU distributions, 110,000 square foot warehouse in Mesa, Arizona. It had just one customer last year, and now it is it has more business than it can handle. The warehouse operates as a foreign trade zone, which allows companies to import products tariff free while stored there or used for assembly. The companies only pay tariffs when they ship the goods to US buyers rather than upon import. And if you reexport them, you don't pay any tariffs. So companies are starting to use these free trade zones to just delay paying tariffs until I assume, hopefully the tariffs are lower or are retroactively lifted or something like that. Right. Which is the Trump administration stated objective, is to use these high tariffs as a negotiating tool to eventually negotiate better deals for everyone. And hopefully, right. If you're a manufacturer and you're dealing with this, you're going to, you know, end up paying 10% as long as you wait.

Blake Oliver: [00:33:47] So some examples of companies, there's security tactical. They sell gun safes. There's Red Aspen. They're a cosmetics company. Sport Flex. They make playing field fences in China. They're importing their products into these free trade zones. Now, these have been around for a long time. They were created back in 1934, created to encourage foreign commerce and mitigate the effects of the Smoot-Hawley tariffs. The original tariff bill by McKinley, who who Trump likes to cite as an example of a great leader manufacturing in the zones became legal in the 1950s. So you can import your raw materials, you can manufacture in the zone and then pay the tariff once you sell to a US customer, or avoid the tariff entirely if you export back. And this is a big deal for Arizona. We have the most free trade zones of any state. Um, now it doesn't totally eliminate the tariffs. You still have to pay whatever tariff rate is in effect when the goods leave the zone, but it enables you to avoid all the tariffs at the moment. So cash is king, right? You get to hold on to your cash for a little bit longer, hopefully pay a lower rate later.

David Leary: [00:35:06] And it's a hedge to where now you have the goods onshore in the states. So when the tariffs do change, you can start shipping your goods out. And those delays of a boat traveling across the Pacific Ocean are not going to be there. Ordering from China, having remanufactured from scratch. So it's a little bit of a hedge to get a competitive advantage in theory.

Blake Oliver: [00:35:25] Arizona has 76,000 workers in free trade zones. That's the most of any other state. Next is Texas with 61,000 and California with 52,000. And then Mississippi and South Carolina are a distant fourth and fifth, respectively. Um, and, you know, it's interesting is that like these free trade zones are actually geographically marked. So here's an I want to show you an example of one. Uh, this is the free trade zone in Mesa. As reported in the Wall Street Journal, uh, you can see the outline. It was actually originally designed around the airport in Mesa, but it's a pretty large area, and potentially any warehouse in that area could become could, could qualify for that free trade zone. So it's it's good for the city of Mesa, that's for sure. For their economy. But it shows you some of the distorting effects of tariffs. Companies will figure out how to avoid paying them, and it's going to pull economic activity from one area of the country to another simply because they have this exemption.

David Leary: [00:36:30] What did you say this is the employees 76,000.

Blake Oliver: [00:36:34] This employees 76,000 employees are in free trade zones in Arizona. So I would expect if this goes on for a while, that would expand. So if you have a free trade zone near you right. Maybe a good place to invest.

David Leary: [00:36:49] So these are not 76,000 people working at these warehouses.

Blake Oliver: [00:36:52] It's just 76,000 workers in free trade in Ftzs.

Hector Garcia, CPA: [00:36:59] Okay.

Blake Oliver: [00:36:59] Yeah. So we don't know, like if all that work of course is being done in the FTC, like for this type of Situation. Does that make sense?

Hector Garcia, CPA: [00:37:11] Yeah. That's interesting.

David Leary: [00:37:12] I've been in Arizona my whole life, basically, and did not know these existed.

