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Advocacy

2019-2020 Legislative & Regulatory Agenda and Progress Report

The 2019-2020 Legislative session has begun with the re-introduction of the non-CPA ownership bill. Below you will find all the legislative and regulatory issues the NYSSCPA will be working towards this year and background information to keep you informed on progress up to this point. We will keep this page updated as issues change and move forward.

The NYSSCPA is firmly committed to maintaining the strength and integrity of the accounting profession, and has worked with both Assembly Members and State Senators on both sides of the aisle to advocate for bills covering Continued Professional Education (CPE) requirements and firm ownership.

A. NON-CPA OWNERSHIP: (A.2919, People-Stokes/S.3842, Stavisky)

2019:
Non-CPA ownership was included in the Governor’s FY2019-20 Executive Budget proposal which was released on January 15th. On March 11th and 12th the Assembly and Senate released their one-house budgets in response to the Governor’s Executive Budget. The Senate included non-CPA ownership in their one-house budget bill and the Assembly did not. On March 31st the Senate and Assembly passed the FY2019-20 Budget and non-CPA ownership was not included.

Both the Senate and Assembly have introduced stand-alone bills allowing non-CPA ownership in New York (bill #s referenced above), sponsored by Assembly Member People-Stokes and Senator Stavisky.

A.2919 Sponsored by Assembly Member Crystal People-Stokes

  • 1/28/19 – legislation introduced and referred to the Assembly Higher Education Committee

S.3842 Sponsored by Senator Toby Ann Stavisky

  • 2/19/19 – legislation introduced and referred to the Senate Higher Education Committee

Prior years: In 2018, language allowing Non-CPA firm ownership was included in both the Senate and Executive budget proposals. However, the Executive, Assembly and Senate could not come to an agreement to include it in the final joint budget bill.

In 2018, a bill did pass in the Senate but did not advance from the Higher Education Committee in the Assembly.

  • New York, Delaware and Hawaii are the only remaining States in the country who prohibit non-CPA ownership of firms. In today's world, firms want to provide the best quality professional services including audits and other accounting-related services. This very often requires the skills of non-CPAs, such as systems engineers and other IT professionals, valuation specialists, actuaries, industry experts and others. Clients have come to expect that these specialists will participate in the CPA firm's work and the audit work product is better because of it.
  • For the last four years, NYSSCPA has supported the efforts of The Accountants Coalition (TAC) in advocating for this legislation initially sponsored by Assemblyman Ortiz and Senator LaValle.
  • NYSSCPA drafted and submitted letters of support for Non-CPA ownership to leadership in the Assembly including, Speaker Heastie, Majority Leader Morelle, Assemblywoman People-Stokes, Assemblywoman Glick, Assemblyman Weinstein and Assemblyman Crespo
  • NYSSCPA utilized the voter voice outreach tool to engage membership and encourage them to send in letters of support to key members of the Assembly identified by zip code and region. NYSSCPA membership submitted over 70 letters of support.


NEXT STEPS
:

  • NYSSPCA will continue to play a supportive role to TAC’s efforts in passing non-CPA ownership in New York. NYSSCPA will not actively support Assembly Member Glick’s proposal of 25% non-CPA ownership.


B. ACCEPTING E-SIGNATURES ON CERTAIN NYSDTF AUTHORIZATION FORMS

  • Currently, clients of NYSSCPA members need to physically sign NYS TR-579, E-file Signature Authorization for Forms IT-201, IT-201X, IT-203, IT-214, NYC-208 and NYC 210, creating a burden for tax professionals
  • NYSSCPA is in receipt of a letter from Scott Palladino, New York State Department of Taxation and Finance Assistant Deputy Commissioner, indicating that NYSDTF’s requirements for electronic signatures and records is governed by the NYS Electronic Signatures and Records Act (ERSA) [Article 3, State Technology Law].
  • Although governmental use and acceptance of electronic records and signatures is voluntary, if an electronic signature solution is being contemplated by a NYS agency then the ERSA regulations require government entities to conduct and document a “business analysis and risk assessment (BA/RA) when selecting an electronic signature to be used or accepted by that governmental entity.
  • NYSDTS has indicated that conducting and documenting the required BA/RA is problematic when the electronic signing process, software, and records storage system is not standardized and is controlled by third parties.


