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AICPA State Society Survey State Regulatory and Legislative Issues Summary November 2014

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Mat Young, Vice President, State Regulatory and Legislative Affairs, myoung@aicpa.org

Suzanne Jolicoeur, Senior Manager, State Regulatory Outreach, sjolicoeur@aicpa.org

James Cox, Senior Manager, State Legislation, jacox@aicpa.org

Lindsay Patterson, Communications Manager, State Regulatory and Legislative Affairs,lpatterson@aicpa.org Phil Miatkowski, Project Administrator, pmiatkowski@aicpa.org

AICPA State Society Survey State Regulatory and Legislative Issues

Summary November 2014

47 state societies responded to the survey: Alabama, Arizona, California, Colorado, Delaware,

Florida, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland,

Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma,

Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah,

Vermont, the U.S. Virgin Islands, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

Question

Now that most states have enacted individual CPA mobility legislation, is your state facing any challenges or concerns related to the implementation of mobility?

Hawaii, Michigan, Nevada, New York, Ohio, Oklahoma, Oregon, and Virginia reported seeing such proposals.

Question

Did your state consider new legislation that could potentially harm your state’s mobility law such as military licensure, film production tax credits or state tax tribunals in 2014?

Military Licensure – Arizona, Hawaii, Iowa, Maryland, Massachusetts, Minnesota, New Mexico,

Nevada, Oregon, and Pennsylvania Film Production Tax Credits – None

State Tax Tribunals – Alabama, Iowa, and Tennessee Question

Do you anticipate that your state will consider any legislation that could potentially harm your state’s mobility law such as military licensure, film production tax credits or state tax tribunals in 2015?

(2)

Question

In regard to the revised definition of attest:

Alabama, Arizona, Colorado, Delaware, Illinois, Indiana, Louisiana, Massachusetts, Montana,

Nevada, New York, North Carolina, North Dakota, Puerto Rico, Tennessee, Texas, Wisconsin, the U.S. Virgin Islands,and Virginia have the new comprehensive definition of attest. Georgia and Iowa

require conforming changes to their definition of attest.

Arkansas, Guam, Iowa, Kentucky, Maryland, Michigan, Minnesota, Oregon, Pennsylvania, Rhode Island,and South Carolina plan to bring legislation on this topic in 2015.

Washington plans to bring legislation on this topic in 2016.

Florida, Hawaii, Idaho, Mississippi, Nebraska, New Jersey, New Mexico, South Dakota,and

Wyoming are not sure when they will bring up the issue.

Do you envision that passing language on the definition of attest will be:

Relatively Easy – Guam, Iowa, Kentucky, Maryland, Michigan, Rhode Island, Utah, and

Washington

Medium Difficulty – Arkansas, Minnesota, Oregon, Pennsylvania, and South Carolina Question

In regard to firm mobility:

Alabama, Arizona, Colorado, Delaware, Idaho, Indiana, North Dakota, Ohio, Rhode Island,

Pennsylvania, Tennessee, Utah, Virginia, and Wisconsin have firm mobility.

North Carolina does not have CPA firm mobility. However, it has reduced requirements. Out-of-state firms must give notice to the board, but do not have to obtain an out-of-state firm permit.

Massachusetts, Rhode Island, and Texas are planning to bring legislation on this topic in 2015. No states plan to bring legislation on this topic in 2016.

Florida, Georgia, Illinois, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,

Montana, New Jersey, New Mexico, Oklahoma, Oregon, South Carolina, and Washington are not sure when they will move on firm mobility.

Arkansas, Hawaii, Nebraska, New Hampshire, New York, South Dakota, Vermont, the U.S. Virgin Islands, and Wyoming have no plans to move on firm mobility.

Do you envision that passing language on firm mobility will be:

Relatively EasyCalifornia and Texas Medium Difficulty Massachusetts

(3)

Question

During your state’s 2014 legislative session, were any proposals on the licensing of tax preparers considered?

