Log In | About PICPA | Contact | FAQs

Legislative Update

Week Ending Jan. 18, 2008

• PICPA’s 2008 Advocacy Agenda—Members First
• CPA Law Changes—Call to Action
• EIT Reforms on the Move in Senate
  
• House Passes Property Tax Constitutional Amendment
• House Approves Extensive Business Tax Cuts
• Who Do YOU Know? Become a PICPA Key Person
• Making an Investment in the Profession
• Another Lawmaker Decides Against Seeking Re-Election
  

PICPA’s 2008 Advocacy Agenda—Members First

As we usher in a new year, PICPA’s top advocacy priority in 2008 remains advancing Pennsylvania’s CPA profession. In the state legislative and regulatory arena, PICPA strives to protect the CPA designation and further the legislative interests of all CPAs through a comprehensive advocacy program.

Maintaining a strong government affairs advocacy program is critical to any organization’s success. PICPA works with the members of the Pennsylvania General Assembly in Harrisburg to ensure that CPAs across the Commonwealth have a strong voice in the public policymaking arena.

PICPA protects and promotes the interests of members and the profession by monitoring hundreds of bills as well as regulatory and legal issues each year and working closely with policymakers. The goal of this work is to constantly advocate for the future of the profession and to keep members informed of relevant changes that could impact them, their clients, or their employers.

Having a well-earned seat at the table working with legislators, the Rendell administration, the Department of Revenue and other state agencies has had a profound impact on PICPA’s ability to promote and protect your interests. Our legislative goals for 2008 include…

• Easing interstate practice mobility (see CPA Law story below)
• Achieving meaningful earned income tax collection reforms (see EIT Reform story below)
• Passing lawsuit abuse reform
• Stopping sales tax on accounting services
• Promoting principles of good tax policy

To learn more about how you can help PICPA achieve success on its legislative agenda, please see Who Do YOU Know? Become a PICPA Key Person and Making an Investment in the Profession below.

CPA Law Changes—Call to Action

The last time the Pennsylvania CPA Law was revised by the state legislature was in 1996—two years before Google was even incorporated. Much has changed in the way CPAs conduct business. Senate Bill 838 responds to the changing needs of CPAs and the clients and businesses they serve while continuing to protect the public interest.

SB 838 passed the Senate unanimously on Dec. 11, 2007, by a vote of 49-0. It has been referred to the House Professional Licensure Committee for further consideration. PICPA is aggressively lobbying all members of this committee to garner their support to move the bill forward without additional amendments. You can help our efforts by contacting your state House member regardless of whether he or she is a member of the Professional Licensure Committee. Visit our CPA Law Revisions – Issues and Answers information page for additional details.

Senate Bill 838 adds an important new concept called “substantial equivalency” to the current CPA Law. This addition is designed to enhance the mobility and portability of your license across state lines. This has become critically important since many of CPAs’ clients—or potential clients—conduct business in multiple states and often require filing tax returns to be filed in multiple jurisdictions. PICPA is also proposing that this mobility be permitted without notification or fee.

Similar legislation, which includes a no-notification and no-fee provision, has been approved in 10 states: Ohio, Virginia, Missouri, Wisconsin, Illinois, Indiana, Maine, Rhode Island, Tennessee, and Texas. Additional states with legislation pending include Delaware, Louisiana, Massachusetts, and Oklahoma.

Senate Bill 838 would also require a person to 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 55 CPA licensing jurisdictions.

Lastly, the bill would allow a CPA firm to be up to 49 percent owned by non-CPAs, which is already law in 38 other licensing jurisdictions.

EIT Reforms on the Move in Senate

Legislation reforming and streamlining the earned income tax collection process is on the move in the state Senate. Senate Bill 1063, which unanimously passed the Senate Finance Committee on Dec. 5, 2007, was referred this week to the Senate Appropriations Committee.

PICPA and its coalition partners in this effort—the PA Chamber, the Department of Community and Economic Development, the NFIB, the Retailers Association, the Allegheny Institute and others—are urging the Senate leadership to bring the bill up for consideration in February.

