Tax Organizers Suck

What sucks more than tax organizers? Nothing! Today, we're wading deep into the weeds to talk about the toils and troubles of working with tax organizers with Jason Staats, Principal at Brenner LLP, founder of the Realize community for accountants, and advisors, and host/creator of the YouTube channel, Jason_CPA ...

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[00:00:19] Episode Preview

Blake Oliver: I love this! If I’m understanding correctly, you're saying, figure out how to open up what the IRS knows.

Jason Staats: Yep.

Blake Oliver: Open up their database to outside authorized people like CPAs, and software companies supporting them, and then we can go in, and we can fix it. We can get the data we need to file whatever we need to resolve these issues, rather than having to have this wall between us and the information.

[00:00:52] OnPay Studio Bumper

David Leary: Coming to you weekly from the OnPay recording studio, this is The Cloud Accounting Podcast.

Blake Oliver: Today is January 30th, 2022. Welcome to The Cloud Accounting Podcast, I'm Blake Oliver.

David Leary: David Leary.

Blake Oliver: And joining us today is Jason Staats, the YouTuber of the CPA profession, leading us into the great world of video. And we're recording on video today because of you Jason; you have inspired us. So, thank you so much for being here.

Jason Staats: Good. Thanks for having me. This is going to be fun.

Blake Oliver: I am so excited, talking to you about all sorts of things going on this week; tax season, cryptocurrency. What else do we got? David, you started a little- a Twitter war or tweetstorm.

David Leary: Well, Jason said that I chose anger, based on my tweet and it got- people got very opinionated about that tweet.

Jason Staats: You chose violence.

Blake Oliver: I want to talk about your tweet.

David Leary: We'll talk about that, the IRS, their updates; they're looking for lawyers, thinking about looking to alternatives to the We can follow up on some of those stories.

Blake Oliver: That's right. Expensify launched a corporate card for CPAs. I tried to sign up for it. I can't wait to tell you guys about how that went. I've been talking about the Metaverse a lot, and because we're on video, I can show you. I actually did it David.

David Leary: You did buy Oculus?

Blake Oliver: Here's my Oculus.

Jason Staats: Yes. Oh, yeah. Next time we do this, we're all going to be goggled out of our minds, right?

Blake Oliver: So, for those listening on the podcast, not watching the video, this is my Oculus Quest 2. It's still in the box. It's the Facebook VR headset. So, yeah, we have to do a Metaverse edition.

David Leary: So, I hate to do this, because we have the video professional with us, and we're using video for the first time to do the podcast, but Jason, you are blurry as hell.

Blake Oliver: That's because of our video platform here; we're using Zencaster to record.

David Leary: Oh, but you look perfect. You're perfectly crisp.

Blake Oliver: Well, I have- I don't know what you guys have. I have fiber.

David Leary: Am I blurry as well?

Jason Staats: You look good to me. I can see my camera live feed, and it looks fine through my end, so it's gotta be the platform, I think.

David Leary: Alright.

Blake Oliver: So, the way this platform works is, it records the video locally to the computer. The stream is just for us, and then it uploads the high-res files to the server.

Jason Staats: I've got my- and I'm going to- I've got my own recording straight out of my camera. So, worst case, I could shoot that to you.

David Leary: Perfect. I was getting kudos, clueless like we have the better video.

Jason Staats: Figure your crap out, Jason.

David Leary: It’s actually going downhill. It's actually getting worse, so this is great. This is perfect.

Jason Staats: Aw, geez.

[00:03:33] David Chooses Violence?

Blake Oliver: So, let's start with this tweet. David, please read your tweet. What did you say?

David Leary: Read my tweet. Let me open up my tweet here.

Blake Oliver: And read it in the voice in which you composed it, please.

David Leary: This is one o'clock in the afternoon, on January 26. I tweeted “#TaxTwitter: You know that portal you are sending clients to answer “just 59 questions” so you can do the return? It sure feels a lot like the same experience when I just use TurboTax to do my taxes myself.” And then I put a space, and I said, “What are you doing to differentiate?” And what drove this is, this year- I've used a firm to do my business returns before. And the first time I used it, I used the firm Halon Tax. I used Halon Tax and it just connects to your QBO file and just suck the data. I barely had to do anything. It was actually a pretty slick experience.

The problem is, Halon backed off on that because I was probably an exception; My QuickBooks were actually in order. Most peoples aren't. So, tools like that, it's really hard to do. But I'm actually going to use a firm for my- I'm getting more complicated. I don’t have- what's the words that H&R Block and TurboTax use now- simple return. So, I have a firm that's going to do my taxes, and then my business return. But I've gotten two of these onboarding interviews now. And boy, they feel a lot like TurboTax, as far as the questions. And I'm sitting here, and I'm like, “If I have to do all this gathering, get these W2s, scan the PDFs, upload them to somewhere else, I might as well just do them in TurboTax.

And it's not about the value the accountants are bringing them. Just my experience as a client, I'm like, “This is crazy. The experience is identical between a firm and just using a self-product.” Some people said, “I don't understand what accountants do,” and that's possible. Some people said that it's about the value, or some people said, “Hey, let people use TurboTax if they want to do that.”

There's a lot of discussions about the value, and Jason's like, “Oh, man, you chose violence today.” I didn't do it to pick a fight. I'm just questioning. And then I was thinking, “Could you exploit this? Could you just put your- tell your clients to start your return on TurboTax and then invite me in?” So, it's almost like somewhere you're falling between the TurboTax Live model, where you're making a version of that yourself, I don't know.

Jason Staats: So, why I love this is, it's one of those things where the tax professional hears it, and they're going to get so upset.

David Leary: Oh, no.

Jason Staats: But it's absolutely the sort of question our clients ask, and we've had our clients bring that up several times. "Why are you making me do all of this stuff, when that's what I'm paying you to do?" So, several different angles there. The most obvious one is, how are you gonna differentiate? Don't go into business doing what TurboTax does. For reference, my firm will do about 1,100 1040s this year, and there's probably 40 of those that could be done on TurboTax, and we're very upfront about that. We don't want TurboTax tax returns.

But for whatever reason, they're spooked. They don't like it, or maybe there's something else, some other aspect to what we do for them throughout the year that offers more value than just the tax reporting. So, from a differentiation standpoint, just don't do tax returns that could be done on TurboTax; and I don't think most tax professionals are. Now, the trouble is, all those questions that TurboTax asks you, we have to ask you all those same questions and more.

David Leary: Because you need the data, right? [CROSSTALK].

Jason Staats: Because we need the data, yeah. And there's definitely, bad ways to do that. we've all experienced really unintelligent forms. Like, so, give me your business name, every single year, year after year, David. What is your first name, last name, social? Nobody wants to do that. So, there’s definitely bad versions.

Blake Oliver: That reminds me of, the bad version is, you send me the printed-out organizer that has every single possible question, and it's hundreds of things for me to fill out. That's a terrible experience.

Jason Staats: It is.

David Leary: Or the people have taken that, and I think they've turned it into a type form or Google sheet, thinking, “Oh, now-” but that's the same thing; you just get rid of this pen and paper.

[00:07:39] Form Logic

Jason Staats: It's one of those things where to a degree, we're subject to the tool set that we have, and it takes a little more effort to build out that kind of conditional logic. Because every taxpayer situation is so different. So, it's dependent upon the jurisdictions that you work in, that you live in; those question sets are totally unique. And so, obviously, the easy thing to do is take a boilerplate set of questions, and just vomit all of that into- it could be on paper, it could be something fancy like Typeform.

