2024

The demand for CPAs and other accounting professionals continues to grow, yet the number of individuals entering the field is falling short of meeting this need. In 2022, the number of candidates taking the CPA Exam hit its lowest point in nearly two decades. Compounding this issue, the number of accounting degrees awarded between 2020 and 2022 declined by 7.8%. These trends underscore the urgent need for action to address workforce challenges and ensure the profession’s vitality. 

The PICPA supports legislation designed to address critical updates to the licensure process in Pennsylvania, reflecting both the evolving needs of the accounting profession and the dynamic landscape in which it operates. PICPA-backed legislation proposes two significant changes to Pennsylvania’s CPA licensure process. 

First, it introduces an additional pathway to licensure. Under current law, candidates must complete a master’s degree or 150 credit hours of education (including the required accounting concentration), gain one year of professional experience, and pass the Uniform CPA Exam to become licensed in Pennsylvania. While this pathway will remain intact, the PICPA supports creating an alternative option to qualify for licensure: candidates with a bachelor’s degree (including the required accounting concentration), two years of professional experience, and successful completion of the CPA Exam. 

Second, the PICPA supports simplifying practice mobility for qualified CPAs from out of state. These individuals would be allowed to work in Pennsylvania without obtaining a Pennsylvania certificate and permit, which is current law under substantial equivalency, provided they meet specific requirements: 

• Hold a CPA license in good standing in their home state
• Have at least a bachelor’s degree and completed an accounting concentration in coursework 
• Have passed the CPA Exam
• Have completed an appropriate experience requirement

Each year, as part of the state budget process, Pennsylvania lawmakers routinely consider changes to the state’s tax system. Any proposal — whether a sweeping overhaul or a minor adjustment — necessitates a thorough and consistent approach to analysis and comparison.

The PICPA stands ready to assist. To guide the evaluation of tax proposals, the PICPA advocates for the adoption of the 12 Guiding Principles of Good Tax Policy, a framework developed by the American Institute of Certified Public Accountants (AICPA), which ensures that changes to Pennsylvania’s tax system are evaluated through an objective lens, utilizing recognized benchmarks of effective tax policy.

By leveraging this framework, policymakers, stakeholders, and taxpayers can better assess the merits of proposed tax changes, fostering transparency, fairness, and effectiveness in Pennsylvania’s tax system.

The PICPA is committed to working with lawmakers and stakeholders to uphold these principles, ensuring Pennsylvania’s tax policies reflect the highest standards of good governance. As an example of this commitment to providing technically relevant tax information, please see the PICPA Issue Brief on Combined Reporting.

State Reps. Abigail Salisbury (D-Allegheny) and Keith Greiner, CPA (R-Lancaster), have reintroduced legislation supported by the PICPA that would raise the monetary threshold that subjects charitable organizations to more extensive financial oversight, including mandatory audits. Under House Bill 965, charitable organizations receiving annual contributions of $1 million or more (currently $750,000) would be required to have an audit. Those receiving contributions of less than $1 million would have different levels of review or compilation required on their financial statements to be performed by an independent CPA. This legislation will benefit many not-for-profit organizations while also relieving human capital pressures in the CPA community.

Pennsylvania resident partners subject to pass-through entity taxes (PTET) in other states may face double taxation due to the denial of a Pennsylvania resident tax credit. This issue arises even though the taxes paid through PTET to other states are equivalent to those which would otherwise be paid directly by Pennsylvania residents to those other states. The Pennsylvania Department of Revenue (DOR) has stated that resident partners are not entitled to a credit against personal income tax for PTET paid to other states. However, this stance differs from the DOR’s position on resident S corporation shareholders, who are eligible for a similar credit against their personal income tax. The PICPA supports legislative efforts to extend equivalent credits to resident partners and S corporation shareholders, addressing this inequity and mitigating the risk of double taxation.

The federal Tax Cuts and Jobs Act of 2017 imposes a $10,000 limitation on the deduction individual taxpayers may claim for state and local taxes paid for tax years 2018-2025 (SALT cap). Congress is currently considering options which may extend and/or modify the SALT cap, which may continue to impact Pennsylvania taxpayers. This limitation presents challenges for taxpayers, particularly owners and shareholders of businesses structured as partnerships or S corporations. Income generated from the activities of these pass-through entities is currently taxed at the owner level at Pennsylvania’s 3.07% personal income tax rate. The PICPA is urging state lawmakers to adopt legislation that provides a revenue-neutral elective pass-through entity tax (PTET) to allow tax to be paid at the entity level and facilitate the federal deductibility of state income taxes. In doing so, Pennsylvania will better align with other states that have already enacted similar legislation to provide their constituents with a path to increased federal tax deductions. To date, 36 of the 41 states imposing a personal income tax have passed similar legislation.

To simplify local tax compliance for Pennsylvania taxpayers and tax practitioners, the PICPA is advocating for the Pennsylvania General Assembly to modernize the electronic filing of local earned income tax returns to leverage existing systems and minimize costs and operational disruptions. The IRS’s Modernized e-File (MeF) program enables taxpayers and tax professionals to electronically file tax returns directly with federal and state authorities. This system converts tax forms into a digital format, allowing tax preparation software to transmit the federal return to the IRS, which then forwards the relevant information to state tax authorities. Currently, taxpayers can use the MeF system to electronically file both federal and state returns. Extending this process to local earned income taxes would streamline compliance and bring much-needed efficiency to Pennsylvania’s local tax system.