The Illinois CPA Society and the Colorado Society of CPAs indicated that such proposals were considered in 2014.

Question

Do you anticipate this type of proposal in 2015?

Illinois, Indiana, New Jersey, and Ohio anticipate some type of tax preparer legislation in 2015.

Question

What sort of resources would you find helpful in combatting a tax preparer law in your state? (Select all that apply)

Sample Testimony 16%

FAQs 28%

3-5pp background document – 22%

All of the Above 78%

Question

Has your state considered legislation to ban or otherwise restrict the use of biometrics? Do you anticipate such legislation next year?

No states reported seeing this issue in 2014, and no states expect to see it next year.

Question

States often have CPE requirements which can present a challenge for those CPAs with licenses in multiple jurisdictions, such as state-specific ethics requirements. Has this been an issue for CPAs in your state?

Arizona, Delaware, Louisiana, Maryland, New Jersey, South Carolina, and Washington indicated this was an issue.

Question

Does your state board allow a licensee with multiple licenses, whose principal residence is not in your state, to meet his/her home state's CPE requirements in lieu of meeting your state's CPE requirements?

Alabama, California, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Louisiana, Maryland,

Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio,

Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, and

Wisconsin answered yes to this question.

Georgia, Massachusetts, Michigan, Minnesota, Mississippi, Utah, Washington, and Wyoming

reported they do not, but they would be willing to approach their board about updating this provision to reflect the UAA.

(4)

Question

Do you anticipate legislation in your state to legalize marijuana for medicinal or recreational use in 2015?

Arizona, Arkansas, Florida, Georgia, Guam, Kentucky, Minnesota, Nevada, Oregon, Pennsylvania,

Utah, the U.S.Virgin Islands, and Wyoming anticipate marijuana related bills during their 2015 legislative sessions.

Question

Many states have considered tax reform measures which included the taxing of professional services provided by CPAs and CPA firms. Did your state consider a tax on professional services in 2014?

Massachusetts, North Carolina, Ohio, Pennsylvania, and Virginia indicated their states considered such a proposal in 2014.

Question

Do you anticipate your state will consider a tax on professional services in 2015?

Georgia, Indiana, Louisiana, Maryland, Massachusetts, Nevada, North Carolina, Ohio,

Pennsylvania, Tennessee, Virginia, and Washington expect their states will consider a tax on professional services in 2015.

Question

What is your society's position on a potential tax on professional services?

Already have one – Delaware, Guam, New Mexico, South Dakota, and the U.S. Virgin Islands

Would oppose under all circumstances – Arizona, California, Florida, Maryland, Massachusetts,

Minnesota, Mississippi, Nebraska, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island,

Tennessee, Texas, Virginia, Washington and Wisconsin

Generally oppose, may support as part of larger tax reform – Alabama, Idaho, Illinois, Indiana, Iowa,

Kentucky, Louisiana, Nevada, Oklahoma, South Carolina and Utah

Support – None

No position – Arkansas, Colorado, Georgia, Hawaii, Michigan, Montana, New York, North Carolina, Oregon, and Wyoming

Question

States facing budget deficits often explore the consolidation of state agencies including boards of accountancy as a way of saving money. Did your state consider such a proposal in 2014?

North Carolina, Oregon, and Wyoming explored state board consolidation in 2014.

Question

Do you anticipate your state considering such a proposal in 2015?

Arkansas, North Carolina, Ohio, Oregon, and Wyoming expect to consider the issue in 2015.

(5)

Question

Some states are considering initiatives to make their Board of Accountancy a semi-independent agency. Did your state consider this type of legislation in 2014?

Georgia considered an initiative in 2014 to make its board of accountancy a semi-independent agency.

Question

Are you considering such proposals in 2015?

Georgia reported it will consider such a proposal.

Question

Were changes to your state's accountancy statute or regulations enacted during the 2014 legislative session?