The harder thing to do is to get down more into that conditional logic, but there's also an element of, what is the client's preferred way of interfacing on this stuff? So, throwing out the example of, these are just unintelligent questions, the intelligent questions, you still need a way to gather them. Some people want to do that digitally, some people don't. I sometimes worry if my function is to call you and ask you all those questions. Does it squeeze out meaningful phone calls? And so, that's where we're trying to make the best of both worlds, is only sending people through intelligent questionnaires as best we can, and then saving the higher-context, one-to-one phone calls for the more valuable stuff.

Blake Oliver: And you just put a course up on my app, Earmark, web forms for accountants. And this was one of the learning takeaways for me was, don't send people a 50-question form, or a 100-question form, if you're going to do Type form. Break it into smaller chunks. And then only send them what they need- what you need to know, if you can.

Jason Staats: Yeah. And the two tools we went through there, Airtable and Typeform, they both let you build out conditional logic based on the responses. So, very good example, did you have an auto in your business this year? Well, that auto pro forma from last year, you ought to know based on last year. But if you didn't, you don't need to ask all these questions about your auto. If you did, then you do need to ask. And that's actually not that hard to build these days, but you see, even some of the really tech-enabled firms like Highrock for example, when they do their client onboarding, they actually have completely separate forms that are chained together, based on responses to those earlier forms. So, there are definitely intelligent ways to do it.

David Leary: So, that means I have more forms coming from Highrock. Is that what you’re telling me?

Jason Staats: I think we all know that the standard technological bar for the tax prepare isn’t particularly high. So, yes, there's a lot of bad versions of this out there.

David Leary: So, a lot of this is scale. And I'm just thinking in my own time. That's what's convenient for something like TurboTax, ‘cause all my answers, like what are my kids' names? What are their social security numbers? I don't know this; I got to go find it. So, the fact that it's just already in TurboTax- and I was thinking how, I think last week we talked about TaxSlayer is offering a three-year tax product, $25 a year.

Maybe that's where this makes the most sense, like, “Hey, you're going to have to do this onboarding questionnaire, but because you've committed to your taxes with us for three years, next year, we're going to reuse the answers,” or, “We're going to have the data, and you just have to clarify a couple things.” ‘Cause that's basically, what TurboTax does every year, usually. “Do you still have the same children?” Yes, check. I don’t have to worry about the socials. I'm assuming it's correct, still; it didn't change So, it's like, obviously, you need the information, but that's the big question is, the client experience is not- doesn't feel different.

Blake Oliver: The forms are not connected to the database right now. That's the problem. That would be the ideal situation, right, Jason? It's like, you have a database of all this client information. And then you only- you confirm with them what you already know, and then you ask them for stuff you don't know. So, that's hard. That's a hard problem.

Jason Staats: It's super hard. So, I've got a video that's half written on this right now; the title is something like, "Why is my tax account so old-timey?" And honestly, the reason is there's basically four tax softwares that the whole U.S. tax system runs on, in terms of what CPAs use. None of those systems give you access to any of that data. There are integrations. Intuit's got a little bit, as long as you're inside the Intuit ecosystem, but for example, I don't have an automated way to pull your pro forma tax data into a Typeform. It's all captive data. Those of us that are trying to push that forward, you're having to rely on RPA, PDF extraction of these hundred-page organizers to pull out the bits of data that you want. So, that's definitely making the problem worse.

David Leary: And then one of the firms is using a TaxCaddy, which I thought was interesting, because TaxCaddy’s argument is, if you subscribe to TaxCaddy, you as the client, and if I change firms in theory, all that stuff I typed in, will move to the new firm because it's now part of TaxCaddy. But even that, you look at that and I'm like, “It's just an online website I'm putting all my data into.” I don't know, I feel like the gathering of the form maybe shouldn't be the focus. It's like, how do you exploit the condition people are in?

Jason Staats: I don't know.

David Leary: I don't have the answer to this and I just- in my experience-

Jason Staats: And the reason-

David Leary: - it just doesn’t feel different.

[00:12:56] Time to Say Goodbye ... to TurboTax?

Jason Staats: The reason you start going away from TurboTax is when your tax situation goes beyond what's reported on a government form. So, whether you're a simple or not, you need an efficient way to capture those government forms, no matter what. And TaxCaddy is a pretty good way of doing that. But when your situation starts getting complex, it's all this stuff beyond that that’s- it's the questions and the conversations you need to have beyond just what the IRS knows about, to make the most of your tax report.

David Leary: And that's why I had to go with a firm, is because I added- I needed some advising this year. Some situations occurred; I needed advising this year. So, that's why I had to jump through. So, it's definitely the advising part, but you don't, in your brain, combine the two. It’s like, “Oh, now, you have to do the firm, or I’m going to do the tax return.” And that's the difference. So, I wasn't trying to attack the world, but-

Blake Oliver: I’d say the timing is a little poor with that.

David Leary: I thought it was perfect time. I was experiencing- it was literally on my screen.

Blake Oliver: Actually, the timing is good. And I think that the customer experience is where we differentiate as accountants these days. That's the difference. And so, if our customer experience is the same as a automated tax platform, that's a problem. There needs to be more humanity in there, ‘cause that's what makes us different. And Jason, you're all about that. It's like, “Let's free up time on all this administrative stuff that we waste time on, and then we can actually be advisors to people,” right?

Jason Staats: Yeah. So, the best implementation of this is, when you have a tax advisor you're working with throughout the year, and doing all of the planning, filing a tax return is actually more of an administrative process. It's not this ta-da something coming to a head. Because my clients in November, December, they already know what their tax is going to be in April. They've already paid it all in. And so, the only thing that's due April 15th is your tax payments, not even the tax return. So, at that point, filing your forms is really, an administrative process. And so, a high touch- it’s definitely high touch set up- it's an afterthought, and nobody likes doing it, but the value of the relationship is more everything else that's happening around that. And the productized solutions of like, “We're just going to file your form for you. We're gonna pull your data out of QBO.” That's a productized version that somewhere in the middle, it's not DIY; it's not super hands-on. But hopefully, that's what firms like mine are pushing towards, not going back more of the productized side.

[00:15:27] Thank you to our sponsor, Synder

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Blake Oliver: So, we got some listener mail. Should we get to that, David?

David Leary: Yeah. [CROSSTALK].

[00:16:44] Listener Feedback - USDC Audited

Blake Oliver: A little feedback on our crypto episode last week. Just a little bit. Jacob's Schroeder tweeted to us. He said, @BlakeTOliver, “Isn't USDC audited by Grand Thornton? This may be the differentiator that allows it to overtake USDT.” What he's referring to there is what we talked about last episode, my concerns with Tether as the bank of crypto being $70 billion of actually not crypto that's not Tethered in any way to the U.S. dollar, because Tether says that they don't have to give you U.S. dollars in exchange for your Tether. And to me, that is the sandy foundation for this whole house of cards, potentially, collapsing. $70 billion wiped out, could take down the crypto markets. And I was really curious, because I haven't looked at other stablecoins, and USDC is the one that's backed by Coinbase, and a bunch of other legit exchanges. And they are audited by Grand Thornton And the reserves are backed up, which is great, unlike Tether, which has never been audited. You think you look at the trading volume, and Tether’s 10 times that of USDC.

David Leary: [CROSSTALK] part of Tether, because I had a- I saw an article about Tether’s accounting firm.

