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IRS Staffing Shake-Up Could Spell Delays Down the Road

In an interview with ABC 10, CalCPA Committee on Taxation member Jen Bogart says clients are anxious but not seeing major refund delays given the IRS shake-up. But impacts are being felt when dealing with business returns.

Tax Season Delays

CalCPA Supports AB 1175: A Modern Pathway to CPA Licensure

California Assembly Bill 1175, which aims to enhance and modernize CPA licensure requirements by creating more inclusive, flexible and affordable pathways for aspiring CPAs, recently passed out of the Assembly Business and Professions Committee this morning with unanimous support.

CalCPA Supports AB 1175

Addressing Misconceptions About the Evolving CPA Licensure Requirements

Discussions around changes to CPA licensure have sparked questions and, in some cases, misconceptions. As leaders of state CPA societies across the country, we want to set the record straight and provide clarity on what these changes mean for the profession and its future.

Licensure Update Misconceptions

Indemnification Clauses in Client Agreements

At first glance, indemnification provisions may seem benign, but hidden in what a client may define as “standard” terms can be language that shifts unreasonable risk to a CPA firm. 

California CPA magazine

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Assembly Bill 1175, which enhances and modernizes CPA licensure requirements by creating more inclusive, flexible and affordable pathways for aspiring CPAs to demonstrate the necessary competency for licensure, passed out of the Assembly Business and Professions Committee April 8. The bill now heads to the Assembly Appropriations Committee, then on to the Assembly Floor, before heading to the Senate for a similar process.

, authored by Assemblymember Jacqui Irwin and sponsored by the California Board of Accountancy (CBA). 

The changes outlined in the bill better align with market needs and consumer demands and will help ensure the profession remains a trusted voice and provider of consumer services. Importantly, this is achieved while maintaining essential consumer protection provisions.

Demand for CPA services continues to rise, yet the number of candidates entering the profession remains flat while the number of those retiring from the profession is increasing. This growing gap puts pressure on current CPAs, affects client service and ultimately impacts the public interest. 

To address these challenges, stakeholders across the country—including CalCPA and the CBA—are working to attract and retain more CPA candidates by reducing barriers without compromising the profession’s integrity.

AB 1175 is the product of more than a year of thoughtful work by the CBA. It would allow aspiring CPAs to earn a bachelor’s degree with an accounting concentration, pass the CPA Exam and complete two years of general accounting experience—with the option to substitute a qualifying master’s degree or certificate for up to one year of experience. This flexible approach gives candidates multiple affordable options toward licensure.

To support these changes and minimize disruptions for consumers and those working in the profession, AB 1175 also updates and strengthens CPA interstate practice privileges that support CPA mobility across state borders. These updates enable CPAs to serve clients and meet consumer needs effectively and efficiently across state lines.

Lastly, AB 1175’s modernization approach is already influencing similar efforts in other states and is proposed for inclusion in the Uniform Accountancy Act—positioning California as a national leader in shaping the future of CPA licensure, expanding career pathways and meeting evolving consumer needs.

If passed, AB 1175’s mobility provisions would take effect Jan. 1, 2026, with licensure updates following on July 1, 2026.

You can find out more information about the development of AB 1175 on the 

Despite the IRS staffing shake-up, tax refunds are still generally arriving on time and most people who file electronically receive theirs within three weeks. For those filing paper returns, it could take up to eight weeks. 

, CalCPA member Jen Bogart, CPA, says clients are anxious but not seeing major refund delays.

“I have heard more clients coming in wanting to file as soon as possible when they're expecting refunds to make sure that they get the refunds because they're nervous about that, but I have not been seeing or hearing that anything has actually been delayed so far,” said Bogart, who also is a member of the CalCPA Committee on Taxation.

The story is a little different, she said, when it comes to impacts being felt when dealing with business returns that have already been subjected to years of delays. Most notably, those involving the Employee Retention Tax Credit.

