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AB 2415 Vetoed: and other legislative action affecting CPAs.

In the closing clays of the legislative session the governor vetoed AB 2415 (Ting), which would have created a registration requirement for anyone acting as a property lax agent. As you know, this bill has been the top priority for the CalCPA Government Relations team this legislative session, and this issue has been around the Legislature for several years.

In its original form, the definition of "property lax agent" and the registration requirement in AB 2415 was broad. CalCPA was concerned that the bill would have required CPAs to register with the Secretary of Stale's Office for services that already fall within the scope of their practice as a CPA.

Prior to AB 2415 being sent to the governor, CalCPA was successful in getting amendments to the bill to exclude the routine day-to-day services that CPAs regularly perform for clients that may bring them into contact with a county assessor or their stall". As a result of these negotiated amendments, CalCPA removed its opposition to the bill.

Even with the amendments in place, the governor vetoed AB 2415, stating: "This bill would regulate individuals who represent clients before county assessors. The real property tax assessment system has worked relatively well over a long period of years. There has been some serious misconduct in a limited number of cases, but that doesn't lay the predicate for yet another registration program."

Achieving the amendments excluding usual and customary services performed by CPAs was a successful outcome; still, the veto of AB 2415 is an important and even more successful outcome to this legislation. It avoids another registration requirement CPAs potentially would have had to comply with.

Thank you for all your help and involvement throughout the process. When legislators hear from CPAs and members of their communities, it provides the extra push and unique perspective needed to ensure that a difference is made.

CBA Omnibus Bill Signed into Law

Another bill that CalCPA successfully worked on this year with the Legislature and the California Board of Accountancy was SB 1467, which is an omnibus bill containing legislative provisions requested by the CBA.

These non-controversial, legislative changes are necessary for the CBA to continue to regulate the CPA profession and ensure consumer protection. Specifically there was technical cleanup and a change of mobility language; language to allow the CBA to collect licensee email addresses during the licensure and renewal process; language to allow for the acceptance of academic experience for licensure; and changes to give the governor greater flexibility when making appointments to the CBA.

CalCPA worked closely with the CBA, the Legislature and the governor's office to ensure that the bill would be successful and in the best interest of the profession. The governor signed this consensus measure.

Contingency Fee Regulations with GO-Biz

CalCPA has been engaged with the Governor's Office of Business and Economic Development (GO-Biz), which oversees the California Competes Tax Credit program. The program is an income tax credit available to businesses that want to come to California or stay and grow in California.

Businesses are able to apply through a competitive process for rights to a credit on income taxes so that they can invest in their business. Businesses often utilize the services of consultants, including CPAs, to assist in gathering the necessary information to complete the application.

In proposing regulations to extend the California Competes Tax Credit Program, GO-Biz inserted regulatory changes to limit the use of contingency fees as part of the applicant-consultant fee arrangement during the application process. Specifically the new legislation slated that "any contingent fee arrangement must result in a fee that is less than or equal to die product of the number of hours of service provided to the applicant and the industry standard hourly rate for such services."

In response, CalCPA worked with other stakeholders to write a letter of concern to GO-Biz stating that the proposed language pertaining to contingency fee arrangements is incalculable and may adversely impact the program's goal of fostering fair competition, especially in relation to small businesses.

Preparation of applications for complex programs, such as the California Competes Tax Credit Program, requires substantial time and effort, and can be especially challenging for small-business owners with limited resources and expertise essential for crafting viable, competitive applications.

Further, GO-Biz's practices already include a thorough review of the client- consultant fee arrangement associated with each application.

CalCPA is working with GO-Biz to develop alternative regulatory language that will still protect GO-Biz's discretion in weighing the negative impact of the rare contingency fee agreement that may be grossly unreasonable in the context of a specific application, while maintaining flexibility with respect to contingency-based fee arrangements which may be the most economical way to assist the small businesses that are most in need of the awards.

Bruce C.Allen is CalC PA's director of government relations. Jason Fox is CalC PA's director of legislation.
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Author:Allen, Bruce C.; Fox, Jason
Publication:California CPA
Date:Nov 1, 2014
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