Blake Oliver: Oh, well, the one that issued- they are holding out this report, Independent Accountant’s Report, but it's meaningless.

[00:18:13] Tether's New Accounting Firm Is the Old One, with Baggage

David Leary: Yeah. So, UK-based, mid-tier firm, HMA, MacIntyre Hudson, announced January 14th, its Cayman Islands office, MHA, Cayman, now handles the clients of Cayman-based, more Cayman firm, Tether’s Accountant.

Blake Oliver: It’s a lot of Cayman.

David Leary: I don't know- in Cayman Islands, things are done there for a reason, right?

Blake Oliver: Jason, are you into crypto? Do you have clients that do a lot of crypto? Are you knowledgeable about this? Can you educate us in any way?

Jason Staats: I love this stuff. Honestly, I try not to talk about it because accountants, I think, are really going to be the laggards and the people that steer clear of it for a long time. But I think it's- honestly, I think it's fun. I think oftentimes, the mainstream stories about it take away from the really exciting thing, which is more the Blockchain. But then all you do is you see stories about volatility and crypto as an investment, stuff like that, which is a fun story, but I'm excited about the long-term possibilities.

[00:19:16] Listener Feedback - The Case of the Missing Billable Hours

Blake Oliver: So, another listener wrote in. Eric, who asks that we not use his full name, this is regarding time sheets. ‘Cause we're not exactly- I'm not exactly a fan of time sheets, having done them myself in public accounting. Eric said, “Great follow-up on the time sheet debate. When I worked at a large firm, a new senior manager was in an absolute panic, because he would religiously fill out his time every day. But at the end of the week, his billable time was incredibly low, even though he had been working long hours.

We had the IT person trace who was accessing the software. Not everyone had access to someone else's time. We caught a partner editing this poor guy's time sheet and moving time on his jobs to non-billable time. The partner instructed his admin to do it, and his admin “gave him up”. The admin had “all access” for billing and making corrections in the time software. Lots of stories about that partner. He was such a jerk, and no one did anything about it.” Can you imagine that?

Jason Staats: It’s the perfect crime in an accounting firm. That is so inside baseball, wow.

Blake Oliver: Secretly moving time from a manager, from billable to non-billable, to me, that's the timesheet equivalent of, in an office, moving somebody's cubicle wall one inch smaller. You're going to make them- drive them crazy. David, you look like you're going to say something.

David Leary: No, I'm just like, that slowly- it's gaslighting, right? That's the whole story.

Blake Oliver: Yeah. Well, and I asked- I followed up and I said, “Well, why was this guy doing it?” And maybe the answer is, he's just messing with this guy, but also, he wants to look better. ‘Cause then, he has a partner he doesn't have to write off those hours. So, it's just these games we play in firms.

Jason Staats: It's always incentives. What are you incentivizing, right?

Blake Oliver: Yeah.

Jason Staats: And then you build a game around it.

Blake Oliver: So, thank you for that story, Eric. And I think it completely also dispels this myth when- I talked to Ed Mendlowitz about this and he's very passionate about time sheets being useful. And there's a great episode on the Earmark podcast with Ed Mendlowitz talking about time sheets, and we debate it. And he said, “People don't lie on their time sheets.” And I'm like, “Yes, they do. Of course, they do.” So, please send me your stories, dear listeners, of people lying blatantly on their time sheets. I want to dispel this notion that this profession doesn't play games like that.

[00:21:30] Listener Feedback - Avoid Prometric Remote Tests!

Blake Oliver: More listeners stories; more listener feedback here. Here's one. The subject of this email: Avoid Prometric Remote Tests! Remember we were talking, David, about Prometric now offering remote testing for the CMA?

David Leary: Oh, yeah. You had to have a webcam or what have you.

Blake Oliver: Yeah, you can do it at home instead of having to go to these Prometric testing centers, which is amazing, because if you live in a big city, it can be easy to get to the Prometric centers. But if you don't, you have to stay over at night, you have to go there. It's quite an experience, and anyone who's taken one of these exams, EA, CMA, CPA exams, Prometric is where you do it.

So, Prometric now has this do it at home thing, and we were talking about it, and I'm like, “How does this actually work?” Well, one of our listeners has done it; Chris from Baton Rouge says, “Hi, Blake. I took a securities licensing exam using the Prometric remote proctoring a couple months ago, thinking it would be more convenient than going to the testing center. It was anything but convenient, and added much more stress to the situation, than going to the testing center. I had to put bedsheets over the clutter in my office, and move things around to make it neater, per pre-exam instructions.

The Proctor made me practically undress in front of the camera, and move the camera so they could see every square inch of the room, including behind my monitor and under the desk. I will gladly waste an extra hour of my time and go to the physical testing center for my next test. By the way, I just completed my first hour of CPE with Earmark to get my last hour of CPE required for 2021.” So, thank you, Chris, and thanks for trying out Earmark, and good warning to everyone on those remote tests. Appreciate that.

[00:23:13] Bend it like Bitcoin?

David Leary: So, I have a Bitcoin story follow up.

Blake Oliver: Let’s hear it.

David Leary: Let’s talk about that. So, Odell Beckham Jr, last in November, he moved to- he got cut from his team and he moved to the LA Rams and he decided to take $750,000 salary in 100 percent Bitcoin.

Blake Oliver: Oh, that sounds wise.

David Leary: And essentially, this was at the peak. So, at that time, Bitcoin was at $69,000, and now, it's at $36,000. So, it's down 46 percent.

Blake Oliver: So, this is like Eric Adams, mayor of New York, same idea, right? He said, “I'm going to take my first three paychecks in Bitcoin.” There’s a lot of people have been doing this, right?

David Leary: Yes. And he's probably going to have a tax hit on this, by the time it's done. And eventually, over the past two and a half months, he's been making about $35,000 a month- which for NFL players, it's not much money, in the grand scheme of things, for big stars. He may not care, because as part of this deal, it was a promotion with Square- Square's Cash App.

Blake Oliver: Of course. Of course.

David Leary: So, he got paid $1 million from them, so he may not care.

Blake Oliver: So, what are the tax implications what he did? So, he got paid directly in crypto at the peak, and of course, it's dropped to half of what it was.

David Leary: So, apparently, I guess it's common to require the value of the crypto assets to be declared at the moment they are received. So, if it falls from the time of purchase and the amount of receiving it, and lodging the return, I don't know. This was in Cointelegraph.

Blake Oliver: So, he owes tax on the value of the crypto when he received it, right, Jason?

Jason Staats: Yep.

Blake Oliver: And even if it falls in value after that, he still has to pay tax on what he got.

David Leary: Now, here’s-

Jason Staats: Yeah, and he doesn't harvest those losses until he sells it.

Blake Oliver: Oh, that's brutal.

David Leary: So, he got paid seven figures from Cash App. Now, I'm wondering if Cash App paid him in Bitcoin as well, or did he get real cash from now [INAUDIBLE] side of this whole thing? The best part of this article, I think, for our listeners is, most of the issues arising are lack of understanding of tax laws amongst crypto enthusiasts. The demographic is 25 to 40-year-old males, and a lot of them probably haven't invested in shares, or even seen an accountant before. So, this is your marketing opportunity; all these crypto enthusiasts, they really need to have an accountant at this point.

Blake Oliver: Yeah.

David Leary: And they've never done it. So, it's a whole, fertile land of people that have never experienced an accountant before. So, when you send them that onboarding form, you're gonna lock 'em right in.