Blake Oliver: [00:37:16] No idea. Oh, light em up. Says when we were talking about those warehouses at the airports. Those are bonded warehouses. Oh, maybe it was in the dark night. Allison says. Dark night. That could have been it, I think. Was that the one where they stole the gold from the. It was like, I don't I don't remember. Um, okay. So what else is new with tariffs after all this? They might actually be struck down as unconstitutional. The first federal court hearing was held on Trump's Liberation Day tariffs, and the three judge panel of the US Court of International Trade appeared troubled by the Trump administration's broad claims of power. During their hearing the cases Vos selections v Trump. The case hinges on four key words in the International Emergency Economic Powers Act the ieepa. The words are unusual and extraordinary threat, unusual and extraordinary threat. So Trump cited large and persistent annual U.S. goods trade deficits as justification, and the judges are questioning whether a decades old trade deficits could qualify as unusual or extraordinary. We talked about this on a show in the past. There is actually no law that gives the president the authority to change tariff rates. This is taxation. Tariffs are taxes. And Congress, according to the Constitution, has the power to levy taxes. The president has emergency powers to regulate trade.

Blake Oliver: [00:38:56] But does that mean that you can change the tariff rates? Or does it simply mean that you could block imports? So Execution is always the Achilles heel of any administration. And as we saw with Doge, right, you try to fire people the wrong way. You run afoul of the law. The courts strike it down. Eventually this could happen with the tariffs. Wouldn't it be crazy if all of this ended up being moot because the tariffs are rendered unconstitutional by the courts? Now, there is a historical precedent. The United States versus Yoshida International in 1975. Nixon did a temporary 10% tariff on foreign goods. But there were some differences. Nixon's tariffs responded to the sudden Nixon shock of ending dollar gold convertibility, and Trump's tariffs are based on long standing trade deficits that aren't new or sudden. So there's not really a historical precedent for what Trump did that matches. And I could see these federal judges striking this down. The question would be, does the Supreme Court agree? And will any of this get to the Supreme Court before all of this is moot anyway? Right? If the Trump administration manages to negotiate all these deals with other countries and then lifts the tariffs, then it won't matter anymore. So we'll see. Um. And that's all I got on tariffs.

David Leary: [00:40:29] I could swing this pendulum back to MAGA and into it if you want. We could we could talk about Intuit again if you'd like.

Hector Garcia, CPA: [00:40:38] We can go back to that.

Blake Oliver: [00:40:38] But let's thank our third sponsor first. If you put up the banner I will read the ad. Thank you, Bluevine for sponsoring this episode. Your small business clients deserve banking built specifically for them. Meet Bluevine, the business banking platform created to save you and small businesses time, money and hassle with Bluevine. Your clients don't need a savings account. They can earn up to 1.5% 5% APY on checking balances when they meet an activity goal, or up to 3.7% APY automatically with upgraded plans and with no monthly fees for standard plan customers. Free standard ACH and competitive rates on same day ACH wires and international payments, they'll save more where it counts. But Bluevine doesn't stop there. Powerful tools like multiple Subaccounts for better budgeting, shared account access with secure logins and automated accounts payable streamline how your clients manage invoices, approvals and payments. And for you, Bluevine is dedicated. Account dashboard gives 24 over seven secure access to all your clients accounts in one place. No more chasing down statements or check images with seamless integration with QuickBooks online reconciliations are faster and accounts payable workflows are simplified. Plus, as a partner with Bluevine, accountants get access to a free, upgraded plan with 3.7% APY and a bonus of 200 or more for each new qualified client referral you make with Bluevine. You're not just managing accounts, you're setting your clients up for success while making your job easier. If you're ready to become a valued Bluevine partner and unlock exclusive rewards just for accountants, head over to The Accounting Podcast. That's The Accounting Podcast dot. E v I n e. All right. David, what is this about? Intuit and Mega? Has Intuit gone mega?