Alabama, Arizona, Delaware, Florida, Georgia, Illinois, Indiana, New Jersey, Ohio, South Carolina,

the U.S. Virgin Islands, Virginia, Washington made changes to their jurisdictions’ accountancy statutes

or regulations in 2014.

Question

Do you anticipate changes in 2015?

The following jurisdictions anticipate changes to their accountancy statutes or regulations in 2015:

Alabama, Arizona, Arkansas, California, Delaware, Georgia, Guam, Hawaii, Indiana, Iowa,

Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana,

Nebraska, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Virginia, and

Wisconsin.

Question

Is your state’s accounting statute set to expire in 2015 or 2016? 2015 – None

2016 – Tennessee

Other – California, Maryland, New Hampshire, Texas, Utah Question

Have you had any activity in 2014 in the area of unauthorized practice of law by your state bar association, a state agency, or your state Supreme Court?

Ohio, Pennsylvania, South Carolina, and Wyoming had activity in 2014 in the area of unauthorized practice of law by either their state bar association, a state agency, or their state Supreme Court.

Question

Do you anticipate your legislature considering some type of legal liability reform legislation in the 2015 legislative session?

Kentucky, Maryland, Minnesota, Montana, New Jersey, and Pennsylvania anticipate some type of legal liability reform legislation in 2015.

(6)

Question

Do you anticipate your state legislature considering some type of legislation to expand whistleblower rules?

Kentucky and New York expect legislation to expand whistleblower rules.

Question

Was "ban the box" legislation considered at the state or local level in 2014?

State Level – Illinois, Minnesota, New Jersey, Ohio, Rhode Island, and Washington

Local Level – Maryland, Pennsylvania, and Virginia

Both Levels – Kentucky and New York Question

Are you aware of any attempts to introduce "ban the box" legislation in 2015?

Kentucky expects “ban the box” legislation next year.

Question

Do you expect mandatory audit and/or audit partner rotation to be an issue in your legislature next year?

Massachusetts and New Jersey expect the issue to surface in 2015.

Question

Have any of your members or their firms holding multiple state licenses, been disciplined for actions that occurred in a state other than the state that issued the discipline?

California, Delaware, Michigan, New Jersey, Texas, and Virginia reported that some of their members have been disciplined.

Question

In 2014, did any proposals occur on the licensing of other professions that include some CPA activities, such as private investigators, debt management or real estate appraisers?

Private Investigators – Colorado, Michigan, Oregon, South Carolina and Virginia

Debt Management – Massachusetts and Utah

Real Estate Appraisers – Minnesota and the U.S. Virgin Islands Question

Is state pension reform an important issue for your society?

State pension reform is an important issue in Alabama, Colorado, Georgia, Massachusetts, Nevada,

Utah, and the U.S. Virgin Islands, but they have not examined the issue.

State pension reform is an important issue in Ohio, Pennsylvania, and Rhode Island; and these states have a position.

Illinois, Indiana, Maryland, Michigan, Minnesota, New Jersey, South Carolina and Virginia would like the profession to develop some thought leadership on the topic.

(7)

Arizona, California, Delaware, Florida, Guam, Hawaii, Idaho, Iowa, Louisiana, Mississippi,

Montana, Nebraska, New Mexico, New York, North Carolina, North Dakota, Oregon, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming reported it was not issue.

Question

Do you have a specific initiative to build relationships with minority lawmakers in your legislature?

Florida has a program in place.

Indiana, Iowa, New York and North Carolina have programs, but would like ideas.

Arizona, California, Colorado, Georgia, Idaho, Illinois, Illinois, Louisiana, Maryland, Michigan,

Mississippi, New Jersey, New Mexico, Ohio, Rhode Island, South Carolina, Texas, Utah, the U.S. Virgin Islands and Washington do not have initiatives, but have good relations.

Alabama, Arkansas, Massachusetts, Oklahoma, Pennsylvania, and Virginia do not have programs, but would like to have one.