Jason Staats: Stock cash. This is the exact reason I haven't gotten into crypto tax myself, is they definitely need help; I just don't know that I want to be the guy to help 'em.

Blake Oliver: 'Cause you have to bring them on; teach them everything, because they've never done this.

Jason Staats: Yeah. And the first time anybody works with professional services, it's like it's always a learning process for them, and sticker shock, and all those things, but they do need help, for goodness sakes.

Blake Oliver: Good on all those accounts out there advertising themselves as crypto accountants; serving the greater good. Hey, let's talk about tax season, because it's tax season, right? Jason, how is it going for you?

[00:26:15] Do We Have to Talk About Tax?

Jason Staats: Do we have to?

Blake Oliver: Would you rather just pretend it's not happening?

Jason Staats: Yeah.

Blake Oliver: Is it that bad, then I guess is my question.

Jason Staats: There's so much unknown, a lot of spooky things that could happen. And we're still in the thick of COVID. My firm, it's been a revolving door of people that have been going through COVID this last month. So, we're already off to a slow start. But definitely, that new tax bill spooky, virtually every version we've seen of it included changes to 2021 tax law.

Blake Oliver: Oh, boy.

Jason Staats: And that gets you excited. I think we all still have PTSD from last year, when they changed unemployment income tax ability after the fact, when millions of peoples had already filed their returns. And then the IRS said, “Don't worry about it, we'll fix them all,” but what that really meant was they were just gonna change your unemployment tax ability, not whether that made you eligible for other credits, or any other impact that has on your return. So, oh yeah, a lot of landmines this year. The third stimulus payment, the advanced child tax credit reporting.

[00:27:22] IRS Child Tax Credit Letters May Have Wrong Information

Blake Oliver: I saw a story in Accounting Today about the tax credit letters being wrong.

David Leary: I was just gonna bring that up as well.

Blake Oliver: The child tax credit letter that I got, if I moved or something changed, they may not have the latest information. So then, that number is wrong. And if I file with that number, this is the problem. They're so behind, if I file with that number and it doesn't match what they've got in their system, now we've got an exception, that returning even though file electronically gets pulled out to be hand-processed behind millions of other returns that are in the queue to be hand-processed. That could take-

David Leary: So, they’ve [CROSSTALK] a website for you to check that with your clients, if you don't know about.

Blake Oliver: Oh, cool. What’s that called?

David Leary: So, there’s a website for childcare tax credit. You're going to want to go to that because-

Blake Oliver: Do I have to take a selfie?

David Leary: ‘cause even if your client is really good, and they kept all those letters, and they bring them to you, or you have them uploaded through your portal, all these letters they got from the IRS, you can't use them to create the return. You have to go do due diligence and get this on their website. Not that anybody kept those letters, because the letters never said, like, “Please retain for your tax records.”

Jason Staats: And all of this assumes those letters are right, which the issue with the stimulus payments last year was the IRS thinks you got the payment, but you never actually did, for any one of a number of reasons. I was talking with somebody the other day; there's never been more liability in doing a 1040 than there is now, because somebody gets a notice from the IRS, it says, “You owe $1500, cut us a check.” And it's because they never got the money the IRS thought they got. Does the TaxPro then run up $1,000 in professional fees on a $500 tax return to try to fix that for them? It's a tough spot for sure.

[00:29:05] How Do We Stop the Bleeding?

Blake Oliver: The time it takes to resolve these issues, it's not worth it for anyone to have to deal with this. But we have to, because if you don't, it just compounds, and what a mess. Well, so, Jason, let me ask you a question that I asked this week to Sue Coffey and Tom Hood from the AICPA. What is the solution to all of this? The AICPA got together and created a coalition where they wrote a letter to the IRS. The letter basically said, “Stop all these notices, stop all the penalty stuff, until we can sort this out.” And that seems to be the official plan of action. But to me, that's just stopping the bleeding, it doesn't heal the wound. So, how do we get out of this mess of the IRS just not being able to catch up?

Jason Staats: The stopping the bleeding in the short-term is stop sending out those automated notices that-

Blake Oliver: Yeah, in the liens and all that stuff, because they haven't processed payments that have been received. So, then they send out a notice that you didn't pay your taxes, and then they do a lien on your house- all that stuff is automated, right?

Jason Staats: Yep. So, you got to flip that stuff off in the short-term. Longer term, I think we're all realistic that any version of modernization from the IRS isn't going to be the holy grail by traditional standards. But what I'd like to see, the best place to make that investment is in accessibility to data. And a good model for this is, a lot of states now have pretty solid state websites, where you can go in, check payment statuses, actually resolve tax issues online very quickly, file amended returns, stuff like that.

And they're all, by and large, using the same off-the-shelf systems for doing this. The states aren't developing it themselves. And what this enables is not only solving those issues in the portal, but also, allowing them third-party developers to build stuff on top of that. So, if the IRS has a system that enables responsible access to that data, you actually open up a whole ecosystem of other partners that can build meaningful things around it, rather than relying on the IRS, which is unrealistic.

Blake Oliver: I love this! So, if I'm understanding correctly, you're saying, figure out how to open up what the IRS knows.

Jason Staats: Yep.

Blake Oliver: Open up their database to outside authorized people like CPAs, and software companies supporting them, and then we can go in, and we can fix it. We can get the data we need to file whatever we need to resolve these issues, rather than having to have this wall between us and the information.

Jason Staats: Yep. I think that's the first step, and then a good analogy for, I think, what you could build on top of that is- I think a good analogy is Plaid and banking data. So, imagine a Plaid for tax data. So, Plaid serves as the developer interface between that data and the people developing useful things on top of that data. As soon as you've got an ecosystem like that, I think then, you've got an entire new category of tax tools for tax resolution, and all these different things that we don't have today. That's honestly what I get most excited about, is enabling developers to start building stuff on top of that, but you need that baseline of data accessibility from the IRS first.

Blake Oliver: I love that. So, that's great, 'cause that's an actual solution that isn't just pouring money into the IRS, and it doesn't rely on just hiring more people, which is- ‘cause that seems to be the solution, right? They're gonna take $80 billion, hire a bunch of people at the IRS. But if the technology doesn't get improved, they're never going to be able to solve the problem with people. Just like accounting firms, we can't solve the problem with people anymore.

Jason Staats: And it's the American way, right? We're going to privatize a solution for our tax system. But at this point, with the level of trust we all have in the IRS, it seems like the shortest path.

Blake Oliver: Yeah, that's great. How do we write a letter- form a coalition, write a letter, get this top of mind? Because I feel like the leaders unfortunately, nobody's talking about that solution; I've never heard that from anyone in leadership.

[00:33:24] The UK Tax Solution

David Leary: I’d agree on the U.S. side for sure. But I did sit in- this was at [INAUDIBLE] Connect in the UK three years ago, four years ago And they had a spokesperson for the HMRC. So, that's what, Her Majesty’s Revenue Collections, possibly, something like that, for the UK.

Blake Oliver: Their IRS, yes.

David Leary: The IRS of the UK. And they've rolled out making tax digital. Small businesses, every form they need to interact with the government has to be e-filed, and there's no mailing of paper forms. And they've been- they keep pushing out some of these deadlines, but I sat through that, and it felt like a tech pitch when she was on stage. It's all APIs, you're going to make API calls to get the data out. It's what Jason half described here. But even when a tax agency and the government is 100 percent behind that, it's a slow ball to get rolling down the hill. And it has its own hiccups and problems, and it's not like making tax digital solved all the problems. It probably created just as many problems as it's resolving. But you're right on the U.S. leadership side, there has not been that public discussion at all. And you’d think in 2022, this would be on AICPA's list of priorities; how do we make tax digital in the U.S.? Just an idea.