“Those are the ones that can be large dollar amounts for some businesses, and [the IRS] stopped processing them for a while due to concerns about fraudulent claims, and they've started slowly reprocessing them, but very slowly, like, 18-plus months out, the people are waiting for refunds,” Bogart said.

The CPA profession is built on a foundation of integrity, expertise, and adaptability. As the business world rapidly evolves, so too must the requirements for becoming a CPA. Recently, discussions around changes to CPA licensure have sparked questions and, in some cases, misconceptions. As leaders of state CPA societies across the country, we want to set the record straight and provide clarity on what these changes mean for the profession and its future.

The business landscape has transformed dramatically in recent years, with advancements in technology, evolving regulatory requirements, and increasing market complexities reshaping the role of CPAs. The CPA licensure model must adapt to ensure that new professionals are equipped with the skills and knowledge necessary to meet these growing demands. The changes being implemented are designed to maintain the strength and relevance of the CPA credential while continuing to uphold the profession’s rigorous standards.

State CPA societies listened to the profession and committed to leading together from the front. We collaborated to make much-needed changes that broaden access while maintaining the integrity and trust of the CPA license.

The CPA license is more than just a credential—it is a symbol of trust, expertise, and accountability. Here’s why it matters:

Change can be challenging, but it is also necessary. The CPA profession has always evolved to meet the needs of the business world, and this latest step ensures that future CPAs will be well-equipped for success. As leaders of the CPA profession in our respective states, we are committed to supporting candidates, educators, and employers through this transition.

We encourage open dialogue and welcome questions about these changes. Our goal is to ensure that the CPA profession remains strong, relevant, and prepared for the future. Let’s work together to embrace this evolution and continue to uphold the integrity and excellence of the CPA credential. 

There has been a significant uptick of clients attempting to embed indemnification and/or hold harmless clauses in various documents executed with CPA firms (e.g., non-disclosure/confidentiality agreements, business associate agreements, data protection agreements, etc.) to shift financial liability through contractual apportionment of risk. CAMICO has also noted an increasing trend of clients pushing back on firms’ engagement letters and proposing one-sided indemnification provisions, shifting risk and exposure onto firms beyond what would be deemed reasonable for the scope and limits of the engagement.

At their core, indemnification and hold harmless provisions in most CPA/client agreements are designed to transfer liability, generally in the event of an alleged breach of contract or a party’s negligence, misrepresentation or misconduct. At first glance, these provisions may appear to be relatively benign, but hidden in what a client may define as “standard” terms can be language that shifts unreasonable risk to the firm.

CAMICO encourages CPAs to take great care in reviewing any contracts or agreements containing such language. Consider the worst possible scenario under the agreement and determine the level of risk your firm would be assuming. So, it is important that before you contractually bind your firm to an arrangement, take the time to understand all the implications of any legalese in the agreement to make an informed decision about terms and conditions that may pose a higher standard or greater liability to the firm than what would typically be anticipated.

Make sure that you are comfortable with the agreement and the expectations that will fall on your firm. Be prepared to decline the client opportunity if you cannot negotiate the terms to your satisfaction.

Questions to consider when evaluating agreements with these provisions include:

Determining the answers to the above questions is a good starting point to evaluate risk. It is important to note that indemnification laws vary by state, so this risk discussion is limited in nature and does not address state-specific issues or recommendations. CAMICO encourages you to consult with qualified legal counsel in your state if you have specific questions regarding these provisions. 

Most people would support and agree that if a mistake is made resulting in damage to someone else, the party that made the mistake should be held responsible to “make it right.” What “making it right” looks like, of course, will depend on the facts and circumstances of a particular situation.

How this translates to the CPA/client relationship can be troublesome, given that some of the indemnity and hold harmless clauses are written to be extremely broad, and there may be many components to the underlying facts and circumstances relevant to the assessment of determining actual “fault.” For example, did the CPA solely contribute to the alleged cause of the damage as a result of their negligence, or did the client or one of its representatives contribute, in whole or in part, to the underlying cause?

