Legislative Insider

Mobility momentum - 44 & counting!

More great news! With the passage of Oregon, New Hampshire, and Alabama we are now at 44 states that have passed "mobility" making it much easier for CPAs to hold-out and practice across state lines, especially in the tax preparation area.

In our town hall / professional issues updates the most popular topic is without a doubt CPA licensing and in particular Mobility.

Mobility is the right to practice temporarily across state borders with three important principles:

1. No notification or forms to file

2. No fee or other requirements

3. No escape - automatic consent to abide by the State law you practice in

We covered mobility in-depth in our earlier post titled, What is this mobility stuff all about and our post Mobility questions? Get your answers here we cover this hot topic.

This is significant for three important reasons:

1. This is significant value to every licensed CPA as it reduces or eliminates the need for costly licenses in multiple states to use the title CPA or prepare taxes and other multi-state services
2. It demonstrates the power of advocacy and value of being represented by your State CPA Society
3. It shows the power of collaboration - this effort involved the major national organizations for the CPA Profession - AICPA, NASBA, CPA-SEA (State Executives Association) and the Accountants Coalition (representing the five largest firms).

More Resources:

Maryland State Board of Accountancy guidance on Mobility

CPA Success post on our mobility bill

Lots of work to do on the final day of the General Assembly

New proposal for CPA Exam (120-150 Hour) passes State Board

The Maryland State Board of Public Accountancy approved a proposal to change the requirements to sit for the CPA Exam.

The proposal would change the requirements from 150 hours of education to a modified model that would allow candidates to sit for the exam after completing 120 hours of college education (meeting the accounting or "group I requirements) and then receive their license upon completion of the 150 hours (and all group 2 & 3 requirements).

According to the Board, this change is necessary for two iimportant reasons: 1) To allow students to sit closest to the time when they have completed core accounting technical subjects; and 2) to keep Maryland competitive with our surrounding states (all of our surrounding states have enacted this clause and the total is now over 29). MACPA's own Richard Rabicoff and several of our student members were at the hearing to provide their feedback. See Richard's post on our TCPA blog

The Board did a comprehensive outreach to educators, students, and the CPA profession. results from MACPA townhall meetings indicate almost unanimous support for this proposal. Pictured above is the feedback session with students that the Board held in April. You can read the Board's account of this process and recommendation in their new newsletter The Account Balance.

I want to acknowledge the Board's leadership under Chairman Tom Chambers for running a very effective study and feedback process as they considered this proposal.

This proposal will now go to the DLLR for consideration to be introduced as Department legislation in the 2010 session of the Maryland General Assembly. Our Legislative Executive Committee and Board of Directors will disucss and form MACPA's position on this in upcoming meetings.

What do you think?

New CPE Regulations in Maryland Pass!

The Maryland State Board of Public Accountancyenacted final regulations for Continuing Professional Education (CPE) at their Board meeting today. These regulations complete the most sweeping modernization of CPE in the last twenty-five (25) years. The effective date of these new regulations is May 18, 2009

The changes are as follows:

1. CPE = CPE - This provision removes the distinction and limitations formerly imposed on interactive & self-study programs, making them equal to group study. This has the effect of counting them as equal and subject to the 80-hour carryover.
2. Credit for teachers, discussion leaders, or lecturers - Hours allowable are 3 hours for every hour of presentation for the first-time presentation, and one hour for every hour subsequently presented with a limit of 40 hours per reporting period (40 out of 80 required).
3. Ethics - clarified this requirement of four hours (4) every two years with no carry over provision

In addition, earlier this year, the Board enacted new policies that clarify and provide guidance on the topics that qualify for Continuing Professional Education. By adopting the NASBA fields of study, CPAs have more choices and flexibility in meeting their CPE requirements. This is critical to reflect the diversity of the CPA career and assist CPAs in business, industry, and government maintain active licenses with CPE more relevant to their job functions. Here is a link to the topics approved.

Included in our legislative success for 2009 is also the changes in the CPE requirements for our accounting educators. MACPA sponsored SB 128 which passed and was signed into law, eliminating specific limitations on CPE credit for accounting educators. They will be subject to the new regulations listed above, specifically allowing "repeat" courses to count once during every two-year license period. The law also calrified that there is no CPE requirement for the initial license period.

In other action, the Board enacted new regulations required to support the mobility legislationpassed last year. These regulations expanded the definition of firm ownership to include "affiliated entities" and removed the notification requirements for "intent to practice".