David Leary: [00:42:27] I think so if we go back to almost a full year ago. So June of 2024 and episode 388 of the Accounting podcast, we actually had the title of the episode. It said, Will Intuit go Red in the 2024 election? And apparently us questioning this and our predictions have kind of came out true. So I would argue if Intuit is officially gone red and the it peaked this week, so I didn't. We've always talked about Intuit lobbying, right, because of the TurboTax interest. So last year they spent a record $3.72 million lobbying last year, and the first quarter of this year, they spent more than $1.2 million. In the first three months of this year, they spent its largest quarterly spending ever on lobbying. Also, did you know that Intuit. Intuit donated $1 million to the Trump inauguration?

Hector Garcia, CPA: [00:43:18] I did not.

David Leary: [00:43:19] Did not know.

Hector Garcia, CPA: [00:43:19] That. Did they get their.

Blake Oliver: [00:43:21] Logo on on something there?

David Leary: [00:43:23] No, they got better than that. This week, the Republicans in the House Ways and Means Committee, they voted to eliminate IRS direct file program.

Hector Garcia, CPA: [00:43:32] Wow.

David Leary: [00:43:33] So that's what they wanted out of this.

Blake Oliver: [00:43:35] That's the program that the IRS was building its own tax filing software, which if you're into it and a big chunk of your business is TurboTax, you don't want that. You don't want that free option.

David Leary: [00:43:46] But not only did they vote to eliminate it, they actually recommend and propose a partnership between the IRS and private tax prep companies.

Hector Garcia, CPA: [00:43:54] Well, that's what the IRS.

Blake Oliver: [00:43:55] Had before with.

Hector Garcia, CPA: [00:43:56] Free kind.

David Leary: [00:43:57] Of before.

Hector Garcia, CPA: [00:43:57] It's just it's free file.

Blake Oliver: [00:43:58] All over again.

Hector Garcia, CPA: [00:43:59] The free that wasn't really free.

David Leary: [00:44:02] And so what's interesting about this is Intuit just didn't go read the fact that they donated to the inauguration. You could argue Intuit has gone MAGA, which I find it's kind of making my brain hurt because I would argue if I use MAGA terms, Intuit is one of those woke Dei companies and so.

Hector Garcia, CPA: [00:44:20] Are they going to take are.

Blake Oliver: [00:44:22] They going to take the pronouns out of their email signatures?

Hector Garcia, CPA: [00:44:24] That's how you that's how you I.

David Leary: [00:44:26] Don't know, but at the end of the day, money talks, right? Intuit's turning a blind eye to MAGA social stances, and Republican lawmakers are turning a blind eye to Intuit's wokeness, if you want to think about it that way, they're all hypocrites for the mighty dollar, really, at the end of the day. And but we did predict this. We predicted this last year, a year ago. In the episode, I'll put the link in the show notes. Episode 388. Everybody should go. Listen, we saw this coming.

Hector Garcia, CPA: [00:44:52] All right.

Blake Oliver: [00:44:53] Moving on. Let's talk about what Allison just brought up in the chat. Has there been discussion about the change proposed change from AICPA and Nasba about how to get CPA 120 hours and two years experience? No, not yet, but we're excited to talk about it. And the news is that AICPA and Nasba have released model legislation for the new CPA licensure model that follows what other states have already put in place. It's sort of the reverse order that you would normally expect. Normally, AICPA and Nasba put out model legislation for the Uniform Accountancy Act and then states go and adopt it. But in this case, they were moving too slow and a bunch of states went and already adopted this. And so AICPA and Nasba have put out similar proposed legislation.

David Leary: [00:45:51] And we see a bunch 12 passed it in I think 17 introduced. So we're pushing 30% of the states pretty close to it.

Hector Garcia, CPA: [00:45:58] So we.