Delaware, Guam, Hawaii, Montana, Nebraska, Nevada, North Dakota, Oregon, South Dakota,

Tennessee, Wisconsin, and Wyoming indicated this is not an issue in their jurisdictions.

Question

How regularly do you or your colleagues at your society use CAPITOL? Often – Iowa, Maryland, Massachusetts, and Rhode Island

Sometimes – Alabama, California, Georgia, Hawaii, Idaho, Illinois, Indiana, Louisiana, Michigan,

Minnesota, Mississippi, Nebraska, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma,

Pennsylvania, South Carolina, South Dakota, Texas, Washington, Wisconsin, and Wyoming

Never – Arizona, Arkansas, New York, and Virginia

Never, and I’ve never heard of it. – Colorado, Delaware, Florida, Guam, Montana, Oregon,

Tennessee, Utah, and the U.S. Virgin Islands Question

What were the top three issues you advocated for in your state legislature in 2014?

State CPA Society Responses: Alabama

 Definition of Attest

 Alabama Tax Tribunal

Arizona

 Service tax

 Accountancy board clean-up legislation

(8)

California

 Property tax agent registration

 Legislation that would have required CPAs to register with the Secretary of State's Office for services that already fall within the scope of their practice as a CPA

Colorado

 Excluding CPAs from tax preparer disclosure requirements proposed but later killed

Georgia

 State Board Autonomy

 Tax Reform

 Medicinal Marijuana Legislation

Guam

 Our bill to establish our $1mm agency advised endowment fund at the University of Guam,

 Testimony against a bill that would complicate our licensing process

Idaho

 Clarification to state tax law

Illinois

 Provisional Licensure

 Alignment of state tax code with Federal Code on treatment of net losses for trust and estates

 Local Government Audit clarification

Indiana

 Definition of attest

 Changes to Accountancy Act

 Property tax deadlines

Iowa

 Proper use of audit

 Coupling of tax code

 Making sure Iowa Bill Home base Iowa didn't conflict with CPA licensure

Maryland

 MD Estate Tax - Unified Credit

 Combined Reporting

 Sales tax on professional services

Massachusetts

 Advocated repeal of a bill which imposed a sales tax on computer design and software services

 Advocated an exemption for CPAs from a debt management bill

(9)

Michigan

 Business tax reform

 Resident manager legislation

 School and municipal audit reform

Minnesota

 Federal Tax conformity

 Repeal of professional services taxes that passed in 2013 and tax reform

New Jersey

 Passing Appeal bond cap legislation

 NJ Estate/inheritance tax reform

 Passing legislation to change composition of board of accountancy

New Mexico

 Passed legislation to make our tax code provisions on Net Operating Loss more competitive with other states

New York

 Non-CPA ownership

 Protection of school district internal audit function

 Estate tax reform

North Carolina

 Tax reform

 No consolidation of our licensing board

 Uniform taxation of business activities

Ohio

 State tax reform

 Municipal tax reform

 Various tax-specific issues

Oregon

 CPA Exemption from Private Investigator Dual-Licensure

 Umbrella Agency Avoidance

Pennsylvania

 Clarification of a local tax law

 Sales Tax on Services

 Pension Reform

Rhode Island

 Corporate tax reduction: 9 % to 7% passed

 Eliminating the cliff on estate taxes and raising the level to $1.5 million

 Retention of Ed. Commissioner and the creation of a consolidated Tech High School to meet the demands of high quality trade fulfillment

(10)

South Dakota

 AMT Banking Tax Proposal

 Bank franchise Apportionments

 Internet sales tax

Tennessee

 State tax tribunals

 Retaining right to identify state board candidates

 State tax issues

Utah

 .5 financial literacy credit to graduate from high school

U.S. Virgin Islands

 UAA

Virginia

 Tax conformity

 Patent infringement

 Export incentives

Washington

 Tax tribunals

Wisconsin

 Keeping a college education requirement to take the CPA exam

 Updating regulations to reflect current dates of accounting standards

Question

What do you expect to be your Society’s top three issues in 2015?

