CPA day at the Capitol: CalCPA members increase profession's visibility.

More than 100 California CPAs arrived at the state Capitol May 10 to increase the profession's visibility and share concerns with legislators on issues important to the profession and the state.

CPAs were briefed on key issues, then assigned to teams that met with more than 100 legislators to educate those lawmakers and staff on the real-world consequences of various legislation.

In addition to meeting with legislators at the Capitol, our CPA members sat in on hearings and caught up with their peers from around the state. Among the issues CPAs discussed with legislators were practice privilege, financial literacy and "professional fiduciaries."

Everyone who participated had a great time and said they enjoyed speaking to legislators and staff on behalf of the profession.

Additionally, feedback from the Capitol is that legislators also were happy to hear from their constituents about issues of concern.

This event was invaluable in increasing the visibility of the CPA profession in California. In fact, the day was such a success that CalCPA plans to hold a similar event in early spring next year to bring new issues to legislators' attention.

Because of term limits many lawmakers have no experience with the CPA profession. Some of them were meeting with a CPA for the very first time.

Practice Privilege

CalCPA-sponsored AB 1868 (Bermudez) would ease interstate commerce by clarifying conditions under which CPAs from other states can provide services to California taxpayers.

The bill addresses urgent issues created by an interpretation of SB 1543 (Figueroa), Chapter 921, statutes of 2004 which became effective Jan. 1, 2006. In addition to CalCPA, AB 1868 is supported by the California Board of Accountancy and international accounting firms.

The bill returns the law to that which existed prior to Jan. 1, 2006, with the addition of some important consumer protections.

Out-of-state CPAs will be required to register with the CBA if they physically enter California or solicit California clients unless the services are incident to an engagement in another state.

As of Jan. 1, 2006, all out-of-state CPAs providing any services to California business clients were required to register with the CBA whether or not they physically entered the state. The law was unworkable for the CBA, the CPA profession and California taxpayers.

AB 1868 will provide immediate relief and allow time for all stakeholders to develop a long-term solution that will preserve taxpayer choice of CPA, minimize unnecessary barriers to entry and provide improved consumer protection.

Select provisions of the bill are scheduled to sunset Jan. 1, 2011.

'Professional Fiduciary'

CalCPA is opposing SB 1550 (Figueroa), which would require CPAs who act as trustees for estates or exercise control over the financial affairs of clients to become licensed as a "professional fiduciary."

To qualify as such, CPAs would have to pass a test, meet minimum educational requirements and agree to abide by a separate code of ethics.

The legislation is envisioned as a way to stop unethical or incompetent individuals from financially abusing their clients and stealing client funds.

While CalCPA is supportive of attempts to end the financial abuse and unlawful acts by those who are entrusted to handle fiduciary matters on behalf of California citizens, SB 1550 creates a burdensome regulatory scheme that unnecessarily impacts CPAs.

CPAs already are licensed by the CBA, the requirements of which meet or exceed the minimal standard of competence envisioned by the bill, and are often asked by long-term clients to act as trustees.

SB 1550's definition of professional fiduciary is so expansive that it intrudes into the trust and estate areas which are private decisions made by competent adults.

CPAs should be exempted in the bill like attorneys and banks.

Closing the 'Tax Gap'

CalCPA also is opposing AB 2344 (Chu), which would enact a tax amnesty period for the Franchise Tax Board and Employment Development Department.

The bill's stated purpose is to close the "tax gap" by encouraging voluntary compliance. The FTB tax amnesty period would be from Feb. 1-May 15, 2007. The EDD period is from July 30-Sept. 30, 2007.

CalCPA could support a tax amnesty program that encourages future compliance, but is opposed to the program proposed by AB 2344. That program would increase costs and penalties on regular taxpayers, instead of just bringing the underground economy into compliance.

AB 2344 also changes the burden of proof. The standard changes from what the taxpayer actually knew to "should have known." This is an impossibly high standard and different from federal law.

Also, the FTB amnesty period is during the busiest time of the year for tax professionals. The amnesty period should be moved so that these complex cases can receive adequate attention without creating an undue burden.

Financial Literacy

CalCPA is supporting AB 2787 (Niello), which would require that a personal finance component be added to the content standards for economics in the history/social science curriculum and provide a basis for assessment for these personal finance standards.

CalCPA has a strong commitment to increasing individual understanding of personal finance issues.

Bruce C. Allen is CalCPA's director of government relations.