NEXT STEPS
:

  • While the acceptance of e-signatures on certain New York State Department of Taxation and Finance forms continues to be an issue/priority for NYSSCPA members, NYSDTF does not have the resources or capability to conduct the necessary business analysis/risk assessment as required under the NYS Electronic Signatures and Records Act.
  • With the nomination of Michael Schmidt as the new Commissioner of NYSDTF, NYSSCPA will explore the idea of reaching out to him (once confirmed by the NYS Senate) to educate the new Commissioner about the challenges NYSSCPA members are facing regarding the acceptance of electronic signatures.
  • NYSSCPA will continue its dialogue with NYSDTF and offer assistance if and when they are willing to undertake the required BA/RA


C. REFORM OF MUNICIPAL CONTINGENT FEE AUDITS

  • A draft proposal that came out of the NY, Multistate and Local Taxation Committee that seeks to prohibit the use of contingent fee audits by municipalities is currently being reviewed by the NYSSCPA’s Government Accounting and Auditing (GAA) Committee.
  • NYSSCPA’s Tax Division Oversight Committee (TDOC) has already conducted a preliminary review of the proposal and expressed general support of its concept to prohibit use of contingent fee audits by municipalities.
  • In 2016, following review by the GAA Committee and final review by TDOC, this item was be brought before the Legislative Task Force and then the Board of Directors for approval at the 2016 September Governance Forum.
  • Background: This issue was first raised at the committee level in 2015 and the draft report was issued in February 2016.
    • State and local jurisdictions have supplemented their audit activities by engaging independent third-party tax auditors. In some cases, the third-party auditors are paid via contingent fee arrangements (i.e., a fee in exchange for a percentage of the increased taxes, fees or other amounts collected).
    • The use of third-party tax auditors is commonly used in the area of unclaimed property or escheated property. State and local jurisdictions also utilize third-party tax auditors with respect to local property tax audits, sales and use tax audits, and transfer pricing audits. 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.
    • In addition, taxpayers have challenged the use of contract auditors in judicial proceedings. For example, in the District of Columbia, taxpayers have challenged the ability of contract auditors to use specific transfer pricing methods at audit.
    • North Carolina, Arizona, South Carolina and Pennsylvania have enacted legislation against this practice.


NEXT STEPS
:

  • Legislation has been drafted which would prohibit municipalities from compensating private auditors on a contingent fee basis and is currently seeking bill sponsors in the Assembly and Senate. Below is the draft legislation:

    AN ACT to amend the general municipal law, in relation to prohibiting compensation for service of auditing relating to any tax on a contingency basis

    The People of the State of New York, represented in Senate and Assembly, do enact as follows:

    Section 1. Article 3 of the general municipal law is amended by adding a new section 39-A to read as follows:

Notwithstanding any inconsistent provision of law, a municipal corporation shall not compensate any person or entity in whole or in part on a contingent fee basis or on 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.

§ 2. This act shall take effect immediately.


D. FLEXIBILITY FOR NY STATE CPAs TO VOLUNTARILY SURRENDER THEIR LICENSE & BECOME INACTIVE

  • Under existing law that was amended in the 2008 Reform Act, the only way to be an inactive CPA, is to submit and obtain written permission from NYS that you no longer are practicing public accountancy. Otherwise, you must remain registered with NYS and keep current with your CPE requirements.
  • NYSSCPA wishes to explore the idea of allowing more flexibility for NY State CPAs to voluntarily surrender their license and become inactive.


NEXT STEPS
:

  • NYSSCPA will work with the Ethics Committee in drafting up to 10 real world scenarios/hypotheticals NYSSCPA members are facing in order to help clarify when an active or inactive CPA registration status is appropriate. NYSSCPA will then submit these scenarios/hypotheticals to Jennifer Winters, Executive Secretary, State Board of Public Accountancy, and seek clarification.


E. ABILITY TO SOLICIT NEWLY LICENSED CPAS TO JOIN SOCIETY

Currently, the Society is not allowed to solicit newly licensed CPAs. The Society will begin to explore how best to change this.


NEXT STEPS
:

  • NYSSCPA will monitor to see if the CPE for All legislation, which was passed and signed into law in 2018, has an impact on newly licensed CPAs joining the Society.

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