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Legislative Update

Week Ending April 11, 2008

• Financial Literacy is Vital in Struggling Economy
• Revenue Customer Service Center Extends Hours
• House Adopts Mortgage Reforms
  
• Bill Penalizes Employers for Wrong Classification
• Finance Committee Approves Tax Credits for Volunteers
• Bill Would Compensate Municipalities for Tax-exempt Property
• Maryland Passes Mobility Legislation
• Survey Reveals Low Optimism for U.S. and Local Economies
• Vote Absentee for the Upcoming Primary Election
• Register Now for PICPA’s 2008 Local Government Conference
  

Financial Literacy Is Vital in Struggling Economy

2008 marks the third consecutive year that the Pennsylvania House of Representatives has declared April Financial Literacy Month. PICPA and CPA member of the House, Rep. John Maher, sponsored the resolution, and CPA Reps .Gordon Denlinger and Mike Peifer were among the cosponsors to convey the importance of effectively managing finances, especially adhering to budgets, understanding the consequences of debt, and recognizing the benefits of opening savings accounts.

Financial literacy is crucial in an uncertain economy that is seeing soaring gas prices and a downturn in the housing market. These factors, and many others, should impel families to take a closer look at their finances and make appropriate adjustments.

PICPA and the CPA profession have many programs targeted at educating consumers and helping them make prudent financial decisions. With the PICPA Web site, consumers have access to information that includes money management articles, a free online “Ask a CPA” service, and a couples financial compatibility quiz.

Nationally, the CPA profession has a comprehensive Web site. This site—created by the AICPA—includes relevant articles for all stages of life, financial calculators, checkbook balancing tools, and more. On average, the site receives more than 144,000 visits per month.

On this third annual declaration of April as Financial Literacy Month in Pennsylvania, the CPA profession hopes consumers will access these valuable resources available to help them take control and manage their finances.

Revenue Customer Service Center Extends Hours

People who need late-season tax help will be able to get it through extended service hours at the Department of Revenue’s Taxpayer Service & Information Center.

Starting this week and continuing through April 15, the information center will be open 7:30 a.m. to 7 p.m. weekdays, and from 8 a.m. to 4 p.m. on Saturday, April 12.

The Taxpayer Service & Information Center is prepared to help taxpayers with personal income tax questions.  Call (717) 787-8201 or visit the Online Customer Service Center.

Taxpayers with Internet access may be able to find answers to their tax questions using the Online Customer Service Center, which allows taxpayers to search a database of commonly asked questions.  If taxpayers do not find the answers they seek, they can submit questions to customer service representatives via the department’s Web site.
 
The Taxpayer Service & Information Center’s staff can also answer questions about electronic tax filing options.  The department offers two free electronic tax filing options: TeleFile (over the telephone) and pa.direct.file (over the Internet).

Through March 27, more than 2.2 million Pennsylvanians filed their state income taxes using one of the electronic filing methods – 13 percent more than last year at that time.  About 1.3 million taxpayers have filed paper returns.

Taxpayers can visit the department’s e-Services Center to file returns using pa.direct.file; make payments, including estimated payments; download tax forms; check the status of returns or refunds; update information; pay any taxes due by credit card; and access the Online Customer Service Center.

Forms are also available by calling the toll-free, automated Forms Ordering Message Service at 1-800-362-2050.  Assistance is also available at Revenue district offices located across the state, which are listed in the blue pages of phone books.

House Adopts Mortgage Reforms

A package of mortgage reform bills won passage in the state House on April 8. The bills are very similar to a package of bills approved last month by the state Senate.

The package includes:

• House Bill 1081—would increase oversight of state-certified appraisers.
• House Bill 1082—would allow the Banking Department to release information on denial, suspension, revocation, fines or other disciplinary orders against a licensee after a final order or adjudication by the secretary of Banking. The department currently must wait until all court appeals are exhausted.
• House Bill 1083—would create a reporting system for lenders to tell the Pennsylvania Housing Finance Agency about loan delinquencies, giving the state an early warning system on state and regional trends in foreclosures.
• House Bill 1084—would exclude pre-payment penalties on residential mortgage loans of less than $197,000. The current threshold is $50,000.
• House Bill 2179—would streamline the licensure and administrative process for mortgage brokers and bankers by creating a single license and creating a new licensure category for all mortgage originators, regardless of the type of lending involved. The licensure requirement would provide a tracking and disciplinary mechanism for the Banking Department, and would require pre-license education for the people involved in direct sales of mortgages.

