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Legislative Update

Week Ending Nov. 30, 2007

• CPA Mobility Bill One Step Closer to Enactment
• PICPA Set to Testify on Lawsuit Abuse Reform
• Sales Tax Expansion Update
  
• Separate Open Records Legislation Move in Both Chambers
• Legislation Makes It Illegal to Go Phishing in Pa.
• Revenue Launches Final Phase of Use Tax Compliance Reviews
• GASB Issues New Statement No.
• More Retirements Announced
  

CPA Mobility Bill One Step Closer to Enactment

Legislation amending Pennsylvania’s CPA Law moved closer to the governor’s desk this week as the Senate Appropriations Committee unanimously approved the bill (26-0), and sent it to the Senate floor for consideration.

Senate Bill 838, sponsored by Majority Policy Chairman Sen. Jake Corman and PICPA member Sen. Pat Browne, CPA, adds a “substantial equivalency” provision to the current statute. Substantial equivalency will enhance the mobility and portability of the CPA license across state lines. The new system will give Pennsylvania CPAs the ability to practice in other states without the burden of applying and paying for additional licenses.

The PICPA-supported bill also proposes other changes to the law including:

• Requiring that a person complete at least 150 semester hours of post-secondary education before receiving a CPA certificate, beginning in 2012. This provision is already required in 48 of the 55 CPA licensing jurisdictions.
• Eliminating the current two-tiered structure of experience requirements, setting a one year experience requirement for all CPA candidates, beginning in 2012.
• Allowing up to 49 percent of a CPA firm to be owned by non-CPAs.
• Updating peer review terminology to reflect changes in the AICPA Peer Review Program.

The Pennsylvania CPA Law, which regulates the accounting profession in the Commonwealth, was last amended in 1996. Since that time, there have been significant developments in the accounting profession that must be reflected in our CPA Law.

Senate Bill 838 is modeled after the Uniform Accountancy Act, prepared jointly by the National Association of State Boards of Accountancy (NASBA) and the AICPA. Similar legislation has already passed this year in several other states including, Indiana, Texas, Illinois, Maine, Rhode Island and Tennessee. Ohio, Virginia, Missouri and Wisconsin already have similar laws in place.

For more information, members may contact your PICPA Government Relations Team.

PICPA Set to Testify on Lawsuit Abuse Reform 

On Monday, Dec. 3, PICPA President-Elect Eric Wallace, CPA, will appear before the House Republican Caucus to discuss the importance of reforming Pennsylvania’s civil justice system, particularly the doctrine of joint and several liability.

Wallace, a partner with the Pittsburgh-based firm Carbis Walker LLP, will outline PICPA’s strong support for House Bill 850, also known as the Fair Share Act. The bill eliminates joint liability for defendants in civil cases found to be less than 60 percent liable, replacing it with a system of comparative responsibility in which a defendant is responsible for paying only his “fair share” of the damages. That means if a party were responsible for 10 percent of the fault, that party would be accountable for paying only 10 percent of the total award.

Under current law, the doctrine of joint and several liability establishes that any defendant in a multi-defendant civil case may be required to pay any or all damages associated with the actions of their co-defendants.

Reforming Pennsylvania’s civil justice system has been an ongoing legislative battle for several years. In 2002, the General Assembly approved the Fair Share Act only to have it struck down by Commonwealth Court on the grounds that it violated the “single subject” requirement of the state constitution.

The bill was referred to the House Judiciary Committee.

Sales Tax Expansion Update

PICPA continues to monitor actively the ongoing school property tax relief debate that is currently before the state House of Representatives. Thank you to all of those who have contacted their state representatives on our behalf. In an effort to keep you apprised of developments, PICPA has learned that a vote on property tax relief legislation has been tentatively scheduled for the week of Dec. 10.

Also, as we anticipated, earlier this month the School Property Tax Elimination Act of 2007 was introduced as House Bill 1275. The 218-page bill, which calls for an expansion of the sales tax base to include a number of professional services, was referred to the House Appropriations Committee.

