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Advocacy

Proposed 2021 Legislative & Regulatory Agenda

Overview: This proposed legislative and regulatory agenda was developed with input from the NYSSCPA Legislative Task Force and will serve as the action plan for staff and volunteer activities this session. 

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

ISSUE: 

New York State law prohibits non-CPA ownership of firms. New York and Hawaii are the only two states with this prohibition. As CPA client work becomes more complex, non-CPA professionals are increasingly vital to performing high-quality client work. IT professionals, policy experts, data analysts and others are reaching a professional ceiling due to the fact that firms are unable to offer this long-term incentive and growth opportunity. No non-CPA firm ownership option often results in the loss of these valued employees to neighboring states, where the opportunities they are looking for are available. Expanding opportunities for ownership in New York State will level the playing fields, provide increased job opportunities and strengthen the economy. 

BACKGROUND: 

NYSSCPA continues to play a supportive role in advocating non-CPA ownership in New York. The legislation passed in the Senate, but continues to stall in the Assembly’s Higher Education Committee.

UPDATE: 

Governor Cuomo included Non-CPA Ownership in his 2020 budget and the Senate included it in their one-house budget resolution, but it was not included in the final enacted budget.  One new piece to the Governor's Non-CPA ownership proposal this year was the inclusion of a $300 annual fee for each non-licensee owners which would be revenue to the State (but it still wasn't enough to gain the required support in the Assembly).   The Senate and Assembly have since amended their bills to include a $900 fee on each non-licensee owner to be paid on a triennial basis.

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) 

CPE Reciprocity

ISSUE: 

CPE reciprocity exempts CPAs who hold multiple state licenses from having to meet the individual CPE requirements of each state so long as the licensee meets the CPE requirements of their home state. Because this exemption encourages uniformity while removing unnecessary burdens that do not play a role in protecting the public interest, the AICPA and NASBA are encouraging state boards of accountancy to adopt this provision of the Uniform Accountancy Act (UAA) Model Rules.

The NYSSCPA will seek clarification from the State Education Department on how the NY regulations match/fail to match the UAA as stated below.

BACKGROUND:

The implementation of individual CPA mobility has allowed many CPAs to give up the holding of multiple reciprocal licenses in various jurisdictions. However, in certain circumstances, a CPA may choose to continue to hold more than one license.

Examples 

  • CPA may wish to hold a license in his/her original state of licensure, or because the CPA plans to return to that state at some point in the future 
  • CPA may work near a border and find it important to hold a license in the CPA’s home state as well as in the state where the firm maintains a second office. 
  • Certain jurisdictions (outside the respective state boards of accountancy) require CPAs to have an active in-state license if they are performing certain types of attest work within a particular state. 
  • CPAs may opt to hold two or more licenses when they are assigned to a limited but multi-year engagement in another state but know they will eventually return home (e.g., publicly traded companies require partner rotations every five years. 

For all of these reasons, the UAA Model Rules seek to provide a reasonable accommodation in regard to multiple license holders’ Continuing Professional Education (CPE) requirements across state lines.

According to UAA Model Rule 6-4, all CPAs are required to obtain 120 hours of CPE every three years as a condition of licensure renewal. These hours must include four hours of ethics-specific training and not less than 20 hours of CPE in any given year. However, a CPA is exempt from meeting multiple jurisdictional CPE requirements as long as the licensee meets the CPE requirements of his/her principal or home jurisdiction. Such a rule is a logical exemption, ensuring CPAs are continuing their CPE while also avoiding complex multi-state compliance regimes.

Unfortunately, not every state board of accountancy has adopted this provision. This can lead to some holders of multiple licenses having to meet multiple state CPE requirements. 

UAA Model Rule 6-5 (c) 

A non-resident licensee seeking renewal of a certificate in this state shall be determined to have met the CPE requirement [including the requirements of Rule 6-4(a)] of this rule by meeting the CPE requirements for renewal of a certificate in the state in which the licensee’s principal place of business is located.

(1) Nonresident applicants for renewal shall demonstrate compliance with the CPE renewal requirements of the state in which the licensee’s principal place of business is located by signing a statement to that effect on the renewal application of this state. (2) If a non-resident licensee’s principal place of business state has no CPE requirements for renewal of a certificate, the non-resident licensee must comply with all CPE requirements for renewal of a certificate in this state.