Blake Oliver: Right? That's what we're talking about here.

[00:34:38] Some Potential Solutions for the IRS Flaws?

Jason Staats: Oh, yeah, and we've got the executive order about the modernization of systems and stuff like that. But we'll see; I think everybody knows it's unlikely you get stuff like that from the IRS, for good or bad reasons, whether it's genuinely, “Oh, it's too complex of a tax system to do that sort of thing around or not.” I think the best first step is just making that data more accessible, because I think then, capitalism will take hold and start building what you need around that data.

Blake Oliver: Well, there is a start to this that has happened. It's the portal now where you can go in and- isn't there a portal where you can get power of attorney, you can do that?

Jason Staats: Yep.

Blake Oliver: So, they're building at least the framework around which that could exist.

Jason Staats: There are people genuinely working on building the Plaid for tax data around those portals. And so, as more things become available through that portal, which they are starting to work on this. And so, you have this tax professional portal for the first time. Right now, it's very feature light, but there are people working on this, and it's genuinely, as soon as that data is available, other people are going to solve these problems. And so, all we need from the IRS is just to make this stuff accessible.

[00:35:52] IRS Looking for Alternatives

David Leary: Is the IRS damned if they do, damned if they don't? So, they try to roll out that- we talked about it last week- that, where you're going to provide a selfie, and your driver's license too. Well now, the IRSs came out and said that they're actually looking for other possible providers in the future for a service like this. Because it turns out- obviously, mainstream media has jumped on this story.

And it turns out that it's not just a one-to-one, “Okay, it's Blake’s selfie holding up his driver's license. We verified who Blake is, and that's the end of the conversation.” apparently stores this in a big database and compares your image to millions and millions of other images. And so, people are like, “This is a breach of privacy.” And then really, the reason you build the database like that is to sell it to marketing agencies. That's where the real money is in all of this. The money is not in their government contracts. So now, the IRS says-

Blake Oliver: Well, the company is-

David Leary: -they’re opening up to look at other alternatives.

Blake Oliver: Yeah, because it's a private company they've contracted with, right?

David Leary: Yeah.

Jason Staats: They weren't quite holding themselves out as what they're truly doing. And now, that's coming back on the IRS. I totally get it, you're hosed, either way. ‘Cause the IRS is trying to make authentication as tight as possible, without building their own thing, because who's going to do that right now?

David Leary: But they're trying to step in that, if you can figure out who people are, you can open up the data to the person on the other end. And then they're getting slammed for- they took a step to try to do that, and it just backfired on them.

[00:37:25] Thank you to our sponsor, Relay

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[00:38:43] PPP and IRS Disappointment

Blake Oliver: So, I hate to do this, but since I made us talk about taxes, then I'm going to make us talk about PPP.

Jason Staats: Uh oh.

Blake Oliver: It's coming back guys. Maybe this is the last hurrah, because we have a report on how did it all pan out? Where did the money go for Paycheck Protection Program? Which we've been asking for years now on our show. So, here's a report from The National Bureau of Economic Research. This got some press a couple of weeks ago, came out this month, in January, as we record. So, a reminder to everyone who has blocked it from their memories, the Paycheck Protection program provided small businesses with roughly $800 billion in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. Jason, did you get into the PPP game? Are you still-

Jason Staats: Oh, did we? Yeah.

Blake Oliver: How many of your loans have been forgiven, would you say?

Jason Staats: Almost all of them. If they haven't at this point, it's usually because there's an issue on the portal side.

Blake Oliver: Got it. So, you were in this; you were helping people get these PPP loans.

Jason Staats: Oh, man. We were so out in front of this, doing webinars. We were going to be the heroes, ‘cause everybody, all at the same time, they want this money. So, you can't really just hide from it, right?

Blake Oliver: Right. So, were you the heroes?

Jason Staats: I think we navigated it as well as we could, but holy smokes, were things changing day by day? We told them, “Hey, we're going to get the agent fees, so you don't have to pay us to do this work.” Then the banks took all the agent fees, and it's a whole thing.

[00:40:20] The True Cost of PPP

Blake Oliver: Screw the banks, man. Screw the banks. They really hosed us on that. So, here's where the money went. So, according to this report, what was the impact? 93 percent of small businesses ultimately, got one of the loans. 93 percent of small businesses. So, it worked in that regard; 93 percent of businesses were able to access the program. The program cumulatively preserved between 2 - 3 million job years of employment over 14 months. A job year is one year of a job, so 2 - 3 million job years, over 14 months. You want to know how much that cost, per job year? $170,000 - $257,000 per job year retained.

Jason Staats: Geez.

Blake Oliver: That person- ‘cause the point of the program was to replace paychecks; Paycheck Protection Program. So, if you had an employee, let's say the typical American worker makes- I don't know, what? $50,000, $60,000, whatever the number is. It's definitely not $170,000 - $257,000, right? So, we paid that much to save those jobs. Only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs. The balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.

David Leary: So, this should have just used the Treasury and the IRS, just to deposit 50 grand in everybody's bank accounts. If you had a job when the pandemic started, we're just going to give you 50 grand. And it would have been cheaper for us, as a country, overall.

Blake Oliver: Well, this is the consequence of funneling it through banks and through businesses, is that- think about it. When it goes through that filter, how much of the money is going to get to the workers? Now, there's a debate as to-

David Leary: We talked about that startup in Phoenix, made $1 billion in revenue or $2 billion or something; ridiculous. They started the startup in April of 2020, and they made-

Blake Oliver: To do the PPP loans. Because they got the percentage, the commission on that. So, this is, I think, a good argument for- now, I don't look at this as a failure in the sense that, the workers only got a third of the money. Because the program changed, evolved, to support small businesses too. It was called the Paycheck Protection Program, but it was designed to keep these businesses alive. If it kept the businesses alive, and they didn't go out of business, that's protect protecting future job years. So, I don't think they looked at that in this report.

David Leary: Yeah

Blake Oliver: I think they need to look at that; how many businesses would have gone under if they hadn't done PPP?

Jason Staats: And don’t forget, the whole premise of the PPP in the beginning was, “Use this money to pay your team to not work.”

Blake Oliver: Right.

Jason Staats: It wasn't to pay them to come in and work as they usually would, it was so that you could keep paying them when they had to go home because you were shut down.

David Leary: You were shattered.

Blake Oliver: My take away from this is, the program was successful, it was just extremely inefficient. Which is not really saying much when it comes to the government, because that's what we expect. But I think this is a good reason, a good case for the digital dollar, or a fed coin, because then, it would be possible for the government to, instead of going through banks, which are extremely inefficient, and the SBA, to directly distribute stimulus to individuals through a cryptocurrency, a Blockchain-based, that they control. The digital dollar would let you do this. We have cash, you can't just mail everybody $10,000 in cash very easily. Also, then you have to use the IRS for that; that was a problem. I don’t know. Jason, do you have any thoughts on this concept of a federal coin, like what they've done in China with the digital Yuan?