Blake Oliver: [00:45:58] Can expect the rest of them to follow. Now that they have this model that they can they can use. Um, it's really the same stuff we've been talking about. The the new pathway is a bachelor's degree with an accounting concentration, two years of experience and passing the CPA exam. There are improvements to mobility. It shifts from a state based to individual based practice privilege, which allows you to practice across state lines with just one license. There are some elements of automatic mobility in here where as long as you meet one of the three pathways requirements or you're grandfathered in under the legislation, then you're automatically able to practice in the other state. There's no need to register. There's no need to prove that you're qualified. So this will hopefully reduce some of those complaints of CPAs when they do get in trouble with state boards of accountancy. And they get picked on for this. And I don't know, I wonder if this is going to have an impact on those firms that are telling CPAs not to use their CPA and their email signature or on LinkedIn, because I think we all want CPAs to be able to call themselves CPAs, regardless of where they work. And I'm not clear on how this affects that. Uh, if if because you're in an alternative practice structure and you're not working at a CPA firm, but you're in public accounting in some respect, like, are you still going to be in trouble with boards of accountancy? I don't know if this addresses any of that.

David Leary: [00:47:26] And they wanted they said they want to publish this this summer, the updates to the Uniform Accountancy Act. But they also at the same time in this article, I saw they plan to I'm going to quote unquote here explore the issue further through a wide ranging study on the skills newly licensed CPAs need. So we're right back to they're going to study it. And like they might they may never actually push this through this summer because they'll still be studying it and having uh.

Hector Garcia, CPA: [00:47:51] Well, no, the.

Blake Oliver: [00:47:52] The legislation is approved, the model.

Hector Garcia, CPA: [00:47:53] Legislation is.

Blake Oliver: [00:47:54] Approved. That's going forward. But I guess, you know, the next question is, okay, now that you have changed, CPA licensure reverted or given us another option that's similar to the old pathway that will reduce the cost for students. What is an accounting concentration? What does that mean? What should be in the accounting curriculum. Uh, with all this AI stuff that's going on, you know, it's not so difficult now to look up the answer to almost anything. So is memorization of definitions really the way to focus the CPA exam? Because that's what a lot of it seems to be. If you can memorize all the definitions, you can get through a lot of the multiple choice questions. And so, you know, my my view is that just like accounting education has to change from memorizing rules to applying them or to critical thinking or just like a whole bunch of other stuff that we're not doing. I mean, I hope that when they do this survey, they ask accounting firms, do you feel that your newly minted staff accountants coming right out of school are prepared? And if not, what are you having to teach them that we should be teaching them in school? When I talk to small firm owners, they say like these accounting grads don't know anything. Like they are. They are. I mean, maybe that's not true, but like, you have to spend years training them in a firm and that's expensive. And and you know, if these students are paying for an expensive education, you would think that they could come in and like, know how to work in a firm, not just have a bunch of theory that they've memorized without ever applying it.

Blake Oliver: [00:49:30] Um, and if you have thoughts on this and you're in accounting education, you can send me an email. The accounting podcast at earmarked me. That's the accounting podcast that earmarked me. I feel like a big part of the problem is that the state boards of accountancy have very prescriptive curriculum. So there's not a lot of room in the way they define an accounting concentration. To actually do anything new, like maybe you can swap out one course, but it's not that meaningful. Like you have to take this giant list of courses in accounting and business. And so the the educator can't really innovate because they're locked into this curriculum. And I the one thing that is not happening that I would love to see happen is to just loosen up the education requirements so that if you have a bachelor's in any subject, you can sit for the CPA exam. And my view is that if you can pass the CPA exam, that should indicate that you learned the material. So who cares if you learned it doing an accounting major or doing a finance major, or doing a business major. Like just let people who have learned the material sit for the exam and become CPAs. And if you don't feel like the exam is good enough to act as a really solid, uh, you know, barrier to entry for people who don't know what they're doing in accounting, then like that's a problem with the exam. We should fix the exam.

David Leary: [00:50:55] So and so. You seem optimistic on this whole infuse your words moving from the billable hour because it's a billable hour model. How many hours of school did you did versus did you get the work done. Did you pass the test.

Hector Garcia, CPA: [00:51:08] Yeah.

David Leary: [00:51:08] What skills do you actually have?