The bills now move to the Senate for consideration.

Bill Penalizes Employers for Wrong Classification

The state House Labor Relations Committee met April 8 to consider a bill that would impose penalties on employers who improperly classify employees as independent contractors for workers compensation purposes. PICPA is actively monitoring the bill and asks any member with an interest to contact your PICPA Government Relations Team.

House Bill 2400, the Employee Misclassification Prevention Act, would create a free-standing act providing that services performed by an individual for wages would be deemed to be employment and the individual would be considered an employee of the party that pays the wages. The bill, sponsored by Rep. Bryan Lentz (D-Delaware), provides limited exceptions. An employer or an officer or agent of the employer that fails to properly classify an individual as an employee or fails to pay benefits or other contributions required by law would be subject to penalties, remedies or actions. The bill provides for enforcement and criminal penalties. Any sum collected as a penalty would be applied toward enforcement and administration costs of the Department of Labor and Industry.

Chairman Rep. Bob Belfanti (D-Northumberland), who strongly supports the measure, initially refused requests for a public hearing, but in the end agreed to a single hearing on the bill on April 23 in Folsom, Pa., while the House is in election recess. Belfanti indicated that he will bring the bill up for a committee vote when the House reconvenes in May.  

Finance Committee Approves Tax Credits for Volunteers

The Senate Finance Committee on April 8 approved legislation to provide tax credits to Pennsylvania’s emergency first responders and their employers as a way to help fire companies and emergency medical service companies recruit and retain volunteers.

Senate Bill 1314 would provide a $500 tax credit for active members of volunteer firefighting and emergency medical services organizations that are certified by the State Fire Commissioner or the Director of the Emergency Medical Services Office in the Department of Health.

Senate Bill 1316 would provide a $1,000 tax credit against an employer's personal income tax for each volunteer fire and emergency services member employed.  The credit would not exceed $5,000 per employer during a specific tax year.

The bills now move to the full Senate for consideration.

Bill Would Compensate Municipalities for Tax-exempt Property

This week, the state House Local Government Committee approved a measure sponsored by Rep. Bob Freeman (D-Northampton) that would provide state funding to municipalities to compensate for high levels of tax-exempt property.

House Bill 2018, known as the Tax Exempt Property Municipal Assistance Fund, would be funded by dedicating revenue generated by the 18 percent Johnstown Flood Tax, which generates about $240 million in annual revenue. Under the amended proposal, any Pennsylvania municipality that imposes property taxes and has 15 percent or more of the total market value of properties within its borders labeled tax-exempt would qualify for compensation. The Johnstown Flood Tax, enacted in 1936, is levied on the sale of wine and liquors. 

The legislation would require that each county annually provide the state with information regarding the market value of tax-exempt properties. The funding formula within the legislation is based on the market value of those properties if they were taxable. No single municipality would receive more than 10 percent of the total revenue in the fund or more than $100 per person per capita, based on the last census. Property owned by the municipality itself would not be eligible.

The bill is now in the House Appropriations Committee.

Maryland Passes Mobility Legislation

Before the clock struck midnight on April 7, ending their legislative session, Maryland became the 19th state to pass mobility legislation consistent with the substantial equivalency provisions in the Uniform Accountancy Act (UAA). Maryland now joins Kentucky as they wait for gubernatorial signatures.

Once the ink is dry, both states will join Illinois, Indiana, Idaho, Louisiana, Maine, Mississippi, Missouri, New Mexico, Ohio, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wisconsin.

In other mobility action, Georgia recently passed a mobility provision, which will give licensees the ability to enter Georgia, with no notice, from other states that have enacted mobility provisions.