False Claims Act

The federal False Claims Act (FCA) lets the government recover for any false or fraudulent requests or demands for money. This also includes fraud to avoid paying money to the government. The federal FCA contains a “tax bar,” which states that the law does not cover fraud under the tax code. Several states, however, including New York, have eliminated the “tax bar” from their state FCAs. New York’s FCA is much more expansive than the federal statute and many other states’ false claims laws.  

More specifically, in New York, liability under the FCA may be imposed on any person who: 

  • knowingly presents, or causes to be presented a false or fraudulent claim for payment or approval; 
  • knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; 
  • has possession, custody, or control of property or money used, or to be used, by the  state or a local government and knowingly delivers, or causes to be delivered, less than all of that money or property; 
  • is authorized to make or deliver a document certifying receipt of property used, or to be used, by the state or a local government and, intending to defraud the state or a local  government, makes or delivers the receipt without completely knowing that the  information on the receipt is true; 
  • knowingly buys, or receives as a pledge of an obligation or debt, public property from an  officer or employee of the state or local government knowing that the officer or employee violates a provision of law when selling or pledging such property; 
  • knowingly makes, uses, or causes to be made or used, a false record or statement  material to an obligation to pay or transmit money or property to the state or a local  government; or 
  • conspires to do any of the above. 

New York’s FCA states that these provisions apply to tax claims, records, or statements. 

“Knowingly” is at the heart of New York’s FCA. A false claim, record, or statement does not violate the FCA unless submitted “knowingly.” The term “knowingly” requires more than “mere negligence.” It typically means actual knowledge, deliberate ignorance of the truth or falsity of the information or reckless disregard of the truth or falsity of the information.  

The statute does place certain restrictions on tax claims that do not apply to false claims generally. Tax claims may be brought only against persons whose net income or sales in at least one contested year is $1 million or more and only when the damages equal or exceed $350,000. Also, the Attorney General is instructed to consult with the Commissioner of Taxation and Finance before intervening in state tax-related false claims actions. 

New York has embraced the prosecution of tax frauds under its FCA with aggressive enforcement of its laws. While the New York State Society of Certified Public Accountants (NYSSCPA) has never supported the New York FCA’s applicability to tax issues, we do recognize that New York’s statute is seen by many as a national model. In fact, several jurisdictions have even recently considered adding tax claims to their false claims acts. In essence, many states are looking to catch up to New York.  

In recent months, we have seen certain legislators focusing on expanding the reach of New York’s FCA even further. The NYSSCPA opposes these efforts as they defy the intent of false claims laws, harm taxpayers, and will have a chilling effect on the profession.  

COVID-19 Related Legislation

There have been a number of bills introduced in the Senate and Assembly related to COVID-19 recovery efforts, included but not limited to: business interruption insurance, employer liability protections, commercial tenant rent protections (see list below).  It is unclear at his point the fate of these proposals.  The Governor consistently stresses the need for the next Federal stimulus package to deliver relief to state & localities as well as small businesses. The Governor continues to state that federal stimulus funds are a must as the state’s deficits cannot be closed with revenue actions, cuts, and borrowing.  One good thing for New York is that President-elect Biden has signaled that a stimulus package will be delivered in Q1 2021 that will benefit states and localities.  Stimulus funds may not be sent to NYS until Q2 2021- it may be that the Governor will again seek to have flexibility in the enacted budget to adjust as circumstances change.  We will continue to monitor each of these COVID-19 recovery efforts proposals.   