It is still not too late to contact your legislator to voice your opposition to expanding the sales and use tax to include services. Only you can provide a personal, local face to the impact a sales tax on accounting services will have on you and your clients. Remember, your elected official depends on your input, so call or e-mail today!

As always, please do not hesitate to contact your PICPA Government Relations Team with questions or if we can provide additional information.

Separate Open Records Legislation Move in Both Chambers

Legislation to strengthen Pennsylvania’s antiquated Open Records Law was approved by the state Senate Nov. 28 by a vote of 49-1. The measure now moves to the House, which is in the process of considering a separate bill.

Senate Bill 1 reverses the presumption of access to records for executive agencies and local agencies and puts the burden of proof on a government agency denying access to a record.  

The bill also provides a list of 28 plainly stated exceptions for executive agencies and local agencies. These exceptions include such things as criminal investigations, Social Security Numbers, personal financial information, and individual medical records.

Legislative agencies, including the Senate and the House, are required to provide access to 17 categories of records.

The bill also creates an Open Records Clearinghouse in the Department of Community and Economic Development to provide information, training and advisory opinions on Open Records.

Also on Wed., Nov. 28, the House State Government Committee approved its own Open Records law legislation. House Bill 2072 would subject the legislature to the state Open Records law for the first time in Pennsylvania history. The bill now moves to the full House for consideration.

The separate Senate and House bills eventually will have to be reconciled and agreed to.

Legislation Makes It Illegal to Go Phishing in Pa.

Legislation that would aid in the battle against identity theft by making it illegal to go “phishing” in Pennsylvania unanimously passed the Senate Tues., Nov. 27.  

“Phishing” is a crime in which people use e-mail to falsely claim themselves to be an established enterprise in an effort to lure people to a Web site to collect personal data, such as Social Security, bank account or credit card numbers, or passwords. 

Senate Bill 390 would make it a felony offense to phish personal information and would carry a fine of $100,000 for each violation, along with the ability to collect damages up to three times the actual amount, if the court so rules, as well as attorney fees.

The legislation now goes to the House for consideration.

Revenue Launches Final Phase of Use Tax Compliance Reviews

In November of 2005, the Department of Revenue began mailing Use Tax self-audit letters to businesses across the Commonwealth. Each was instructed to review purchase invoices for the current year, as well as the previous three years, to determine any Use Tax incurred. 
 
Under the Use Tax Voluntary Compliance Program, penalties are waived if the PA-1 Use Tax return and payment are received by the designated due date. The Department has begun conducting a series of limited, focused examinations and field audits to reinforce the necessity of voluntary compliance. 

AUDIT PHASE:

While the audit phase of the program has begun for the industry segments identified above, we continue with our outreach and education initiatives and the voluntary compliance phase for the following segments.

VOLUNTARY COMPLIANCE PHASE:

GASB Issues New Statement No. 52

The Governmental Accounting Standards Board (GASB) has issued a new standard related to the reporting of investments in land and other real estate by endowments.

GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, eliminates the reporting inconsistency by requiring permanent and term endowments, including permanent funds, to report these assets at fair value. It also requires the changes in fair value to be reported as investment income and the methods and significant assumptions employed to determine fair value to be disclosed. Governments should also disclose other information that they currently present for other investments reported at fair value.

Statement 52 is effective for periods beginning after June 15, 2008, with earlier application encouraged.

For more information, visit the GASB Web site at www.gasb.org.

More Retirements Announced

Three more state legislators announced this week that they would not seek re-election at the end of this term. 

Bucks County state Rep. David Steil, Cambria County Rep. Tom Yewcic and Chester County Rep. Art Hershey all announced that they will be retiring at the end of 2008.

They join Reps. Jerry Nailor, Steven Nickol and Tom Tangretti who have already announced their retirements.