Certain courts have found that hold harmless is not distinct and is the same as indemnification, while others have found the duty to hold harmless is broader than indemnification as it also requires protection against liability. Therefore, before signing a contract with indemnification or hold harmless provisions, it is extremely important to carefully read the relevant clauses. Identifying, understanding and modifying unreasonable indemnification and/or hold harmless terms will help to avoid costly liability claims.

What exposure is the subject of the indemnification request?:

 appropriate to agree to indemnify or hold harmless your client or a third party for exposures directly related to the client’s obligations. Any request that provides indemnity for your client’s failure to accurately and timely inform you of information necessary to complete your work is very risky and inappropriate. On the other hand, if the provision is properly worded such that the exposure is appropriately limited given the nature and scope of the professional services provided by the firm, that would be considered less risky. (See the example in the section below titled: Is the indemnity request limited?)

Many of the indemnity and/or hold harmless clauses embedded in CPA/client agreements attempt to shift all liability from the entity to the CPA firm and have broad language that extends the CPA firm’s responsibilities beyond the professional services being performed. Such agreements/contracts, like NDAs, may be boilerplate agreements that clients use for all third-party service providers. As such, they may contain legal conditions and caveats that are inappropriate with; respect to the professional services being provided by the accounting firm.

However, if the indemnification clause is mutual in nature, like the example below, in which both parties accept responsibility as outlined under the terms of the engagement and agree to indemnify any claims judicially determined to have arisen solely from the gross negligence, misrepresentation or willful misconduct of the party, the provision is much more appropriate for the nature and scope of the CPA/client relationship.

Firm and Client acknowledge and agree that each party maintains responsibility for the work performed, and responsibilities as outlined, under the terms of this Agreement. By the signatures below, each party agrees to indemnify the other party as specified herein: (i) <Firm> agrees to indemnify Client for any claims judicially determined to have arisen solely from the gross negligence or willful misconduct of Firm, and (ii) Client agrees to indemnify Firm for any claims judicially determined to have arisen solely from the gross negligence, misrepresentation, or willful misconduct of Client.

What insurance issues should be considered?: 

The most important insurance issue to consider is the impact of your acceptance of indemnification and hold harmless provisions on your professional liability insurance or your cyber policy in the case of data breach–related provisions. Before you agree to any such terms, check with CAMICO or your cyber insurance company. 

Also important to consider is the extent to which you can protect against indemnity risk through other insurance. For example, many business owner policies (BOPs) address the premise’s risk exposure from your personnel being in the client’s offices. If you cannot insure against the risk created by the indemnification, then consider fee/exposure leverage. Assess the size of the indemnity risk versus your fees. If the indemnification exposure is much greater than your fees, risk increases, and reward is limited.

Would these clauses impair independence?:

 Under ET Sect. 1228.020 of the AICPA’s Code of Conduct, a firm is prohibited from indemnifying an attest client for damages, losses, or costs arising from lawsuits, claims or settlements that relate to an attest client’s acts. Doing so would impair the firm’s independence.

Would these clauses be an act discreditable?:

 Certain governmental bodies, commissions and regulatory agencies (e.g., federal banking regulators, state insurance commissions and the SEC) prohibit entities subject to their regulation (regulated entity) from including certain types of indemnification and limitation of liability provisions in agreements for the performance of audit or other attest services that are required by such regulators and provide that the existence of such provisions disqualifies a member from rendering such services to these entities. As such, ET Sect. 1400.060 of the AICPA’s Code of Conduct states it would be an act discreditable to the profession to perform an attest engagement when the engagement agreement contains indemnification or limitation of liability clauses prohibited by a law, regulation or interpretation.

Understand your risks before signing these types of agreements/contracts. As a starting point, ensure that your firm has considered the following risk management steps and has adequately provided for the potential of additional liability risks:

From a risk management perspective, consider limiting any indemnity and hold harmless clauses by incorporating the following four key suggestions:

Refer to the excerpts below for example indemnity and hold harmless clauses that have been embedded in various CPA/client agreements sent to CAMICO’s Loss Prevention department for review. As you can see by the broad nature of these short provisions, as originally written, the firm would be contractually agreeing to cover fees and costs it may otherwise not be legally obligated to cover, which could jeopardize insurance coverage. Agreeing to such terms without modifications would be problematic for any CPA firm, but ultimately it is a business decision for a firm if they are willing to accept the added risk exposure.