State CPA Society Responses: Alabama

 Health Savings Accounts - conform state tax rules with the federal tax treatment streamline sales/use tax system

 Implement a unified audit process for Department of Revenue then local municipalities

Arizona  Service tax

 Tax reform (conformity, corrections)

 TPT implementation

Arkansas

 Discontinue State Board's quality review program

(11)

California

 Sunset Review of Board of Accountancy

 Relationship Building with Freshmen Legislators

Colorado

 Competitive challenges to the organization overall

Delaware

 Monitoring the legislation from the SBOA

Georgia

 Tax Reform - Tax on services have been mentioned along with a reduction in state income tax

 State Board legislative fixes

 Monitor openings for a change to PI Statute

 Medicinal marijuana

Guam

 Get our law update passed

Hawaii

 CPA mobility

Idaho

 Conformity with IRS Code

 Possible restructure to state tax commission

 Streamlined sales tax

Illinois

 Alignment of state tax code with Federal Code on treatment of net losses for trust and estates

 Defense of profession and practice areas

 Defense on service tax if introduced

 Defense on tax preparer registration legislation if introduced

Indiana

 Firm permit clarification

 Government audits-schools

 Tax changes-simplification and competitiveness

Iowa

 Attest language conforming

 Exempting CPAs from PI licensing

 Professional Corporations allowing non CPA ownership

Louisiana

 Budget Deficit

 Tax Reform

(12)

Maryland

 Sales tax on professional services

 Amend definition of attest

 Lower the appeal bond cap

Massachusetts

 Non-CPA leadership

 Several revisions to statutes governing the Department of Revenue

 Advocating against a sales tax on services

Michigan

 Definition of Attest

 Treasury Department Reform

 School district and municipal audit reform

Minnesota

 Pass legislation prohibiting the Department of Revenue and the Courts from using the location of a taxpayer's professional advisors as a determining factor when looking at domicile for tax purposes

 Federal Tax Conformity

 Tax reform and simplicity

Montana

 Tax Simplification

 Board of Accountancy (2-tier to 1-tier, Enterprise Funding)

 Exempt CPAs from PI licensing

Nevada

 Tax on professional services

 Tax reform for increased revenue for education funding

 Potential pension reform legislation

New Jersey

 NJ estate/inheritance tax reform

 Passing appeal bond cap legislation

 Stopping efforts to impose higher taxes on businesses and upper income residents

New Mexico  Tax legislation

 Audits

 State bid procedure

New York

 Non-CPA ownership

 CPA exemption from PI licensing

(13)

North Carolina

 Sales tax on professional services

 Uniform business activity taxes

 Consolidation

Ohio

 State tax reform

 Implementation of municipal tax reform if we are successful in lame duck

Oklahoma

 Firm Mobility

 Tweaks to attest definition

Oregon  Attest

 BOA Budget / Umbrella Agency Avoidance

 Effects of Recreational Marijuana Legalization if passes November ballot

Pennsylvania  Pension Reform

 Change in definition of attest & non-CPA firm ownership

 Appeal Bond Caps

 Sales Tax on Services

Rhode Island

 Regulatory reform

 Tax incentives for businesses

South Carolina  Tax conformity

Tennessee

 Sales tax on services

Texas

 Firm mobility

 Preparation services

 Elimination of redundant filings

Utah

 Requiring the state auditor to be a CPA.

 Ethics requirement as part of our 80 hours required to be submitted bi-annually

U.S. Virgin Islands  NIIT

 Scholarships

 Peer Review

(14)

Virginia

 Tax conformity

 Repeal of debit card tax refund mandate

 Tax reform

Washington

 Sweeping of state board funds, scholarships for future CPAs

 P.I. statute, CPA exemption

 Taxes, Sales tax on professional services

Wisconsin

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