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Advocacy

2022 Legislative & Regulatory Agenda

Overview: This 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. 

  

LEGISLATIVE AFFAIRS 

False Claims Act – S.5319/A.2506

BACKGROUND: 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, 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.   

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, and 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 requires more than mere negligence; it suggests misstatement of 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. In addition, the Attorney General is instructed to consult with the Commissioner of Taxation and Finance before intervening in state tax-related false claims actions.   

In recent months, however, S.5319 (Hoylman) /A.2506 (Weinstein) was introduced to further expand New York’s FCA beyond reasonable limits. The legislation would allow the New York FCA to be used as a tool to recover unpaid tax obligations based on false claims made by certain individuals or businesses without the statutory requirement that such false claims were made knowingly. The bill memo states that the FCA would become a tool by allowing claims “without needing to clear the evidentiary hurdle of proving that such false claims were made knowingly.” The legislation even applies retroactively.    

UPDATE: Efforts to expand New York’s FCA, as envisioned in S.5319 (Hoylman)/A.2506 (Weinstein), is worrisome, considering that the basis for false claims acts is to root out fraud or willful misconduct. In fact, the federal FCA was signed into law over 150 years ago, in 1863, by President Lincoln to combat fraud stemming from Civil War defense contracts. The NYSSCPA fully appreciates the utilization of the federal FCA and corresponding states’ false claims acts in combatting fraud and recovering monies to the benefit of the government. However, there must be limits.    

Efforts to penalize taxpayers whose noncompliance is not willful under the FCA cannot stand. If legislation such as the S.5319 (Hoylman)/A.2506 (Weinstein) is ultimately enacted, well-intentioned taxpayers could be dragged by forced to defend themselves in expensive litigation or reach a settlement to avoid negative public exposure. In addition, the Department of Taxation and Finance already has the legal authority to levy penalties on taxpayers whose noncompliance is not willful—substantial underpayment penalty, negligence penalty, and so forth.    

Importantly to the NYSSCPA, the legislation would have a chilling effect on the profession in New York. CPAs have a duty to their clients. This duty dictates that all tax laws, regulations and guidance documents are to be adhered to at all times. There are, however, instances when grey areas arise with regard to tax laws, regulations and guidance documents, and well-intentioned CPAs are required to take good faith positions. Such private or government overreach would certainly have a detrimental impact on the profession and may result in many CPAs choosing another state to work in. At a time when New York’s economy is struggling, this is not the message we want to send to hardworking, New York-based CPAs.    

As referenced above, this legislation was one of the NYSSCPA’s top priorities during our annual Lobby Day. The NYSSCPA Lobby Day participants met with both of the Assembly and Senate sponsors of S.5319 (Hoylman)/A.2506 (Weinstein) and expressed our concerns. This bill was halted in the Assembly and the Senate, and was not further pursued, largely due to the actions of the NYSSCPA.  

In addition to the legislation above, the NYSSCPA recently authored a letter to the governor, urging a veto to S.4730 (Krueger)/A.2543 (Weinstein). The NYSSCPA urged the governor to alternatively recommend chapter amendments to achieve the legislation’s stated goals in a more narrowly tailored manner. The bill’s intention is aimed at filling a loophole in the New York FCA to ensure that individuals and businesses who knowingly fail to file tax returns are liable under the law.    

The letter suggests that the governor and legislature reevaluate the term “obligation” in the bill’s text, due to its broad and vague language, and that it provides no explanation as to what it means in the context of the New York Tax Law. The letter also states significant concerns related to the retroactive nature of the legislation. The bill fails to allow sufficient time for due process, as it states an immediate effective date. Joanne S. Barry, NYSSCPA Executive Director/CEO, states, “Filling this loophole is a noble purpose, but it cannot come at the expense of reasonable limitations and fundamental fairness.” 

Read the letter to the New York State Governor. 

 

Non-CPA Ownership Legislation – A.2919C/S.4221 

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. A 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: The 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:  Former Gov. Cuomo included non-CPA Ownership in his 2021 Executive budget proposal, 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 owner, 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.  

S.4221 (Stavisky) passed in the Senate, but A.2919C (Peoples-Stokes) failed to come out of the Assembly Higher Education Committee. The NYSSCPA continues to makes strides in passing this law.   
  

Board of Trustees to Administer the Accountants’ Fund –A.8201 

BACKGROUND: The NYSSCPA was approached by the Assemblymember Abinanti for counsel and guidance on legislation that would establish an Accountants’ Fund for Client Protection of the State of New York, for the same purpose as the Lawyers’ Fund for Client Protection of the State of New York established in 1982—to provide reimbursement to accountant clients who lost money or property as a result of an accountant’s dishonest conduct in the practice of accountancy.  

UPDATE: The NYSSCPA is working with Assemblymember Abinanti on improvements to the author’s first draft, which include making a distinction between a CPA and an accountant.  

 

Power of Attorney E-Signature Expansion

BACKGROUND: 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. 

UPDATE: A.7955 (Magnarelli)/S.6851 (Liu) was introduced late in the 2020 legislative session. Legislation is currently in committee for the 2021 legislative session.  

 

Recoupling with the IRS

BACKGROUND: Due to natural disasters and the lingering pandemic, the New York State Department of Taxation and Finance (NYSDTF) found itself making several important tax deadlines, filing extensions throughout 2021, moments before the filings were due. The Internal Revenue Service (IRS) previously and with lengthy notice provided extensions with ample guidance, which the state did not follow until absolutely necessary. This legislation would reverse a law that decoupled the NYSDTF from the IRS’s extensions and guidance.  

UPDATE: The NYSSCPA is working on identifying legislators to carry out this legislation. 

   

REGULATORY AFFAIRS


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 his or her 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 (the National Association of State Boards of Accountancy) are encouraging state boards of accountancy to adopt this provision of the Uniform Accountancy Act (UAA) Model Rules.  

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   

  • A CPA may wish to hold a license in his or her original state of licensure, or because the CPA plans to return to that state at some point in the future. 
  • A CPA may work near a border and find it important to hold a license in his or her 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 multiyear engagement in another state but know that 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 or her principal or home jurisdiction. Such a rule is a logical exemption, ensuring that CPAs are continuing their CPE while also avoiding complex multistate 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 nonresident 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 nonresident licensee’s principal place of business state has no CPE requirements for renewal of a certificate, the nonresident licensee must comply with all CPE requirements for renewal of a certificate in this state. 

UPDATE: The NYSSCPA continues to monitor the progress of CPE reciprocity. Due to growing concerns regarding inconsistent regulations across states, the SED (State Education Department) is not prepared to move forward with this legislation. 


WATCHLIST


The Martin Act
 

BACKGROUND: 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 the 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.   

UPDATE: 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.   

Occupational Licensing

An antiregulatory movement 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: Research shows that from the 1960s to today, the number of jobs requiring a license 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.  

UPDATE: 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. 

 

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

 

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