For illustrative purposes, CAMICO has offered suggested edits (highlighted and indicated below) to limit the provisions to more reasonable terms.

Example 1 – Excerpt from a Confidentiality Agreement

to indemnify, defend and hold harmless the Client from any 

 loss, damage, liability, claims, causes of action, cost or expense (including litigation expenses and reasonable attorneys’ fees) 

judicially determined to be caused solely 

gross negligence, willful misconduct, or 

and/or its employee agents or representatives

 the terms of this Confidentiality Agreement.

Example 2 – Excerpt from an Engagement Letter

agrees to reimburse the reasonable costs to 

indemnify, hold harmless and defend Client 

and their respective directors, officers, members, managers, employees, agents and/or representatives

 third-party claims, demands, causes of action, losses, expenses or liabilities, including costs, expenses, and reasonable attorneys’ fees (collectively, “Losses”) 

 or other obligations under this agreement.

If one goes today to the California Franchise Tax Board (FTB) 

 and visits the “Law” section, they will see information on “written guidance” in the form of Chief Counsel Rulings, FTB Notices and Legal Rulings. Had one visited that site six months ago, one also would have seen many years of FTB Technical Advice Memorandums (TAMs). This fall, however, the FTB removed the TAMs from its website in reaction to a decision by the San Francisco County Superior Court which invalidated one of FTB’s TAMs as being an unlawful “underground” regulation.

American Catalog Mailers Association v. Franchise Tax Board

, San Francisco Superior Court No. CGC-22-601363, that TAM 2022-01, which addressed Public Law 86-272, was invalid because it had not been issued in compliance with the California Administrative Procedure Act (Act). 

In general, the APA defines a “regulation” as every rule … of general application … to make specific the law enforced or administered by it.… ” The court found TAM 2022-01 was a “regulation” that had not been promulgated properly under the APA (no notice, hearing, formal review/approval, etc.) and was hence “void.”

The FTB argued, unsuccessfully, its TAMs do not provide binding rules, let alone ones of general application, and were simply a resource provided to FTB auditors and made available to the public, and were not “regulations” required to go through the APA process. However, the court disagreed.

The FTB did not appeal the decision by the San Francisco court. Instead, it responded to the decision by removing from its website 

 previously posted TAMs, reiterating the TAMs removed were nonprecedential and were provided for informational purposes only.

This removal is a disappointing development because TAMs would inform the public of FTB’s position on a certain issue, e.g., TAM 2022-01 on what FTB believed was the scope of protected activities under Public Law 86-272.

However, if I was still in FTB Legal (as I was many years ago), this is precisely what I would have done. The position taken by the FTB in the (now secret) TAMs will continue to be their internal position on the issues, but by removing them from the public, the FTB no longer needs to worry about cases such as American Catalog and being sued by taxpayers under the APA on the theory the TAMs are void “underground” regulations.

The FTB has long made it clear that while positions it takes in the TAMs could be used to support an audit determination, the TAMs themselves were not to be cited by the FTB to a taxpayer as authority for that position. (

See 10.4.8 of FTB’s Manual of Audit Procedures. MAP 10 TAX RESEARCH, sec. 10.4.8

 of the TAM in issue (on PL 86-272) because the merits were not at issue—i.e., the court never invalidated the 

The decision addressed purely a challenge to the 

 of the FTB publicly releasing that TAM without first going through the APA and having it formally approved as a regulation. All that was accomplished by 

 the TAMs from public access, denying the public (but not FTB auditors) the benefit of that knowledge.

Missing TAMs

The FTB has removed Technical Advice Memorandums from its website in reaction to a court decision that invalidated one of FTB’s TAMs as being an unlawful “underground” regulation.