[00:44:02] There's Got to be a Better Way

Jason Staats: Yeah. I think that there is a lesson to be taken from the PPP thing. It was a situation where it was going to be a shotgun approach, and everybody knew that. And it was an eight-week program; that was how it all started. And they thought at the time, that was the most efficient means they had to put money in businesses’ pockets- maybe- and by extension, the employee's pockets. But with the stimulus payments, issues with those debit cards they mailed out, money going to the wrong people, yeah, there's definitely a strong argument that you need a more direct way to put money in people's pocket. On the flipside, we all know how well these one-size-fits-all solutions work.

How many people in the U.S. right now actually have a crypto wallet? What does that look like? The thing’s a great example, where theoretically, it gets you quicker access than it did before, but there's a lot of people that just doesn't work for. We're going to have elderly clients who are going to have to come in to office on somebody's smartphone, or iPad, or something, and then navigate them process. So, definitely, trade-offs, but I think it is a great example of the underlying value of Blockchain for all of the really negative headlines it can generate. It totally makes sense in that regard.

David Leary: Plus, it's going to give the post office something to do. Because they were talking about doing debit cards, the post office, for the unbanked; they can do some banking functions at the post office. But now, I think the post office can distribute all those COVID tests. And that maybe, there's some functions of the IRS they could push off onto the post office as well, like opening the mail, opening the returns.

Blake Oliver: Another underfunded agency-

David Leary: The post office could do that for them. And that would save the IRS.

Jason Staats: Well, have you seen the rebrand of RadioShack? Now, it's all D5 cryptocurrency. Maybe this is the future of USPS, David. It's a D5 play.

David Leary: Yeah, they'll just deliver something else, instead of a-

Blake Oliver: Eventually, the U.S.- the postal service has- doesn't deliver any mail.

David Leary: Oh, no.

Blake Oliver: It’s just a dhow, or it's a-

Jason Staats: Yeah.

Blake Oliver: We inched into it. Maybe we should get into app news with the time we have left.

David Leary: Yeah.

Blake Oliver: What's the big story in app news? I don't know where to start, David; Expensify releasing its CPA card that's going to pay your AICPA dues, or Apple is now going to let iPhones except credit cards so you don't have to use a Square reader?

[00:46:35] Apple Makes New Moves to Turn iPhones into Payment Terminals

David Leary: And that Apple story, we could talk about that. The headline was way better than the article; there's not a lot happening just yet.

Blake Oliver: The story is, iPhones have NF- not NFT, what is it called? Near-field- NFC.

David Leary: NFC.

Blake Oliver: iPhones have NFC, which is what lets you tap them to a reader, and then pay with Apple Pay. Apple has acquired a startup- they did it a while ago- and they've now adapted this technology, so that you could theoretically accept payments on your phone the same way you make payments.

David Leary: So, you don't need a Square dongle or any piece of hardware added on. But then, if you really dig into the article, they've already been running this- this company has already been doing this technology on Samsung phones for two years. And so, that's where I was like, “Oh.” It's already available, in a way. But at the same time, Apple, if they do things right, and they really get behind it, where this becomes a priority for Apple, it could be very disruptive to all of us, including Square.

Blake Oliver: So, you’re saying it's been around, and it hasn't changed the world. So, what's going to- is it going to make a difference or not?

David Leary: I see a lot people on their Samsung phones with Square dongles on them.

Blake Oliver: Still.

David Leary: Still.

Blake Oliver: Interesting.

David Leary: But when I did see that break that story, I was like, “Whoa.” And then now, I'm like, “Ah, it's probably not crazy as everybody's making it out to be.”

[00:47:52] Thank you to our sponsor, A2X

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[00:48:59] Expensify Releases First-Ever Corporate Card for CPAs and Accounting Firms

Blake Oliver: So then, let's talk about Expensify, because this caught my attention. They made a big announcement about the Expensify CPA card; the only smart card built specifically for accountants, and includes benefits such as reimbursed CPA license, and CPE credit fees, dedicated account managers, instant approvals, blah blah blah. But the thing that caught my attention was, apparently, if you get this card from Expensify- the CPA card- you are going to get a free AICPA membership, free state-by-state CPA certification renewal, free CPE credit reimbursement. How much is an AICPA fee now? It's hundreds of dollars- I can't remember, right, Jason?

Jason Staats: I don't know. It's one of those things you pay and you don't even look, ‘cause it's like, “Well, I gotta pay it.”

Blake Oliver: Annual membership dues for the AICPA, they're going to- oh, it’s by- they change it by regular memberships, depending on your level. Staff pay $300, partners and shareholders pay closer to $500. So, this is a crazy offer, isn’t it? What if everybody signs up for this and Expensify ends up paying 700,000 people's AICPA dues?

David Leary: Pretty much, if you're CPA, you're going to get the card, because they have the model similar to the Brex and Ramp, and all these companies that they don't make the founders of a startup put up their own equity or a personal guarantee on the credit card. They're building that same type of a model where they're not going to do a credit check, or personal guarantee. So, basically, if you have those letters, your firm we're give you this card, and take care of all this. Now, what's interesting as you think about this, what about these big firms? If you've got 4,000 per your company, you're going to roll this out, and now, they're going to pick up- Expensify is going to pick up the memberships at the AICPA for this.

Blake Oliver: State and national member dues. That's going to be hundreds of dollars per CPA.

David Leary: I think this is great for firms, probably. This is really great. It's a it's an amazing offer, but who-

Blake Oliver: It just seems too good to be true. How is there going-

David Leary: What is Expensify going to get out of this? It’s the hope that the experience with Expensify is gonna be so great, that people are going to push all their clients on it. It’s a great value though, from this perspective.

Blake Oliver: It's not surprising, given what they've done in the past. A Superbowl commercial, invite-only destination conference. This is very much like an Expensify- when they do a marketing activity, they go all out, and they'll spend whatever. But this one could be- so, I tried to sign up for it because obviously, I don't want to pay for my own member dues. This is the best part. I go on the website, and I chat, and I say, “How do I get this thing?” Apparently, the only way that I could sign up was for somebody to call me, and talk to me on the phone. And the card is not available yet. It's going to be available in three weeks from as we record this. So, I'm on the wait list; I'll let you know if I get one, and if it works.

David Leary: Is there a way for you to make a bunch of money at this, Blake? Take your Earmark CPE app-

Blake Oliver: Uh huh.

David Leary: Charge $1,000 for it now, and tell- you put a little ad on it that says, “Hey, don't worry, if you buy this for $1,000, Expensify will pay for you.” You still get the Earmark CPE app for free, but you get $1,000. Expensify is going to reimburse the account for that. Isn't there a-

Blake Oliver: Sign up for Earmark, and we will sign you up for the Expensify CPA card and you will get-

David Leary: 100 percent rebate.

Jason Staats: Is there a AICPA, tie up in there?

Blake Oliver: Well, so, here's the funny thing about this. I don't know, because Expensify, are they still in the program? Because after David Barrett wrote that letter saying that- he wrote a letter two years ago or I don't know- during the election Biden V Trump. He wrote a letter to all the Expensify users saying that, “If you vote for Trump, it's a vote against democracy.” It's worth reading, go check that out, if you didn't get that email. But after that, Expensify disappeared from very quietly. I don't know if this is in partnership with are they still there? I'm going to go right now to and see if Expensify is listed as one of their clients.

David Leary: I’m in the Expensify website, and I don't see them bragging or saying they’re endorsed, or any little logos or anything like that. I did otice when the page is loading though, that Expensify’s accounts page just runs on Squarespace.

Blake Oliver: Really?

David Leary: Yeah.

Blake Oliver: Amazing.

David Leary: They probably saw a Superbowl ad for Squarespace and like, “We're moving to there.”