Also last week, Iowa moved closer to final enactment of a partial mobility bill that is awaiting the governor’s signature. While the statute will allow for out-of-state individual CPAs to enter the state without notification, the CPA firm will need to obtain an Iowa firm permit if they are performing reviews or audits.  Both of these provisions take effect in July of 2009.

Passing this legislation in Iowa and Georgia gets both states closer to achieving a full mobility provision.

Currently, 15 states have mobility legislation pending: Alabama, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, Oklahoma, South Carolina and Pennsylvania.

Survey Reveals Low Optimism for U.S. and Local Economies

Despite lower interest rates and adoption of the federal fiscal stimulus plan, the outlook among the nation's small and mid-sized business owners has fallen to record lows in the six-year history of the PNC Economic Outlook survey, according to new findings.

Only six percent of business owners are optimistic about the U.S. economy over the next six months, a record low for the semiannual survey that began in April 2003. An unprecedented 19 percent also expect their profits to decrease in the near term. Asked about their top concerns, the possibility of recession is number one, chosen by 36 percent, while higher energy prices are second (30 percent).

The national economy's woes are beginning to significantly impact the outlook for small and mid-sized businesses, according to PNC's new spring findings. The survey gauges the mood and sentiment among small business owners, who represent the bedrock of the American economy.
The majority of owners are also doubtful that the federal fiscal stimulus plan will boost their business, PNC found. Sixty-three percent expect to see "little to no benefit" from the package. Regionally, owners in the midwest are the most pessimistic, where only 8 percent expect to benefit, followed by the west (11 percent) then northeast and south (both 19 percent).

Among the 35 percent that expect to see some benefit, the expectation is higher among owners of wholesale and retail companies compared to manufacturing and service firms.

Likewise, one in 10 expect to reduce the number of full-time employees, while for two-thirds, there will be no change in employment levels over the next six months.

PNC also found:

• Nearly two out of three (61 percent) expect to pay higher prices to suppliers, which is little changed from two previous surveys. Only 38 percent expect an increase in employee compensation over the next six months. Fewer employers (50 percent) are expecting higher healthcare costs.
• A stable 43 percent plan to pass along some portion of their higher costs in the form of higher selling prices to customers. Of those who plan to raise prices, nearly one-quarter (24 percent) report that favorable market conditions will allow it, while three-quarters (73 percent) are attempting to preserve profit margins.
• Nearly one out of five (18 percent) of business owners -- compared to 10 percent in the autumn -- say it is more difficult for them to obtain credit recently than it was three months ago. Only one out of seven (14 percent) business owners say that it is easier to get credit now. Plans for capital spending have declined across a broad range of industries.

Nearly half (48 percent) expect house prices in their area to decrease during the next 6-12 months compared to 43 percent in the autumn. Among those who expect a decrease, a growing amount say the decline will have a negative impact on their business, calling for them to reduce the number of full-time employees and limit capital spending. 

Vote Absentee for the Upcoming Primary Election

Travel may be a frequent part of your job.  Even though you might be out of town, you do not need to be left behind on April 22, Election Day.

You can still vote.  In fact, to be on the safe side, vote early.

If you know or think you will be out of your district on Election Day, make sure to apply for an absentee ballot.

Be sure to complete and submit the form as instructed.  Applications must be received by April 15, 2008.  Your local election board office will mail you an absentee ballot which will be your vote.  The application is the first step; be sure to vote by returning the ballot by April 18th, either by mail or in person.

Or, if you prefer, you can vote early in person at your county board of elections office when the ballot is ready.  Call ahead to ensure you will be able to cast your vote. 

Business travel is considered a legally valid reason for voting by absentee ballot, so do not be left behind this Election Day!

Register Now for PICPA’s 2008 Local Government Conference

PICPA’s 2008 Local Government Conference is scheduled for July 14-15, 2008 at the Hershey Lodge & Convention Center in Hershey, Pa. Invest two days and learn about required audits and initiatives for local governments from the Auditor General, discover what GASB issued this year, examine AICPA and federal activities in response to the federal government’s study on the quality of single audits, understand effective approaches to uncover evidence of a financial crime, and more! You can also personalize this conference by selecting your concurrent sessions! Register by May 20 and SAVE!