This concluded an intense process that started last July and involved a Board task force led by Terry Hancock and Ray Speciale (educator member of theBoard). Myself and Marybeth Halpern testified at task force meetings and provided research about CPE and the changing CPA profession. We thank the Board for their efforts and willingness to involve us in these important changes.

We are at the half-way mark - Day 44

Right at the halfway mark and we are making great progress. Thanks again to all of you who joined us on CPA day and those who have been testifying and supporting our efforts.

Here is the latest developments:

1. Changing CPE rules to be more flexible for Accounting Educators - We sponsored these bills with the State Board of Accountancy's support SB 128 Passed the Senate 47-0 & HB 69 Passed the House on Second Reader yesterday, expected to be passed by the weekend.

2. Stopping Sales Tax on Accounting, Tax & Consulting Services(again!) - No bills submitted yet (deadline is March 9th) - feedback from CPA day is that this is unlikely to happen this year - keep your fingers crossed!

3. Stopping the Lawsuit Taxas Trial Lawyers attempt to change Maryland's Tort system - No bills submitted yet (deadline is March 9th) - we are watching this closely.

4. Watching for possible negative legislation like the 2% payroll surcharge for insurance in the 2,500 pieces of legislation that will be introduced during the 90 day session

5. Technical Corrections to Peer Review necessary to reflect updates in Professional Standards SB 204 This is a Department Bill (DLLR) and passed the Senate 47-0 on February 20, 2009, now on its way to the House.

6. Stopping Proposed Amendments to Tax Preparer Registration from last year. HB 24 We testified against this bill in January and it received an unfavorable report by the House Economic Matters Committee last Friday.

7. Mandatory e-Filing of Tax Returns SB 96 proposed by the Maryland Comptroller was defeated in the Senate Budget & Taxation Committee this week. We were on record in support of this bill due to our prior work with the Comptroller's office.

8. Tax Legislation - members of our State Tax Committee have been instrumental in helping the legislators deal with a host of tax bills in the estate, business, and individual tax areas.

Some updates you might find useful:

Mobility: There are now 35 states who have passed “mobility” provisions regarding temporary practice (like tax returns). See our blog post at CPALegislativeInsider.com for the listing of the 35 states that do not require licensing. The other states may require licenses. If in doubt, you are advised to put CPA-MD (or whatever your primary state of licensure is) to avoid any misunderstanding by regulators. There are nine more states with active legislation as I write this. This is a historical success for the CPA profession and makes us more uniform and mobile than any other state-based licensed profession.

Tax preparer licensingwill not be in effect until the new State Board is formed. (We have a seat on that board.) All CPAs and your staff are exempt from this newly created license and regulation. We are currently fighting attempts by H&R Block to loosen up the requirements.

Also, we (the AICPA, the MACPA, the California Society of CPAs, the Ohio Society of CPAs and other state CPA societies) were successful in getting H&R Block to back off on their ads against CPAs. Here are details:

• Truth prevails: H&R Block to stop running offending ads
• Can somebody making $7 an hour really beat a CPA?

Read MACPA's Legislative Alert on our website

Post on our initial legislative agenda here

See the Maryland Chamber's Legislative Blog for general business updates

Federal Stimulus Act's impact on Maryland courtesy of Will Burns at the Chamber

What is this mobility stuff all about?

It's about saving CPAs time and money and making the regulation of CPAs more effective (protecting the public interest).

What if you had to file for a separate CPA license in every state that you did business in? Even just filing an individual tax return?

In addition to the licensure, you would also have to meet all other provisions like CPE requirements, special ethics requirements, and anything else in those specific state laws.

Do the math - every CPA who signs tax returns in other states x license fees = a lot of money, then add time spent researching and filing for applications plus additional CPE requirements - you get the picture.

Just a few years ago that was the reality that faced US CPAs as California announced that all CPAs filing tax returns int the state would have to have a California license. Interestingly, there were almost 40 states that had or created similar provisions. It was an attempt by regulators in the post-Sarbanes-Oxley era to regulate the "electronic practices" of CPAs.

As we watched the crazy quiltwork of regulations begin to form, the State CPA Societies, AICPA, NASBA, and a coalition of large firms came together around this concept called "mobility".