Blake Oliver: So, I don't see them listed here, because has their handpicked solutions; the ones they feature. Expensify is gone. So, are they just going to reimburse people?

David Leary: Oh. No, there's free premium upgrades to your firm at $9 a seed.

Blake Oliver: But the play here is not to get money from the firms, it's to get them to put all their clients on it, right? That’s the idea.

Jason Staats: Yeah. That's it, accountants are the golden egg, because they're gatekeepers to so many more potential users. But man, $300 to $500 per user acquisition, seems like a lot.

Blake Oliver: And more, because they're offering- but that's just the AICPA fees, they're also offering state- reimbursement of your state.

Jason Staats: When it's every single year, right?

Blake Oliver: Every year for-

Jason Staats: Good grief.

Blake Oliver: That's why this doesn’t add up to me, unless Expensify just makes so much money. Because we know they're profitable, maybe they make so money they're willing- this makes sense for them, but I don't know. I'll let you know if it's real, but it’s not real yet.

David Leary: And they've tied this into one the biggest defects of Expensify, or the based criticism, which is, you normally really get a dedicated account manager, you don't get good support, and they're bundling that in with this.

Blake Oliver: That’s the other question.

David Leary: Like, “Okay, you want a dedicated support manager, you want actual accountant support, you got to get the credit card.”

Blake Oliver: We'll see if they deliver on that, ‘cause Expensify has always proudly bragged that they only have 140 employees. How many people are they gonna have to hire to offer accountant support? Hundreds.

David Leary: And they get a piece of- the thing is with Visa and MasterCard, and the way their APIs work. And that's where all these companies are spinning up cards, is they get a piece of that action. So, they may have done the math and firms will charge enough other stuff beyond their membership dues, and CPE credit things, that they’ll still make money on this.

Blake Oliver: Well, we're almost out of time but I have one more story to take us out, if you don't mind, David.

David Leary: I got two more we could tie in, ‘cause they tie into your whole crypto, but just these new banks and the credit card stuff.

Blake Oliver: All right. Let's do it quick.

[00:55:29] Walmart-Backed Fintech Startup Is Acquiring Two Firms and a New Name

David Leary: So, one is Walmart. So, Walmart, long story short, they're rolling out new bank called ONE Finance. So, it's a Neo bank, and they're taking that next step because their customers want a one-stop shop. The scary thing or maybe not scary thing is, they have 1.6 million U.S. employees, and 100 million plus weekly shoppers. Them rolling out a bank is hugely disruptive because they already have the eyeballs there.

[00:55:54] QuickBooks Launches 2 New SMB Tools

David Leary: And then the other thing that happened is, Intuit- so, we've talked about before, they rolled out two new products, but they’ve rolled out QuickBooks Get Paid Upfront, which we loosely talked about before, where you can- it's invoice refactoring. What's interesting about that is, if you do the invoice refactoring, and then somebody pays you through Intuit merchant services, Intuit’s not going to double dip on the fee. They pay you through that.

So, basically, all this is going to do, it's going to get Intuit to get even more customers on both sides. They’re just going to get more people. But then the other thing Intuit launched, is they have something called QuickBooks Early Pay, and this is going to allow that to get paid two days early-type functionality that a lot of companies are offering now. Intuit’s gonna be able to offer that. So then, if you have QuickBooks Payroll, you could offer that to your employees. But they launched these two products.

Blake Oliver: It's amazing how so much of what's happening in the accounting space is solving cashflow problems with, “We'll give you the money upfront, and then we're going to charge you a fee for it.” It is sticky; you're not going to leave QuickBooks if you've got all your invoices factored on QuickBooks, right?
Jason Staats: Oh, yeah.

Blake Oliver: Smart move, in that regard.

Jason Staats: Lending all that stuff, payroll, that's all platform commitment.

Blake Oliver: Well, that’s interesting. We'll have to talk more about that on a future episode.

[00:57:09] Play Wordle in Google Sheets

Blake Oliver: I got one more story to take us out, which is, the only thing better than a spreadsheet is a spreadsheet with Wordle in it.

Jason Staats: Oh, geez.

Blake Oliver: Zapier does great blogging. Jason, I love the Zapier blog.

Jason Staats: They do. It is really good.

Blake Oliver: This is a post from this week, this past week, by Tyler Robertson. It's like a lesson in, how do you create Wordle in your own spreadsheet? So, it's a great way to learn spreadsheet-building skills, some automation inside of Google Sheets, if you want to like yourself something cool. He has the screenshots, he has the formulas, everything.

Jason Staats: Can we just touch on what phenomenal marketing that is, too? What can my tax firm right now do around Wordle? I love it. Because who the hell wants to play Wordle on a spreadsheet? Nobody. But that's not the point. We're talking about it.

[00:58:02] Blake's Shoebox Theory of Client Experience

Blake Oliver: So, going back to our discussion about the tax organizer, the big, long form, I’ve always thought that the ideal situation from a customer experience standpoint is actually, the old way we used to do things. Which was, I, business owner, freelancer, whatever, just person, your client, come into your office, and I have all of my tax stuff that I've collected in a shoe box through the year. And we sit down together we just go through it altogether. Maybe it takes a few hours, you do the return, we talk as we do it. And by the time I leave, I'm done. Or maybe you take it, and then we talk about it, then you have everything you need, and then I leave, and then I get the return at some point not too long from then. That's actually the ideal experience. So, how do we recreate something like that, where we're having a conversation, and it's not just me plugging stuff into an impersonal forum? How do we recreate that, as accountants?

Jason Staats: So, what I try to steer my client towards is, I try to avoid the intake meeting. I say, “Send me a shoe box, give it to me in whatever format works best. I'm not going to penalize you, that's fine.” When I want to talk to you, is- if they're a once-a-year client, I want to talk to you on delivery. If they're a year-round client, the time I least want to talk to you is when we're filing the return, ‘cause all that stuff is in stone. There's nothing you can do with it anymore. So, I want to talk to you outside of that period.

Always trying to get it back to it being an administrative process, because you planned ahead, and you already know where you're headed. But yes, leaving space for making it personal, I think everyone's so staffing-constrained and workflow-focused that they're trying to squeeze more and more of that stuff out. And so, you've got this degrading client experience. It's getting worse over time, just from a position of scarcity. And the only solution is really, you got to help fewer clients and help the ones that are willing to pay for the fact that that's more time consuming for you.

Blake Oliver: And you've been out there talking about how accountants need to raise their prices. And I’m glad you're out there saying that, and you did a really good Twitter thread on the math behind it, where- what is it, you raised your prices 20 percent. That's not a 20 percent increase in revenue, it's actually a-

Jason Staats: It's a way bigger increase on your bottom line, and that's what matters at the end of the day, is your profit. Everybody's- I'm so sick of the glorification of growth, and we're all really impressed by each other's growth. Well, growth is top-line, and in my experience, growth is super sweaty. Growth has lot of work. Usually, it degrades quality of life, and it doesn't even mean you're making any more money. The last two years in my firm, we- and I experienced this myself- we grew a cast practice one $1.5 million in 12 months, and it was terrible, and it was awful, and it wasn't very profitable.

And ever since then, in my career, I've been on this pilgrimage to do less, do less, do less. Because if you pair out all the folks that won't pay top dollar for what you do, you make every bit as much money helping fewer people. And our profession right now, I worry a little bit about those people that go away, who's going to help them? I think there's genuinely not enough people out there to help. That's getting into a whole other thing about getting away from one-to-one services, and doing more one-to-many services. All professional services are one-to-one; they don't need to be. But yeah, I'm trying to get away from the whole just toxic attraction to just growth.