Hector Garcia, CPA: [00:51:10] Yeah. And it's totally.

Blake Oliver: [00:51:11] Possible to design tests now that are adaptive. So you don't I mean, the CPA exam is extremely long and it's probably very inefficient. Actually, we know it's very inefficient because there's just a bank of test questions. It's very traditional. And then somehow, you know, your score is calculated. If we did adaptive tests where based on your answer, whether it's correct or incorrect, you get a harder or easier question. You could probably make the CPA exam like one day or one half day instead of four exams. Four days. You could you could do that. The GMAT does this. The GMAT is an adaptive test and it's just much you get to the answer much faster. You get to the score much faster. You could probably even give people an instantaneous score rather than making them wait for weeks. That's all antiquated too. So anyway, enough on that. Let's get to our next story. David, do you have anything you want to highlight? If not, I'll talk about the Florida CPA bill.

David Leary: [00:52:16] Yes. Do that follow up. So you brought this up last week and there's more news.

Blake Oliver: [00:52:20] Well, so yes, there was a bill that passed the Florida House to eliminate all professional licensing boards and continuing professional education requirements for all professions, including accounting. The Florida Institute of CPAs has been working hard to stop that in the Senate. Uh, Shelley Ware has been leading that, and they have successfully paused it. They have, they have. They've got the Senate blocking that. Um, now, it's not completely they're not completely out of the woods yet because, um, I guess the Florida Senate is still in session through June 6th, but as long as that bill remains stalled until then, the bill will die. So according to the Ficpa, they've entered a much safer zone. But they're not 100% out of the woods yet. Those are their words.

David Leary: [00:53:14] And is this just the efforts of the Florida CPA, or is this also the efforts of other professional organizations in, uh, in lockstep with them?

Blake Oliver: [00:53:22] Right now, it's just Florida that's been taking the lead on this.

Hector Garcia, CPA: [00:53:26] Okay.

Blake Oliver: [00:53:26] Yep. So should we talk about the Pope in Texas?

David Leary: [00:53:32] We tried a little bit last week, but more.

Hector Garcia, CPA: [00:53:34] Well.

Blake Oliver: [00:53:35] You talked about the cost of the Pope's. Uh, what's the ceremony? The or the conclave.

Hector Garcia, CPA: [00:53:42] To.

David Leary: [00:53:42] Replace the the to replace the pope?

Hector Garcia, CPA: [00:53:44] Yeah, right.

Blake Oliver: [00:53:45] Did we talk.

Hector Garcia, CPA: [00:53:45] About.

Blake Oliver: [00:53:46] Taxation of the Pope? Because the Pope is a US citizen. Did we? Did this come.

Hector Garcia, CPA: [00:53:50] Up?

Blake Oliver: [00:53:51] I can't remember.

David Leary: [00:53:52] Either. Came up in the chat, but I don't think we had a full understanding of it. So if you have an article with more information on this, I would find it.

Hector Garcia, CPA: [00:53:58] Okay. Yeah.

Blake Oliver: [00:53:58] So this is sort of follow up, right. So there have been some stories about this. So Pope Leo the 14th, uh, formerly Cardinal Robert Prevost, is an American citizen, a United States citizen, and has made history as the first American elected pope. The US taxes global income of all US citizens, no matter where you live. So there's a question as to whether or not the Pope will have to file a US tax return. And it sounds like he might. Being a foreign head of state does not automatically excuse you from a tax requirement. There was a constitutional amendment to revoke the US citizenship of anyone who becomes a foreign nobility or head of state. But that was like a bill that it was one of those amendments that never got enough states to ratify it. So. If he maintains his US citizenship, the consensus is that he would still need to file with the IRS. He could claim foreign earned income exclusion and other deductions, and he has to report foreign bank accounts over $10,000. Now, the Pope is a member of an order where he has taken a vow of poverty. So if he has no income, I don't know if he's going to have to file, but there's probably some paperwork that still has to be done.

