AI Tax Agents Promise Hands-Off Returns as Firms Grapple With Automation

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:05] Kind of wild to think that here we have a situation where basically the biggest bank in cryptocurrency has a token with a circulation of 185 billion, and the company that issues it and controls it has never undergone a full financial statement audit. David Leary: [00:00:24] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:30] Hello and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:36] And I'm David Leary. And Blake, if you saw the news. But it finally happened. The thing you've been fearing about you were. You were scared of. You were so scared of this that you almost became pro-Trump and pro dosh for a little while there. Blake Oliver: [00:00:50] Oh, I forgot about that. David Leary: [00:00:51] You're afraid that the country was going to collapse or why civilizations collapse. And the reason why you've always said is because the government becomes insolvent. Blake Oliver: [00:01:01] That's right. David Leary: [00:01:02] It's official now. Blake Oliver: [00:01:03] Based on the. David Leary: [00:01:04] 2025 financial statements, the US is now in a -4.1. -$41 trillion deficit. It's official. We are insolvent. Blake Oliver: [00:01:16] Our balance sheet we are way way upside down. And we'll talk about that after. We thank our sponsors who are our sponsors for this week. David Leary: [00:01:24] David sponsors this week we have cloud accountants staffing on pay and UNC Kenan-flagler Business School. Blake Oliver: [00:01:30] Are you tired of the endless search for qualified accounting talent? You're not alone. 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Head over to The Accounting Podcast dot promo, that's The Accounting Podcast dot promo C a s. We've also got a special guest this week, it's Kenji Kuramoto from basis. Can't wait to talk to him about what's going on over there with AI tax prep. We had some news last week or a few weeks ago. That basis announced they can do a partnership tax return with an AI agent end to end, which is I mean, we've we've talked about this coming for a long time and it sounds like it's here. We've also got another tax prep company, AI tax prep company saying they can do ten 40s. We'll get into that after we talk about what's going on with the government. Because even though we've all known that the US is running this big deficit for a long time now, it just keeps getting worse and worse. Blake Oliver: [00:03:17] And when your own government, the accountants and your own government, say that the US is insolvent, we need to pay attention to it. And it's crazy that this didn't get reported widely in the press. We saw it thanks to an article that was in fortune, and the headline is Treasury just declared the US insolvent. And here's the financial picture. This is from the Treasury Department's own consolidated financial statements for fiscal year 2025. The numbers 6 trillion in total assets against nearly 48 trillion in total liabilities as of September 30th, 2025, and that 48 trillion in reported liabilities doesn't even include the unfunded obligations of social insurance programs like Social Security and Medicare. Those we report separately on an off balance sheet statement of social insurance, our consolidated balance sheet position. Excluding these off balance sheet items deteriorated by about 2 trillion from 2024 to 2025, reaching that staggering -$42 trillion total liabilities. Now, nearly eight times the value of reported assets. Largest drivers, 2 trillion increase in federal debt and interest payable, which is now 30 trillion, and a 439 billion increase in federal employee and veteran benefits payable. That's now about 15.5 trillion. The off balance sheet picture. The Social Security Medicare that surged by 10 trillion in a single year, and now it's at $88 trillion. So if you add the 88,000,000,000,000 in 75 year off balance sheet obligations to the 48 trillion in official balance sheet liabilities, total federal obligations are now 136 trillion, which is five times the US annual GDP. David Leary: [00:05:26] You could argue it's even worse than that because if you think about the Social Security obligation, that's you're spreading that 88 million over 75 years. But 2024 to 2025, the whole the debt got worse by 2.7 $2.2 trillion times 2 trillion times 75. Now we're at $140 trillion over the next 75 years. If because obviously Doge didn't work. Nothing got cut. This is this is the reason people voted for Trump. A huge number of people, because they wanted the deficit to stop deficit spending. And it just keeps going. I don't can it be stopped? I don't know. Blake Oliver: [00:06:03] These numbers are really big. So let's put this into perspective. If you divide every number by 100 million, you can get a picture of what this would look like if the US were a typical middle class family. So what would the U.S. be in that case? Like if it was a household, the household would be earning about $52,000 a year and spending 73,000. So running basically a $21,000 a year deficit. Borrowing that, and it would owe about $1.3 million. So imagine a family making $52,000 that owes like $1.3 $3 million in a line of credit. David Leary: [00:06:53] Nobody would give that person credit anymore, but obviously. Blake Oliver: [00:06:55] Well. David Leary: [00:06:56] You could just print more money. Blake Oliver: [00:06:59] Well, we can borrow right now and we can print money right now. But how long can we do that? Inevitably, the merry go round will stop eventually. Other countries, investors in other countries are going to stop buying US debt. Our bonds and then interest rates are going to go up if we don't solve this. And when interest rates go up, economic growth slows and you get into this stagnation kind of situation that happened in the UK after World War Two. So this is not like something new. This is something that has happened to many great powers over the last hundreds of years. Um, and we can see it coming, but it seems like there's, there's no political will to do anything about it. David Leary: [00:07:48] And so the part I thought was interesting in the article, they mentioned how the Government Accounting Office issued a disclaimer of opinion for the 29th consecutive year. So I had to go look up what is this disclaimer of opinion? And so like to rewind, if you think about a clean opinion means these look good. The books look good. Qualified opinion means mostly good with some issues. Adverse opinion. These are wrong. Disclaimer of opinion is we can't tell. We have no idea if the books are correct or not. And a lot of this is because of the the military Department of Defense, Department of War, whatever we're calling it these days, has yet to pass an audit because exactly how do they audit the rest of the government? How can you depend on the numbers? Blake Oliver: [00:08:30] Do we even know that these numbers are right? Could it be even worse? It's hard to tell. All right, moving on. Let's switch over to App News. I'm so excited to talk about this because we've had all these releases from these AI companies, Claude and, and Anthropic and OpenAI that have enabled now reliable workflows. And we have another AI tax company that has that claims they have released an AI agent that can complete tax returns from start to finish without the preparer touching a keyboard or mouse. This is tax GPT, and they say that their tool can work with any web based intake onboarding. Tax prep and delivery software without requiring firms to adopt a new portal or system of record. So this is similar as it's described. It seems similar to what Claude Cowork can do, where you can create an agent that works both with files on your computer and in the cloud by connecting to your web browser. So Claude Cowork can open up a tab and you can give it permissions and it can go and work in any of these apps without having a direct API connection. David Leary: [00:09:48] So I'm the client. I use whatever portal to upload my stuff. And on your firm, on that side of the firm, you just turn on this agent, this tool, whatever they're calling it, tax, GPT. I think it's what it's called. Is it? Yeah. And that does the whole return. I don't have to do anything and just collect the money for the return. Charge the client. Blake Oliver: [00:10:06] It pulls in the information from the source docs from that portal. The W-2s 1099 K-1's Excel trial balances. Those can be in local folders or in a cloud portal as long as the agent can access them. And then it takes those numbers and puts them into the return. And then it has another agent, they call it Agent Andrew, which is a review agent that then reconciles the source documents against the prepared return, identifies items that may be sensitive from an audit perspective, and then sends the