Mobility is really about four principles to help CPAs and regulators with a simple and clear way of regulating multi-state practices (this has been compared to driver's licensing):

1. No notification - The CPA does not need to notify a state that they are practicing temporarily
2. No fees - There should be no fees charged (or applications) for practicing temporarily
3. No add-ons - No additional state requirements like CPE, state-specific ethics or other requirements
4. No escape - The CPA agrees automatically upon practicing that they are bound by the rules ot the state they are entering and the state they are resident licensed in.

The good news is that the concept of "mobility" was contained in another major collaborative effort called the Uniform Accountancy Act("UAA"), an effort by the CPA profession (AICPA & State CPA Societies) and the regulatory community (NASBA & STate Boards of Accountancy) to make licensing, regulations, and enforcement uniform across state lines. Using the concept of states that are "substantially equivalent" to the national standard for CPA licensure in the UAA was the way temporary practice could be enabled.

Substantial equivalency is defined as the 3"Es" for licensure:

1. Education - 150 hours education requirement
2. Examination - complete the Uniform CPA examination
3. Experience - minimum of 2,000 hours (1 year) experience

A CPA must either come form a state that has these MINIMUM licensing requirements or individually meets or exceeds these requirements. Then they are deemd to be "substantially equivalent" and can take advantage of mobility provisions in states.

Unprecedented Success - mobility in the US

Back to mobility. As of this post, there are 34 states that have passed mobility (23 in the last year and a half). That means CPAs do nothave to file for additional licenses in all of these states (solid gold & solid yellow on the map above). Last year you will recall that we fought hard against opposition by unlicensed accountants (Maryland Society of Accountants) to pass this critical legislation for CPAs in Maryland. See our posts titled, Lots of work to do on final day of the General Assembly  Check out our Town Hall handout for up-to-date listing of the "mobility" states (page 3)  Download Town Hall Fall 2008 Handouts.

So now do you understand mobility better? and have you hugged you Professional Associations (AICPA, MACPA and your home state CPA societies)?

Additional Resources:

AICPA resources for Mobility can be found at this link

MACPA's legislative/regulatory resource center can be found here(members only login required)

See our article - CPA Mobility passed in Annapolis

Blog post - Sine Die - CPAs had a successfdul session!

 

There they go again

H & R Block and other tax preparer companies are attempting relax requirements that were just enacted last year. We think that is a bad idea!

Here are our talking points for our opposition to proposed changes to the Maryland Tax Preparers Act (SB 817) http://mlis.state.md.us/2008rs/billfile/sb0817.htm by HB 24 & HB 329

• Give it time to work - We don't even know if the minimum requirements are adequate yet and the DLLR has not even established the Board (or the examination) yet
• Stakeholders (H&R Block & others) had a seat at the table and should not be revisiting this before implementation of the original bill
• Maryland's requirements are bare minimums for tax preparer certification - reducing them makes the purpose of the original bill moot and exposes Maryland taxpayers to incompetent tax preparers (the exact problem the act was intended to stop)
• IRS recognized tax preparers (CPAs, Tax Attorneys, and Enrolled Agents) under Circular 230 are required to meet much higher requirements that those set forth in the Maryland law ands all have independent examinations to test competencies
• Exempting anyone (other than grandfather requirement) from the independent, regulatory-based exam defeats the purpose of the original law and subjects Maryland taxpayers to potentially incompetent tax preparers
• CPAs, accountants, enrolled agents, and the consumer groups that sponsored this bill are all opposed to these changes.

It is important to note that SB 817 involved an extensive stakeholder process that included the Attorneys, Enrolled Agents, CPAs, Accountants, and major Tax preparation companies (H&R Block, Jackson Hewitt). That process provided a forum for discussion and debate and resulted in the enactment of a bill that received overwhelming support. The bill is meant to protect the citizens of Maryland from incompetent or unscrupulous tax preparers - both of these bills will significantly lessen the minimum standards contained in the original bill. Shouldn't we give the original bill a chance to be implemented before changing the minimum standards?
 
Why we oppose HB 24
HB 24 http://mlis.state.md.us/2009rs/billfile/hb0024.htm
 
HB 24 proposes changing the grandfather clause from a requirement of 8 hours of continuing education per year (annual) to 8 hours of continuing education over the entire fifteen years.
 
Considering the significant changes to both the federal and state tax laws that occur every year, we believe this exposes Maryland taxpayers to tax preparers who simply may not know the tax code. Considering that they are exempt from testing - shouldn't they have at least some minimum level of continuing education to keep up on changes?