David Leary: [00:55:17] If you get free housing, that's income. Right. I think I think you have to track that.

Hector Garcia, CPA: [00:55:22] Yeah.

Blake Oliver: [00:55:23] There's exemptions and all that stuff. But yeah, probably still some paperwork has to get filed. So, um, he can also continue voting in US elections as long as he maintains citizenship. Isn't that funny? And technically, he meets the constitutional requirements to run for US president.

Hector Garcia, CPA: [00:55:39] So he could be both.

David Leary: [00:55:41] At the same.

Hector Garcia, CPA: [00:55:41] Time. Yes, he could be the Pope.

Blake Oliver: [00:55:43] And he could be the US president. Takes me back to, uh. You know, remember when. Well, I wasn't around, but the stories about how, like, when Kennedy was running for president, his Catholicism was, like a big deal. Like, are you going to, uh, are you going to do what the Pope says? Remember that? Well, now, we could have a whole new discussion.

Hector Garcia, CPA: [00:56:04] It contains, like, an extreme.

David Leary: [00:56:05] This could be a nice movie.

Hector Garcia, CPA: [00:56:06] Yeah.

David Leary: [00:56:07] Kind of fun.

Hector Garcia, CPA: [00:56:08] Um.

Blake Oliver: [00:56:11] All right, so that's it for the Pope tax. Now we've got this whole tax bill in Congress. We don't have time to go through it, so maybe we'll do that next. Next week. I think right now we should actually thank our final sponsor this episode.

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Blake Oliver: [00:57:44] I want to close out by. Highlighting some news about Doge. Elon Musk is stepping aside at Doge or significantly reducing his time starting this month. But Doge's work is expected to continue through July of 2026. That's its scheduled termination date, and there's a lot of work left for Doge to do when it comes to cutting waste and cutting fraud in particular. That's the thing that really concerns me. And regardless of how you feel about Doge, I think we can all agree that reducing improper payments or fraud in the government is something that we should all care about as taxpayers. And there are some crazy examples of waste regarding improper payments. The IRS, for instance, the Treasury inspector general said that the IRS has failed to meet the Payment Integrity Information Act's goal of keeping improper payment rates below 10% for for refundable tax credits. That means that for four different tax credits, the improper payment rate is over 10%. And it reached 21.4 billion in fiscal year 2024. These are people that tried to get tax credits that should not have and got paid. What tax credits are we talking about? The net premium tax credit had a 29% improper payment rate. Almost a third of payments for that tax credit should not have gone out. The American Opportunity Tax Credit 28%, the Earned Income Tax Credit 27%, and the Additional Child Tax Credit 11%, all adding up to over $20 billion in just one year. Now the iris's response. They've made a few changes to try and reduce these. For the 2025 filing season, the IRS modified its identity protection Pin process to accept e-filed returns when a dependent is claimed on multiple returns. So that should reduce the number of improper credits for like the additional child tax credit, I suppose. But duplicate. They say that duplicate dependent claims actually have a minimal impact on total improper payments, which to me indicates that people are basically claiming dependents that don't exist or that they shouldn't have. Right? Like like I claim you as a dependent, David. Yeah, but.

David Leary: [01:00:15] Duplicates are probably just a mistake. It's an honest mistake. People. Anybody who's divorced, you have to clarify who's claiming which kid. It's easy to get confused. Right. And you make a mistake. Both of you claim the same child. But you're right. Just the bigger fraud is probably just making up bodies. And kids are dependents. You don't have.