  1. AB. 10444 [S. 8351] (Epstein): Provides that no personal liability provision of a commercial lease or other rental agreement involving real property and to which a business impacted by COVID-19 is a party as tenant may be enforced against an individual where the default or other event allowing for such enforcement occurs during the COVID-19 period.
  2. AB. 10457 (Carroll): Prohibits the enforcement of personal liability provisions in commercial leases or rental agreements involving a COVID-19 impacted tenant where the default or other trigger event happened during the COVID-19 state of emergency and considers threatening to or attempting to enforce such a provision to be a form of harassment.
  3. AB. 10504 [s. 8391 - Harckham] (L. Rosenthal): Protects addiction service providers from liability during a public health emergency.
  4. AB. 10714 (Abbate): Adds dentistry to health care professionals covered with liability immunity in providing certain services during the COVID-19 outbreak.
  5. AB. 10838 [s.8587 - Liu] (Braunstein): Declares agreements exempting employers from liability for negligence related to the COVID-19 pandemic void and unenforceable.
  6. AB. 10840 [S. 8835 - Sepulveda] (Kim): Limits immunity granted in the 2020-21 Adopted budget to health care professionals that are providing diagnosis and treatment of COVID-19 directly to confirmed and suspected COVID-19 patients.
  7. AB. 10887 [S. 8800 - Jordan] (DiPietro): Limits the civil liability of employers and employees for the spread or possible transmission of COVID-19 caused by an act or omission while acting in good faith.
  8. AB. 10903 (Carroll): Authorizes and directs the department of financial services to require insurers to make insurance premium refunds and other adjustments for all policyholders adversely impacted by COVID-19.
  9. AB. 11025 (Byrnes): Limits the liability of schools holding in-person instruction in compliance with state approved plans.
  10. S. 8171 (Sanders): Extends the provisions found in Section 3000-a of the Public Health Law (Good Samaritan Law) to any individual or non-profit organization who voluntarily and without expectation of monetary compensation renders first aid or emergency treatment to an individual who is suffering and/or has been infected with coronavirus disease 2019 (COVID-19).
  11. S. 8463 (Ortt): Requires each place of employment to develop a business safety plan to provide reasonable and adequate protection from a pandemic disease for all employees and people who lawfully frequent such places. Provides that employers who develop and follow safety plans are not liable for damages to employees or patrons due to disease during a pandemic.

WATCH LIST

Occupational Licensing

An antiregulatory movement now sweeping the country is calling into question the need for certification/licensing across occupations, directly threatening the value of the CPA license. Already, 39 states are considering some form of occupational licensing reform, adding to bills already passed.

BACKGROUND: 

There are cogent points to be made in this position; research shows that from the 1960s to today, the number of jobs requiring a license has exploded from 1 in 20 to 1 in 4. Such rules originally applied only to learned professions such as physicians, attorneys, architects, and CPAs. (In fact, the first law regulating the accounting profession was introduced here in New York in 1896.) Today, however, these requirements have come to encompass such diverse jobs as hair braiders, auctioneers, and home entertainment system installers. Currently, occupations and the learned professions are viewed the same.

The AICPA and NASBA have formed a coalition with other licensed professionals called the Alliance for Responsible Professional Licensing, which aims to educate policymakers and the public on the importance of high standards, rigorous education, and extensive experience within highly complex, technical professions that are relied upon to protect public safety and enhance public trust.

The NYSSCPA is monitoring the issue in New York. 

Tax on Professional Services

A growing number of state legislatures are currently considering expanding sales tax to cover services, including professional services, such as accounting. While there is currently no proposal/legislation in New York, we continue to monitor this issue and stand ready to voice our opposition. If this issue does arise in New York State, the NYSSCPA will consider forming a coalition with the 50+ other professions in the state to push back against this bad public policy proposal.

The Martin Act

The NYSSCPA opposes New York State’s possible expansion of the Martin Act, which allows the state attorney general great leverage to fight financial fraud. The Senate and Assembly have proposed bills that would require Attorney General to investigate financial entities if a public pension fund trustee alleges that a practice is fraudulent under the Martin Act and allegedly caused damage to the fund that the trustee serves. 

The NYSSCPA opposes such legislation - existing law already grants greater authority to the Attorney General than in any other state, and it would adversely affect the state’s business climate. 

Proposed bills that NYSSCPA is monitoring: 

A.4355 / S.1022 - This bill would provide authority to large Institutional investors, including the state's pension fund to bring      actions for damages resulting from violations of the State's securities laws. 

A.5828 / S. 3050 - This bill would authorize public pension funds and Taft Hartley pension funds to bring actions for damages resulting from violations of the state's Martin Act.

SALT Cap Workaround with Reciprocity Concerning Other States & Territories

Currently, New York State denies a personal income tax credit for taxes paid to other states at the entity level. The NYSSCPA believes the state should allow this credit for taxes paid to other states and U.S. territories that have SALT workarounds. In addition, NYS should enact a version of the UBT and S Corp level state income tax with a personal income tax credit on a shareholder’s or a partner’s personal income tax return.

Power of Attorney E-Signature Expansion

Although New York State recently passed its historic e-signature bill, the NYSSCPA is looking for an expansion that would allow documents to be signed electronically by someone holding Power of Attorney.

ACCEPTED INTO LAW

Electronic Signature Authorization

The new law allows tax preparers to accept an electronic signature instead of a traditional “wet” signature for tax-related documents.

In June of 2020, both the Senate and the Assembly passed the Electronic Signature Authorization bill alongside other important COVID-related legislation. Governor Cuomo signed the bill into law in August of 2020.

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