The IRS requires twelve (12) hours of continuing education (CPE) per year for all Tax Preparers covered under Circular 230 (CPAs, Tax Attorneys, Enrolled Agents).
Licensed CPAs are required to take forty (40) hours of continuing education (CPE) per year to maintain their license.
This bill would say the minimum of eight (8) hours over fifteen years is sufficient to maintain competency as a tax preparer - we believe this is simply not acceptable.

Why we oppose HB 329 http://mlis.state.md.us/2009rs/billfile/HB0329.htm
 
HB 329 which exempts individuals from examination if they complete certain training programs (36 credits approved by MD Higher Education)
 
While education of potential tax preparers is encouraged and expected, the proposed changes would exempt certain organizations (like H&R Block and other tax preparation companies) from testing their preparers for minimum competencies in tax preparation.
 
This would effectively allow them to create the education, offer the education, and pass participants with no oversight and no independent validation. The law as enacted requires an independent, regulatory-based examination. The IRS Special Enrolled Agent exam (Part 1 only) or an examination developed by the Maryland Comptroller or DLLR were suggested. In fact the IRS has offered to work with our DLLR to make their examination available eliminating the costs for Maryland to develop this exam and making it easy and fast to implement should the future board decide.
 
It will be unfair to small, local practitioners who will be required to take an examination while employees of certain companies will be exempt from examination.
 
Major tax companies will avoid oversight completely as they are not regulated or registered and their employees would be able to avoid the examination. In the initial research last year, I recall H&R Block tax preparers were listed in the complaints from the Maryland consumer affairs office, which further supports our case for keeping the examination requirements and not relying on a company education program.
 
For more information about our response to H & R Block's anti-CPA ads see our post:
 
http://www.cpasuccess.com/2009/02/can-somebody-making-700-hour-really-beat-a-cpa.html

CPA day in Annapolis - Are you a participant or a victim?

There is an old saying in politics that says you can choose between being a participant or a victim of legislative and regulatory issues.

Last week, Maryland CPAs once again chose to be participants in the legislative process.

Pictured at right are several of our members breaking bread with two Maryland delegates (on the right) at our luncheon following the morning visits with lawmakers. Despite the ice storm - over fifty CPAs made it and let the legislators know our agenda.

In addition to the numerous personal visits our CPAs made with lawmakers, we had to run to make several hearings that afternoon.

We testified in support of the Comptroller e-filing bill SB 96 before the Senate Budget & Taxation Committee and attended a briefing by the DLLR on the implementation of the Maryland Tax Preparer Act of 2008 (SB 817 from the prior year) before the House Economic Matters CommitteeThis was the bill that we successfully amended to exempt CPAs and their staff from this new Maryland requirement - see our post from last year.

Since the e-filing bill is new, we thought we would elaborate on our position:

Why are we supporting the e-filing bill?

The MACPA Board of Directors voted unanimously to support this for the following reasons:

1. The Comptroller agreed to not requiring e-filing for five years after working with us through a series of townhall meetings with MACPA members
2. Despite our efforts to inform and encourage e-iling, Maryland ranks 32nd out of the 41 states who have e-filing in place
3. Eighteen (18) states already require e-filing and more are expected this year
4. The bill has an exemption for taxpayers who do not want to e-file
5. The bill has a two year phase in (over 200 returns for the first year and 100 returns thereafter)
6. It will save Marylandmoney through the efficiencies provided
7. The playing field is more level for our localpractitioners due to the Maryland Tax Preparers Act of 2008 that we successfully amended.

You can see our full 2009 legislative agenda  here

See our CPA Day pictures posted on Flickr

It's getting hot in here. Let's make some steam.

Our Board of Directors has adopted the 212 mantra as its theme for the coming fiscal year.

Not familiar with 212 yet? Check out this video:

The Reader's Digest version is this: At 211 degrees, water is merely hot. At 212 degrees, it boils ... and makes steam ... and can be used to propel a locomotive.

So the question is this: Where do we find the extra degree that will help us do great things?

There's no single answer that can be applied across the board. That missing degree is hiding deep within each of us. The motivation to find it is an intensely personal thing. No one else can stoke the fires; we have to do that ourselves.

So I was amazed -- simply, utterly amazed -- by what happened today in Maryland.

Today was CPA Day in Annapolis, an event the Maryland Association of CPAs (and, specifically, our own Mary Beth Halpern) had been planning for months. It's the one day each year when CPAs and their lawmakers meet face to face to discuss issues that impact the business community. Members had been registering for weeks. Meetings with legislators had been booked well in advance. Everything was set. This event was going to be held rain or shine.