Specifically, the purpose of this legislation—and why it has garnered PICPA’s support—is to effectuate a reformed local earned income tax collection system by further providing for the recapturing of tax, for the registering of earned income and occupational privilege taxes, for the collection of taxes, for audits of earned income taxes, for the consolidation and uniform distribution of local income taxes, for penalties, and for costs of delinquent tax collection.

Senate Bill 1063 would establish various reforms in relation to the collection of earned income tax (EIT) that would consolidate, modernize, and introduce uniformity to the collection process. This bill would consolidate local income tax collection systems on a countywide basis, thereby reducing the number of collectors from 560 to 66 (one for each county).

House Passes Property Tax Constitutional Amendment

The state House on Jan. 17, 2008, unanimously passed legislation that would add an amendment to the Pennsylvania Constitution to allow for greater property tax relief to homeowners. The bill now goes to the Senate for consideration.

House Bill 1947 would grant authority to the General Assembly to exempt the full value of all homesteads from property taxation. 

Under the current constitution, Pennsylvania is prohibited from providing property tax relief in excess of 50 percent of the median assessed value of a homestead. This cumbersome language serves as a blockade against many lawmakers’ efforts to provide full property tax relief to Pennsylvanians.

The proposed constitutional amendment must pass both chambers in two different legislative sessions before voters will have opportunity to vote its approval. This means that the earliest the measure could be on the ballot is 2009. If voters approve the amendment, it would become effective in 2010.

Property Tax Relief: On the Way?
House Bill 1947 represents one component of property tax relief plan being cobbled together by the House Democratic caucus. Financing any property tax relief plans remains the public policy challenge, as it has been for nearly 30 years.  

According to House Majority Leader Bill DeWeese (D-Greene), when the House returns to session on Jan. 28, its primary focus will center on two bills: House Bill 1489, sponsored by DeWeese; and House Bill 1600, sponsored by House Finance Committee Chair Rep. Dave Levdansky (D-Allegheny).

House Bill 1489 proposes to raise the sales tax by 0.5% across the board, and to dedicate that revenue to a property tax relief fund. House Bill 1600 goes further by not only similarly raising the sales tax rate, but also raising the personal income tax rate by 0.22% to a total of 3.29%.

However, each bill currently has more than 40 amendments filed by other legislators who have their own ideas of how to raise the monies necessary to fund property tax relief. Each of these amendments, unless stricken by its sponsor, will have to be considered before either of the bills can be wholly debated by the House.

Among the amendments is a proposal known as the School Property Tax Elimination Act, sponsored by Rep. Sam Rohrer (R-Berks). One troubling provision within the proposal is expanding the sales tax base to include accounting, legal and other professional services, in order to generate the necessary funds.

PICPA has been at the forefront in opposing this expansion and its potentially devastating effect on Pennsylvania’s economy, and we urge you to contact your state representative and speak out against expanding the sales tax base to include professional services.

House Approves Extensive Business Tax Cuts

On Jan. 17, the state House passed unanimously a bill containing $2 billion in business tax cuts and a state tax credit for the working poor in Pennsylvania.

The bill, House Bill 377, was amended the day before this final vote to include a litany of pro-business initiatives, many of which PICPA and other stakeholders have been advocating for years:

• Cutting the Personal Income Tax (PIT) rate from 3.07% to 2.93% beginning in July, and to 2.8% beginning in 2009
• Lifting the current $40 million cap of research and development tax credits
• Creating a single sales factor, i.e. considering only business profits, rather than property assets and/or employee payroll for state tax purposes
• Lifting the cap on the amount of net operating losses a business can carry forward into the next fiscal year
• Creating a Small Business Health Savings Account Tax Credit
• Lowering the corporate net income tax rate to 6.90% beginning Jan. 1, 2014
• Phasing out the inheritance tax
• Repealing the gross receipts tax on cell phones
• Repealing the Commonwealth Court’s decision in Graham Packaging Company, LP v. Commonwealth of Pennsylvania to include downloadable software in the definition of tangible personal property for purposes of taxation

The bill will now move on to the Senate, where it faces an uncertain future. With the economy in the doldrums, and the Commonwealth’ finances in a precarious state, the likelihood that HB 377 in its current form is brought up for a vote is slim. 

