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Legislative Update

Week Ending May 11, 2007

• Senate Confirms PICPA Member to Accountancy Board
• Treatment of LLCs, LLPs Considered by Senate Committee
• House Committee Considers Strengthening Licensing Laws
• Budget Vehicle Introduced in the House
• Bill to Reduce Size of Legislature Approved by Committee

Senate Confirms PICPA Member to Accountancy Board

On Tuesday, May 8, the State Senate unanimously confirmed PICPA member Paula J. Hasbach, CPA, for appointment to the State Board of Accountancy. The Board is now at its full compliment of nine CPAs.

Ms. Hasbach is a director of taxation at PricewaterhouseCoopers LLP in Pittsburgh. She holds a bachelor's degree in economics from the University of Dayton and an accounting certificate from Old Dominion University. She is also a member of the AICPA, Allegheny Tax Society, and Women's Leadership Initiative of United Way.

Treatment of LLCs, LLPs Considered by Senate Committee

On Tuesday, May 8, the Senate Judiciary Committee met to consider six bills, among which was Senate Bill 632. The bill amends and revises the Nonprofit Corporation Law (NPCL) of Title 15, and enacts the Uniform Unincorporated Nonprofit Association Act (UUNAA).

Among other amendments to Title 15, Senate Bill 632 would provide the same liability protection for partners in an LLP against torts committed in the course of the business that is provided to shareholders in a corporation or members in a LLC. Currently, a general partner in an LLP, while not liable for the tort, itself, is liable for all other debts and obligations of the LLP. These new provisions have already been enacted in 35 other states.

SB 632 would also make several minor changes to conform Pennsylvania law to revisions made in Federal income tax laws as they apply to LLCs and LLPs. These include giving the Department of Revenue the power to accept credit card filing payments without additional charges, and the power to charge a different fee when a filing is made electronically.

The revision of the NPCL has been pending for the past decade, since the enactment of the Business Corporation Law (BCL) in 1998, so that the NPCL will now conform to the BCL. This would include making the language in both consistent, so as to avoid disparate interpretations of identical topics and to ensure that true contrasting provisions are highlighted. Included, as well, among the changes will be to permit businesses under NPCL to use modern electronic technology for certain communications, as is permitted under the BCL.

The enactment of the UUNAA would provide a set of provisions governing the affairs of unincorporated organizations that conduct nonprofit activities, which has not been included in current Pennsylvania statutory law.

The bill was unanimously reported out of the committee, and will now be voted on by the Senate it its entirety.

House Committee Considers Strengthening Licensing Laws

On Wednesday, May 9, the House Professional Licensure Committee convened to hear testimony regarding a series of bills intended to strengthen the authority of the state licensing boards, including the State Board of Accountancy. House Bills 1188, 1194 and 1120 will remain in the committee to be voted on at a later time, once questions from the committee members and licensed professionals have been answered to their satisfaction by the Board of Professional and Occupational Affairs (BPOA).

Perhaps the most contentious of these pieces of legislation is HB 1188, which

• Requires that licensees cooperate with an investigation or be found in violation of professional conduct;
• Increases the maximum fines from $1000 to $10,000 for operating without a current, registered, unsuspended and unrevoked license, registration, certificate or permit and/or violating any provision of their respective acts or regulations relating to the conduct or operation of a business; and
• Requires that a licensee determined to be in violation of the disciplinary act to pay the costs associated with the investigation.

PICPA, along with several other licensed professions, have expressed some concern that the first of these new provisions may, if enforced improperly, compromise an individual’s right to due process. BPOA Commissioner Basil Merenda responded to this questioning by alleging that there would be no such compromise, as each licensee would be provided with notice in the form of a complaint, as well as his or her opportunity to be heard in the form of a mandatory hearing.

Far less cause for debate were House Bills 1194 and 1120, the first of which would allow the BPOA to hire investigators as may be necessary to conduct inspections of facilities as required by the licensing acts. PICPA strongly supports the measure. Current law states that such investigations be conducted by employees of the Bureau of Enforcement and Investigation (BEI) – the enforcement arm of the BPOA – which depletes greatly the number of investigators available for other forms of investigating.

HB 1120 simply increases the grading of the offense of impersonating the holder of a professional or occupational license from a misdemeanor to a felony of the third degree.

PICPA’s Government Relations Team will continue to monitor these pieces of legislation as they progress through the General Assembly.

Budget Vehicle Introduced in the House

Weeks after its anticipated introduction, House Democratic Appropriations Committee Chairman and Philadelphia Mayoral candidate, Rep. Dwight Evans, Wednesday officially filed House Bill 1286 – a vehicle for the 2007-08 fiscal year budget.

Typically, this bill has been introduced in the House, where members amend into it “wish list” items for their home districts, immediately following the governor’s February budget address. After passage in the House, the Senate will then received the legislation, strip it down in the interest of reducing state spending, returned to the House for concurrence, and sent to the governor for his approval. By law, the budget must be signed into law no later than June 30.

Although the House convened for a non-voting session day on Wednesday – purportedly to consider the bill in a meeting of the House Appropriations Committee – that meeting was postponed until the next day of session, May 21. According to House Democratic Floor Leader Bill DeWeese, all amendments to the bill must be filed no later than Monday, May 14. The House will then consider and vote on the final legislation May 22-24.

Two chief roadblocks to this process will be the narrow margin of control the Democrats maintain within the Chamber – 102-101 – and the new reform provisions being considered by House members to increase “transparency” in the legislative process, which, among other things, prevent legislators from conducting business beyond certain time constraints.

In addition, the lukewarm response in all four caucuses as to the feasibility and prudence of many of the governor’s budget proposals is causing much despair within the General Assembly and among other politicos that it will, in fact, be months before a budget is passed.

PICPA will continue to keep you informed as HB 1286 makes its way through the budget process.

Bill to Reduce Size of Legislature Approved by Committee

Legislation to reduce the size and cost of the Pennsylvania General Assembly was approved by a Senate committee Tuesday.

Under Senate Bill 248, the Legislature would be reduced from 50 to 40 senatorial districts and from 203 to161 representative districts. The result would be a 20 percent reduction in the size of both chambers.

In order to ensure that the change would result in savings for taxpayers, a provision in the bill will require a corresponding reduction in the legislature's budget by 20 percent.

Because it amends the Constitution, the bill must be passed by the General Assembly in two consecutive sessions and then be submitted to voters as a ballot question. The changes would be effective after the 2010 reapportionment.