Blake Oliver: [01:00:35] This may be even larger than 21 billion, because the IRS isn't even reporting improper payment rates for programs such as the Employee retention Credit. The IRC, which seems like it would probably be really large, right? Um, so there's that. There's also another fraud that could be costing the US government up to $1 trillion. As reported by NBC News International, criminal groups are stealing between 200 and 33 billion and potentially up to 1 trillion annually from US government programs. That's according to a new report by Socure, an identity management firm. And this is something that Doge really hasn't even tackled yet. Criminal organizations from China, Russia, Egypt, Poland and other nations are responsible for up to 12% of all applications for government services and loans, so criminal organizations in foreign countries are applying for government services and loans up to 12% of all of them. And the core issue how are they able to do this is because there's inadequate identity verification systems in government programs. The annual fraud losses are estimated by the Gao at being between 233 and 521 billion. So this is.

David Leary: [01:01:55] There's no good know your customer procedures. And then they're just cutting checks to people and didn't do the the know your customer due diligence.

Blake Oliver: [01:02:04] They're not verifying identity.

David Leary: [01:02:07] So which is interesting because we have a whole federal government that finds companies, if they give out money without doing proper KYC.

Blake Oliver: [01:02:16] Right. The the banks have to do it. But the federal government itself doesn't seem to be doing it. Um, so I mentioned, you know, it's 233 to 521 billion, according to the Gao. But fraud experts think that could be double or triple those estimates, which is how you get to the possibly $1 trillion number. So it's beyond pandemic relief programs. It's regular government operations, including FEMA, disaster relief and Medicare. How the fraud works. Criminals use stolen or synthetic identities to pose as eligible recipients. They use AI to um to create this documentation, to create the the photos they need whatever they need. And then the government agencies don't have basic verification protocols that are standard in the private sector. No surprise there. For example, call centers often grant account access based on easily obtainable personal information, which we saw recently. You know, the IRS was having issues with that with their taxpayer, um, tax pro line. So. This is an easy win. This is something easy that we can do is just take the private sector's sectors. Kyc know your customer and apply that technology to the government and make sure that the payments don't go out until there's verification that these recipients are legit and not criminal organizations. It's just I don't know, it just. I hate this, right. Like this just it's like billions, hundreds of billions of dollars a year. Uh, Amazon, Walmart. They solved it. Banks have solved it. It's just incompetent.

David Leary: [01:04:03] I have a story we could close out on if you want. I don't know if we talked about it or not. Did we talk about how 99.99% of all Trump Memecoin buyers lost money?

Blake Oliver: [01:04:11] Not yet. But I want to hear about this. How do you know that?

David Leary: [01:04:15] So there's a one of those, uh, blockchain analysis companies. They're actually called chain analysis. They basically audit because the big secret is crypto is not actually secretive. There's a chain, right? Somebody can go and audit and put together the blockchain. Somebody went and where the wallets are. So basically 764 wallets have lost money investing in the Trump meme coin.

Blake Oliver: [01:04:41] Wait.

David Leary: [01:04:41] How many? 764,000 wallets. So these would be a wallet that has a Trump meme coin in it, or did it X price? It's worth less now. In contrast, 58 wallets made over $10 million each, collectively raking in $1.1 billion.

Blake Oliver: [01:04:58] So basically everybody except for like a few dozen people lost money on this. Yeah, a few dozen wallets.

David Leary: [01:05:04] 60 people, 58 people.

Blake Oliver: [01:05:06] How much does it does it quantify how much money they lost or how much money these other wallets made?

David Leary: [01:05:14] At one time it was a market cap of 15 billion. Um, and then the market cap went back up to like 2.7. Currently it's at 2.17 billion, but essentially they raked in at least $1 billion. These 58 wallets.

Blake Oliver: [01:05:27] Wow.

David Leary: [01:05:28] That's. And then the other part of this is the, um, crypto companies that enabled the trades. They raked in $324. $2,320 million in trading fees. Like the whole it's.

Blake Oliver: [01:05:42] Crypto as as one of our episodes was titled crypto is a scam. It's not all a scam, but gosh, most of it seems to be. That's that's amazing. And can we even calculate how much the Trump Organization or the Trump family made from all of this?

David Leary: [01:06:02] Probably not. Probably.

