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Advocacy

2019-2020 Legislative & Regulatory Agenda and Progress Report

Over the last two and a half years, the New York State Society of CPAs (NYSSCPA) has had significant success advancing our legislative priorities and, in turn, advancing the accountancy profession as a whole.

In 2017, we advanced our peer review legislation (S.6026-A / A.7895-A, signed by Governor as Chapter 364 of 2017). Sole proprietorship firms and firms with two or fewer accounting professionals are no longer exempt from mandatory quality review. This change ensures adequate quality review.

In 2018, we advanced our CPE for All legislation (S.8522-A / A.10648, signed by Governor as Chapter 413 of 2018). The three-year exemption of mandatory continuing education for newly licensed CPAs and PAs is no longer in law. Mandatory CPEs for all CPAs further increases public protection in the accountancy profession.

Below please find a summary of our legislative activity and advocacy during the 2019 Legislative Session, which concluded on Friday, June 21st.

NYSSCPA 2019 Legislative Priorities

A.7244 / S.5508 – Municipal Contingent Fee Audit Reform

As the 2019 legislative session began, we decided to primarily pursue reform of municipal contingent fee audits. This issue was first raised at the committee level in 2015 and a draft report was issued in 2016. The general consensus was that a contingent fee audit arrangement raises a number of concerns for taxpayers. This type of arrangement creates an incentive for the contract auditor to assess the highest amount of tax and to interpret the statutes and regulations in an aggressive manner in favor of the jurisdiction. In addition, the contract auditor does not have an incentive to inform the taxpayer of potential overpayments, missed deductions, tax credits or refund claims. Data security is also a concern.

To move forward, we drafted legislation, which would prohibit municipalities from compensating private auditors on a contingent fee basis, and obtained approval of such legislation by the appropriate NYSSCPA committees. The legislation was introduced by majority members in 
each house of the Legislature - Senator Jennifer Metzger and Assemblyman Al Stirpe (S.5508- A/A.7244-A). Our lobbying efforts also resulted in nine co-sponsors in the Assembly. The legislation did not ultimately get passed, but the bill sponsors have agreed to continue to assist NYSSCPA in getting it across the finish line in 2020. We will actively engage as soon as the 2020 legislative session begins.

The legislation stipulates that any municipal corporation shall not compensate any person or entity, in whole or in part, on a contingent fee basis or any other basis related to the amount of tax, interest or penalty assessed against or collected for the service of auditing a return or report filed pursuant to, or in compliance with, any law.

Below is the bill history for both the for A.7244 and S.5508

A.7244-A (Stirpe)

  • 4/18/19 – legislation introduced in the Assembly
  • 4/18/19 – legislation referred to the Assembly Committee on Local Governments
  • 5/30/19 – legislation was amended to clarify language in the bill and recommitted to the Assembly Committee on Local Governments

S.5508-A (Metzger)

  • 5/3/19 – legislation introduced in the Senate
  • 5/3/19 – legislation referred to the Senate Committee on Local Governments
  • 6/6/19 – legislation was amended to match the Assembly clarification and recommitted to the Senate Committee on Local Governments

S.5661 / A.7765 – Electronic Signature Authorization

Leading into the 2019 legislative session, we decided an administrative priority would be to seek New York State Department of Tax and Finance (NYSDTF) authorization regarding acceptance of e-signatures on certain NYSDTF authorization forms. Our analysis led us to believe that NYSDTF has the authority to take this action. To that end, we conducted a conference call with NYSDTF staff. This call commenced a dialogue on this item with NYSDTF staff and our plan was to continue to work in good faith with NYSDTF on the possibility of conducting a business analysis and risk assessment in 2019, which NYSDTF informed us is needed to move forward.

In May, Senator John Liu and Assemblyman William Magnarelli introduced legislation authorizing NYSDTF to accept e-signatures on certain NYSDTF authorization forms (S.5661 / A.7765). This would essentially override NYSDTF’s discretion on the topic and mandate that NYSDTF allow this practice. While NYSSCPA did not push for this introduction due to our good faith dialogue with NYSDTF, we decided to make the advancement of this legislation a priority as session wound down. From May until the close of the legislative session, we worked hand in hand with both Senator Liu and Assemblyman Magnarelli to move this bill. We lobbied majority members in each house and relevant staff. Our efforts led to the bill passing in the Senate in waning days of the 2019 legislative session. In the Assembly, we learned that NYSDTF concerns prohibited the bill from advancing, but we firmly believe this legislation and its momentum, as well as our initial discussion with NYSDTF, will lead to a solution in 2020. We intend to engage both the Assembly and NYSDTF in the fall, so that this item is ripe to be resolved as soon as possible in 2020.

Under current New York State law, individual filers are able to use an electronic signature to file their own NYS tax returns and under federal law, tax preparers are able to use an electronic signature to file a federal tax return to the IRS on behalf of their clients. However, tax preparers filing a NYS tax return on behalf of clients may not use an electronic signature.

The partial adoption of electronic signatures for NYS tax returns is inconsistent and the proposed legislation would align the tax return process for tax preparers with what is already acceptable for federal tax returns.

Below is the bill history for both the for A.7765 and S.5661

A.7765 (Magnarelli)

  • 5/20/19 – legislation introduced in the Assembly
  • 5/20/19 – legislation referred to the Assembly Ways and Means Committee
S.5661 (Liu)

  • 5/10/19 – legislation introduced in the Senate
  • 5/10/19 – legislation referred to the Senate Budget and Revenues Committee
  • 6/17/19 – legislation discharged from the Senate Budget and Revenues Committee and committed to the Senate Rules Committee
  • 6/17/19 – legislation was advanced through the Senate Rules Committee and ordered to Third Reading
  • 6/17/19 – legislation was passed in the Senate (Vote Y: 48/N: 14)

Non-CPA Ownership Legislation – A.2919 / S.3842

NYSSCPA continues to play a supportive role in advocating for Non-CPA ownership in New York. The legislation has already passed in the Senate and continues to stall in the Assembly’s Higher Education Committee.

Professional accountants operate under a more rigorous regulatory regime than in the past, due to the increasingly complex risks that exist in today's global marketplace. Today, the most sought-after IT professionals, policy experts, regulatory staff and data analysts reach a professional ceiling. Firms are unable to offer them long-term incentives and growth opportunities, which often results in the loss of these valued employees to neighboring states, where the opportunities they are looking for are more readily available. Expanding opportunities for ownership in New York State, however, will create jobs and strengthen the economy.

Below is the bill history for both the for A.2919 and S.3842

A.2919 (People-Stokes)

  • 1/28/19 – legislation introduced in the Assembly
  • 1/28/19 – legislation referred to the Assembly Higher Education Committee
S.3842 (Stavisky)

  • 2/19/19 – legislation introduced in the Senate
  • 2/19/19 – legislation referred to the Senate Higher Education Committee
  • 4/30/19 – legislation advanced through the Senate Higher Education Committee
  • 5/7/19 – legislation passed in the Senate (Vote Y: 59/N: 2)