David Leary: But that's the whole- doing less, being a business owner. I want to do less, I don't want to fill out your tax form, your Tax Wizard.

Blake Oliver: So, what Jason is saying is that, if fewer clients you can be more personal.

David Leary: And do more.

Blake Oliver: Is that- do you think-

David Leary: If I think about- and Shoebox, it didn't work out for them, but it was such a great service. They had- for those listeners that are old enough to remember, DVDs that used to be Netflix. You get the red envelope in the mail. Shoebox had a blue envelope, and you would just take all your receipts, and just shove them in there, and you'd mail it off, and they would scan them all for you. This is before you could really take good photos of receipts with phones; they would scan them all, and they'd send you back the envelope, and all your receipts would be organized flat, they'd be stapled together, it'd be beautiful. But it was the experience of me, as a business owner, I don't have to do anything. I just shoved it in the envelope, and mailed it.

And it's that same thing, I was like, “That's what I think clients want. They don't want to have to do the work.” ‘Cause that's what I'm looking at this form, like, “Oh, it's so much work. I might as well just do it myself.” That's what's going through my head, versus, “I'm on the pay, but I don't want to do any of it. Here you go.”

[01:02:47] Jason's Pricing Theory - More Work, More Money, More Better

Jason Staats: Here's what I tell prospective clients, is every firm is on a different end of the spectrum of who we're best suited for, and how much we cost. So, if people are willing to pay for that, it's absolutely worth doing. Where a lot of firms feel pressure is they hear from the bottom 5 percent of their clients that complain about the bill. And negativity bias makes it so that they're always trying to be more cost-effective on everything, for everyone, but they're not hearing from the 25 percent of people that will happily pay more.

And David, maybe that's you. And so, what they do is, they try to make it as little work as possible for the accountant. And you doing more of that work makes it less work for them, but it sounds like what you need is a more hands-on high-touch firm, which is going to cost more. And so, I don't know- at the end of the day, I don't know if there's a right and a wrong way to do it; there's a lot of different flavors of it. And the higher touch may be what you want.

Blake Oliver: Well, maybe, David, you would be happier if you had that as an option. And if it was not what you wanted to pay, then you would happily accept the Typeform, but you don't have that choice.

David Leary: Well, here’s the ironic thing too. Just to- both firms I'm currently working with. The onboarding and the actually paying has not happened, because even that, is work on me. I got to go to a website, fill out a bunch of crap. Even the onboarding and the accepting the contract is more work. Can I just give you my credit card and just get off the phone? So, it's funny how much work is being put on the client.

Blake Oliver: We have a long way to go with client experience. I think that is the great frontier of accounting and professional services, is figuring this out. We are barely scratching the surface of what we can do.

David Leary: What's more important, Jason –‘cause you're big on the automation- is, should firms focus on automation or should they focus on client experience?

Jason Staats: It depends on your customer, and how much they're willing to pay for it. For me, since price is king, price always dictates how much money you make. You increase your price 10 percent, that's 10 percent straight to your bottom line. That means, I think we talk too much about workflow and not enough about creating an experience that people will happily pay more for. So, if it's more work for me and the client's willing to pay for it, then do it. Because that's what increases your bottom line at the end of the day, even if it's not this perfect automated thing. And you're going to have more productized options, like your pilots of the world, for doing that type of return really well. So, I don't think that's where you want to live.

Blake Oliver: From a marketing standpoint, I would say every firm should immediately create a concierge-level of service, and price it at whatever crazy price you need to put out there in order to know it will not be unprofitable; that it will be profitable. You have a number, it could be crazy high, but offer it.

Jason Staats: A good micro example of this is how we did our 1099 services this year through Practice Ignition. We had a concierge tier where we would call the vendors to try to get the W9s for you.

Blake Oliver: Yes, yes.

Jason Staats: And it was astronomically priced.

Blake Oliver: Did anyone buy it?

Jason Staats: Oh, they did. And you're always shocked at how many people are like, “Oh, sure, I'll pay another $800 to not have to do this thing myself.” And we had 20 percent of people opt into it, and God bless the poor soul that then had to call all of these people for their social security numbers and EINs.

Blake Oliver: But you had hired- you had priced it enough where you could afford that person's time to do that. Your clients were happy, ‘cause there's the 20 percent that don't want to do anything, and they're willing to pay for it. And the ones who want to do it themselves, now they feel like, “Okay, I saved money by doing it myself. I'm not just being forced to do this by my accounting firm.”

Jason Staats: People like having options.

[01:06:23] - Jason's Accountant Community

Blake Oliver: Options. Jason, man, this was a great conversation. You have a community of accountants where you talk about this kind of stuff all the time. What is that? Tell us about it.

Jason Staats: It's called RLZ, It's about 120 firm owners like myself, a pretty tech-minded bunch, but the premise is basically, “Let's create a private space where we can collaborate and figure a bunch of this stuff out together, shared tooling, stuff like that, rather than doing all the same stuff in parallel.”

Blake Oliver: We will put the link to your community in the show notes so people can go check that out.

David Leary: Could you say it one more time, though? ‘Cause I'm having a hard time typing it in.

Blake Oliver: You also have a popular YouTube channel. I am subscribed, I enjoy going on my elliptical; I've got the TV in front of the elliptical, and then I catch up on my Jason.CPA. That’s the name of your channel, right? Jason.CPA?

Jason Staats: Yeah. Just go to YouTube, search Jason.CPA. It's a healthy mix of accounting memes and helpful stuff for people like us.

Blake Oliver: I learned about a lot of stuff that we talked about on the show from your channel, so thank you.

Jason Staats: Good. Well, thanks, y'all. This has been a bunch of fun.

Blake Oliver: Oh, it was great. So much fun. And David, if people want to touch base with you- I don't know why they would- but if they want to go-

David Leary: People, are they going to sell me concierge services now? [CROSSTALK].

Jason Staats: Tune in for more hot taxtics with David Leary.

David Leary: Or if you just want to rip on me about my lack of understanding of your job, you can contact me. I’m on all those socials, just at @DavidLeary.

Blake Oliver: I am @BlakeTOliver. I'll see you next week, David.

David Leary: Bye.

Blake Oliver: Thanks, Jason.

Jason Staats: Thanks.

[01:07:56] Classifieds

David Leary: Time for the classifieds.

[01:08:01] The Ambitious Bookkeeper

David Leary: Do you dream of starting a bookkeeping business, but you don't know where to start? Join the bookkeeping biz workshops, a four-day, live workshop series hosted by Serena Shoup, CPA. You learn where to start, what it takes, what tech to use, how to build a business, not a job, plus, how to get comfortable on discovery calls. The workshops begin February 23rd. So, register today at That is

[01:08:34] Oh My Fraud: A True Crime Podcast for Accountants

Blake: Hey, podcast listeners, it's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA, Caleb Newquist. It's called, Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants by accountants.

Caleb and Greg are going to come together every couple of weeks to unpack their favorite frauds, and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim blaming the defrauded widows, orphans, infirm, and feebleminded- because who can resist?

If you fancy yourself a trusted advisor, or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself, safe. To subscribe, go to,, or search "Oh My Fraud" on Apple Podcasts, Spotify, or wherever you get your podcasts.

[01:09:34] How to advertise in these classifieds

David: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.

Tax Organizers Suck
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