Society Advances Legislative Priorities

By:
Ruth Singleton
Published Date:
Jul 16, 2019

capital

Three pieces of accountancy legislation supported by the NYSSCPA advanced through the New York state Legislature this session but did not make it over the finish line, in spite of intensive grassroots efforts, a Lobby Day and outreach to influential legislators. The session ended on June 21.

One bill would allow tax preparers to file their client’s New York state tax returns with an electronic signature. Another would prohibit municipalities from using contingent fees to pay auditors. The third bill is the non-CPA ownership legislation that the Society has supported in previous years.

The Society supported the e-signature bill (A.7765/S.5661), sponsored by Sen. John C. Liu (D) and Assembly Member William B. Magnarelli (D), in order to eliminate the current “split” process, whereby a preparer issues and obtains an e-signature for the federal tax return, and separately collects a “wet,” or physical, signature for the New York state tax return. Under current New York state law, individual filers are able to use an e-signature to file their own New York state tax returns, and under federal law, tax preparers are able to use an e-signature to file a federal tax return to the IRS on behalf of their clients. However, tax preparers filing a New York state tax return on behalf of clients may not use an e-signature.

This legislation passed the Senate but was held up in the Assembly, as concerns voiced by the New York State Department of Taxation and Finance (NYSDTF) about whether it has the technological capabilities to address fraud and security issues prevented the bill from advancing. The Society will continue to work with the NYSDTF and legislators to address these concerns.

NYSSCPA President Ita M. Rahilly said, “At this point, New York and Hawaii are the only states in the union that do not permit the use of electronic signatures. This is a law that needs to change, and we are focusing on making this happen.”

The municipal contingent fee audit bill (A.7244/S.5508A), sponsored by Sen. Jen Metzer (D) and Assembly Member Albert Stirpe (D), would prohibit any municipal corporation from compensating 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.

According to Kevin J. McCoy, chair of the Society’s Legislative Task Force, 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.

“The contract auditor does not have an incentive to inform the taxpayer of potential overpayments, missed deductions, tax credits or refund claims,” McCoy stated. “Several states have enacted legislation against the use of municipal contingent fee audits, including North Carolina, Arizona, South Carolina and Pennsylvania.”

According to McCoy, there was no real opposition to the bill, but legislators in both chambers indicated that they wanted more evidence that the contingent fee audits were a problem before they would move the bill out of committee.

Legislation that would allow non-CPA professionals to own a minority stake in a New York CPA firm stalled again this year as in past years. The bill (A.2919/S.3842), which was sponsored by Assembly Member Crystal People-Stokes (D) and Sen. Toby Ann Stavisky (D), passed in the Senate but did not make it out of the  Assembly’s Higher Education Committee.

“The best quality professional services often require the skills of non-CPAs, such as systems engineers and other IT professionals, valuation specialists, actuaries, and other industry experts,” said NYSSCPA Executive Director and CEO Joanne S. Barry. “Clients have come to expect that these specialists will participate in the CPA firm’s work due to the complexity of today’s audits, and the audit work product is better because of it.”

She added that firms are unable to offer many professionals long-term incentives and growth opportunities, which often results in the loss of these valued employees to neighboring states. “Expanding opportunities for ownership in New York state would create jobs and strengthen the economy,” Barry said.

The Society is developing its agenda for the next legislative session, which you can read about here. Members who have confronted issues that they believe need to be remedied with legislation are encouraged to contact members of the Society’s Legislative Task Force or attend an upcoming Professional Issues Update at their chapter. Learn more about the CPA Political Action Committee (CPA PAC) here.

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