But we didn't count on ice.

A nasty winter storm swept across the Midwest, dropping layer after slippery layer of freezing rain on the mid-Atlantic region. As the day of the event dawned, roads and sidewalks were coated with ice, making travel of any kind treacherous.

And still our members arrived.

Oh, sure, not in the numbers we had hoped. But they arrived nonetheless. They threw on their coats, scraped the ice off their cars, braved the bad roads and even worse sidewalks, and showed up to protect their profession and their clients. One of them even fell on the icy sidewalks and whacked the back of his head on the chilly concrete. His reaction? He picked himself up, walked into our morning briefing, asked for a couple of aspirin and soldiered on.

In short, they found that extra degree.

This is why America counts on CPAs. They don't let a little thing like an ice storm get in the way of progress. They do what needs to be done to make their profession -- and, in turn, their clients and Maryland's business community -- even stronger.

That's how we're going to claw our way out of this recession -- by picking ourselves up, asking for a couple of aspirin, and then doing what needs to be done.

By finding that extra degree and dialing it up to 212.

Legislation: Be proactive, not reactive

What a horrible, heartbreaking day.

Twenty thousand jobs lost at Caterpillar. Eight thousand lost at Sprint Nextel. Seven thousand at Home Depot. Eight thousand at  Pfizer and Wyeth. Two thousand at General Motors. Thirty-four hundred at Texas Instruments. Seven thousand at IMG. Six thousand at Philips. Thirty-five hundred at Corus.

All told, Jan. 26, 2009 will be known as the day when nearly 72,000 jobs were eliminated worldwide.

Think of it this way: There's a person, perhaps an entire family, behind each of those jobs. The human toll is simply astounding.

And when that many people are impacted, can regulation be far off?

That, says AICPA Chair Ernie Almonte, is why CPAs need to be active legislatively.

Lawmakers will react when their constituents suffer. And if no one is there to explain the consequences of their actions, we could be looking at serious repercussions for CPAs, their clients, Maryland businesses and consumers at large.

"Regulation could be a major (issue) for the CPA profession this year," Almonte said during a recent presentation to the Maryland Association of CPAs' Board of Directors. "Inaction (by regulators) would probably be a mistake, but overreaction could be an even bigger mistake. If (CPAs) don't get involved, we run the risk that regulators will overreact."

And if regulators overreact, we end up with things like, oh, the Sarbanes-Oxley Act, for example.

We need CPAs who are engaged, who are ready to step up and protect the profession and, by extension, their clients and the business community.

In short, we need CPAs to join us at CPA Day in Annapolis. We'll have the opportunity to talk directly with our legislators and explain how potential legislation could impact Maryland businesses and consumers alike.

"We have to develop a rapport with legislators," Almonte said. "We have to develop relationships with legislators and become a trusted advisor for them. Once that happens, our message carries more weight."

It all starts on CPA Day, set for Wednesday, Jan. 28 in Annapolis. CPAs will have the opportunity to meet face to face with their legislators and discuss issues of importance to the profession.

• Register to attend.
• Listen to our agenda.
• Get all of the information you need to prepare.

This is it, folks -- your opportunity to step forward and protect your profession, your clients and our economy. It all starts Wednesday in Annapolis. Join us, and make a difference.

CPAs, raise your voices. The General Assembly's in session.

It’s January, and in Maryland, that means it’s time to talk politics.

The state’s General Assembly gathers this month in Annapolis for its 426th session, and it’ll undoubtedly be another 90-day flurry of legislative activity.

And Maryland’s CPAs are gearing up for a busy legislative session as well, starting with their annual CPA Day in Annapolis, an annual event in which CPAs meet face to face with their legislators to talk about issues of importance to the profession.

This year, CPA Day will be held on Wednesday, Jan. 28.

What issues are we watching this year? The agenda includes old favorites like opposing tort reform and sales taxes on professional services ... and a couple of new issues as well. I spoke on the phone recently with MACPA Executive Director Tom Hood, who outlined the profession’s legislative agenda for 2009.

• Let’s take a listen in this CPA Spotlight podcast.
• Subscribe to the podcast here, or search for "CPA Spotlight" in iTunes.
• Get details, register to attend and read our position papers here.

What issues in Annapolis have your attention this year?