Who Do YOU Know? Become a PICPA Key Person

Every day in Harrisburg, state legislators make decisions that affect CPAs and their clients. As a PICPA Key Person, you can and will play a vital role in PICPA’s advocacy efforts and, in turn, help shape public policy.

PICPA’s Key Person program encourages all members who already have, or would like to develop, a personal relationship with one or more state legislators, to volunteer as a liaison to discuss with them PICPA’s position on key issues.
 
The effectiveness of PICPA’s legislative program is determined to a considerable degree by the quality and quantity of the profession's "Grassroots" contacts in the legislators' districts. A legislator places great importance on the viewpoints of his or her constituents, and depends on their input to make important policy decisions.

The CPA back home who validates PICPA's position makes a critical difference in the legislative process. You can exercise an important civic right by sharing your views with your representatives in government. As a Key Person, you can help legislators understand the impact a given piece of legislation can have on Pennsylvania and, in particular, on that legislator's district.

Sign Me Up to Be a PICPA Key Person

Making an Investment in the Profession

Once every two years, you are given an opportunity to cast your vote for your state House representative and/or senator. Even then, your options are limited to the names on the ballot for your personal legislative district.

What if you were given the opportunity to vote for any and all candidates who support a similar vision to your own as to the direction in which our Commonwealth should be heading? A more efficient local tax collection system, a fair and evenhanded justice system, the ability to do business across state lines without confusing and cumbersome fees and notification requirements…

PICPA’s CPA-PAC is that opportunity. CPA-PAC is the only political action committee dedicated to representing and protecting solely the needs of CPAs across Pennsylvania. Every time you make an investment in the CPA-PAC, you are enabling PICPA, in return, to put those investments toward legislators who listen to our views and are responsive to our input – in effect, casting a vote for those state policymakers who best represent your interests.

Every contribution counts, so make your investment in the CPA profession today!

Another Lawmaker Decides Against Seeking Re-Election

The Chambersburg Public Opinion is reporting that state Sen. Terry Punt (R-Adams) is retiring at the end of his current term. Punt becomes the fifth state senator and the 24th state lawmaker to decide against seeking re-election in 2008.Three of those lawmakers—Rep. Daylin Leach (D-Montgomery), Rep. Steve Cappelli (R-Lycoming), and Rep. Sean Ramaley (D-Beaver)—have indicated they plan to run for seats in the state Senate that, due to retirements, will soon be open.

Below is the latest list of lawmakers not seeking re-election in 2008.
In the House
Rep. Jerry Nailor (R-Cumberland)
Rep. Carole Rubley (R-Chester)
Rep. David Steil (R-Bucks)
Rep. Tom Tangretti (D-Westmoreland)
Rep. Steve Nickol (R-Adams)
Rep. Daylin Leach (D-Montgomery)
Rep. Steve Cappelli (R-Lycoming)
Rep. Ed Wojnaroski (D-Cambria)
Rep. Tom Yewcic (D-Cambria)
Rep. Art Hershey (R-Chester)
Rep. Lisa Bennington (D-Allegheny)
Rep. Bob Bastian (R-Somerset)
Rep. Ron Ron Raymond (R-Delaware)
Rep. Carl Mantz (R-Berks)
Rep. Fred McIlhattan (R-Clarion)
Rep. George Kenney (R-Philadelphia)
Rep. Sean Ramaley (D-Beaver)
Rep. Jess Stairs (R-Fayette)
Rep. Tom Petrone (D-Allegheny)
 
In the Senate
Sen. Gibson Armstrong (R-Lancaster)
Sen. Gerald LaValle (D-Beaver)
Sen. Roger Madigan (R-Bradford)
Sen. Connie Williams (D-Montgomery)
Sen. Terry Punt (R-Adams)

PICPA urges any members, who have an interest in running for public office, to contact our Government Relations Team.