Blake Oliver: [01:06:04] Well, that's maybe maybe chain analysis could figure that out. Probably a lot of money.

David Leary: [01:06:07] I don't think you can track the blockchain on an airplane or a jet.

Blake Oliver: [01:06:12] Oh the the Qatar.

David Leary: [01:06:13] Trump got a jet, right? Yeah.

Blake Oliver: [01:06:14] I don't know, did that actually happen yet? Did he. I don't I just.

David Leary: [01:06:17] I don't know either.

Blake Oliver: [01:06:18] I haven't followed it, but um check that plane for bugs. That's for sure. All right. David, always a pleasure chatting with you so much. We didn't get to. I got, like, a giant stack of tech news that we'll have to get to on our next episode. And what else? I think that's pretty good.

David Leary: [01:06:36] We're launching two new podcasts that everybody should check out. Uh, there's podcast called She Counts and another podcast called Tax in Action, and I just put the links in the chat. So if you're watching this anywhere and they'll be in the show notes as well. Uh she counts dot show and tax dot show. Believe it or not we have the domain tax dot show which is so beautiful and simple. Very exciting. You can get CPE.

Blake Oliver: [01:06:59] So, David, um, let's talk about the shows briefly. So tax dot show that is tax in action hosted by Jeremy Wells. It is a practical tax show for independent tax practitioners. And Jeremy walks through different concepts. Um it's not just theory. It's the how to as well.

David Leary: [01:07:19] So it's like having Jeremy to be a part of your small firm to do lunch and learns. That's right. I would say.

Blake Oliver: [01:07:25] And this is a subscriber only podcast. So you have to be an earmark subscriber to get this premium content. So if you have not consider upgrading to an annual membership at earmark app. And also we have subscriptions and discounts for teams. So if you want to get earmark for your whole team, whether you're at a public accounting firm or in corporate, we can do that. Contact sales at earmark and we'll get you set up. You get a 20% discount for five or more seats, and it's unlimited. And you get cool shows like that. And, uh, let's see. She counts. That is open to everyone. David, tell us a little bit about She Counts.

David Leary: [01:08:11] So She Counts is hosted by Nancy Mckillen, CPA and Kristen Tilka EY. And they're really going to have more conversations about what it's like to be a woman in accounting and how being really more of a firm owner who's a female in accounting and the career issues and things like that, almost in a way where I guess a podcast is community. We're a community, right? You could say like, so it's going to be really a community for women that are in the accounting profession to exchange ideas. And they'll have they'll bring on guests. They plan on having a good social media presence. Um, and it's going to be about issues that, frankly, you and I could even learn from. I think it's going to be a show for anybody who needs to be in tune with this.

Blake Oliver: [01:08:52] Absolutely. Thanks everyone who joined us live today. If you're listening on the podcast feed, subscribe to us on YouTube as well. You can tune in live. Hit that subscribe and notification icon. You'll get notified when we start streaming, and you can chat with us while we do the show live. Thank you HK geek for joining us. Alison, light em up. Uh, Hector. Boring. Accountant. Aaron. Aubry. Megan. Madman. Dan. Doug. Uh, who who asked me to say their name? Uh, it was. Oh, there's Brian. Hey, Brian. Stephanie Yagnesh. I said your name. Thanks, everyone. And don't forget, you can earn free CPE for listening to this episode and almost every episode of the accounting podcast. Go to Earmark app, create your free account and you can earn one CPE per week for free. These are Nasba approved CPE credits, so you can use them for your license renewal in the United States. And we have heard from our listeners abroad that they work as verifiable CPE in Canada, the UK, Australia. Be sure to check with your licensing body. But we have not had any issues so far with that. So global CPE for everyone for catching up on the news. David, anything else before we go?

David Leary: [01:10:10] No. That's it. Thank you everybody for attending or listening.

Blake Oliver: [01:10:13] See you next week. Bye everyone.

David Leary: [01:10:15] Thank you. Bye.