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Advocacy works: CPA day efforts push two bills through legislature.


As the Legislature adjourned the 2015-16 session, the impact of CalCPA's advocacy efforts helped spur two bills through the Legislature to the governor's desk, one of which was then signed by the governor.

At CPA Day in January, more than 200 CalCPA members met with California legislators to discuss topics important to the CPA profession and California taxpayers. Two of those topics related to the importance of tax conformity and the role financial literacy plays in the success of Californians.

AB 1775 (Obernolte), signed by the governor Sept. 14, conforms the California tax due dates to the recently changed federal due dates for partnership and C corporation returns. Under the bill, for returns for taxable years beginning on or after Jan. 1, 2016, partnership returns will be due March 15, C corp returns will be due April 15 and S corp returns will continue to be due March 15.

These new due dates for federal and state returns are expected to alleviate timing pressures and provide a more logical flow of information for a smoother and more efficient tax preparation process with less estimates, extensions and amended returns.

AB 2546 (Calderon) would incorporate age-appropriate financial literacy instruction in history-social science curricula when it's revised after Jan. 1 for grades K-12. If the governor signs AB 2546, California will be afforded an opportunity to develop an educational plan for teaching financial literacy consistently throughout a child's education.

These small, but important changes are the result of the hard work and dedication of CalCPA members' grassroots efforts. CalCPA would like to thank Assembly-member Obernolte for authoring AB 1775 and Assembly member Calderon for authoring AB 2546, as well as all the CalCPA members who participated in CPA Day.

Tax on Services Proposal Stalls Again

In 2015, Sen. Hertzberg introduced SB 8 to impose a sales tax on services--including those provided by CPAs--to raise billions in new tax revenue for new dedicated spending plans. SB 8 died in the Legislature when it failed to meet legislative deadlines. In 2016, the senator renewed conversations about tax on services when he introduced SB 1445 as a new vehicle for a tax on services proposal.

Neither version of the bill ever contained specifics about how such a complex shift in the tax burden to raise billions in new tax revenue would work. The grassroots efforts of CalCPA members were instrumental in making legislators aware of the significant issues of tax on services.

CalCPA members discussed concerns, including those over fairness of application, increased cost to comply with the law, competitive disadvantage for California providers, negative impact on small business and costly administrative burden, among other major challenges with imposing a tax on accounting services.

However, it is likely that a similar proposal will again be introduced in the next legislative session. CalCPA members' grassroots efforts will continue to be vital in making sure that CPAs are not unfairly treated or harmed should a tax on services proposal take a more substantive form.

Impactful Election

While the presidential race draws much of the attention for the 2016 election, a number of other races and issues will be decided in November, including a U.S. Senate race, competitive legislative races and a number of ballot measures on a range of topics.

There are 29 open legislative seats, where a freshman legislator will be sworn into office in December. In addition, there are a handful of competitive races that can flip from one party to the other. Democrats will be seeking to pick up a couple more seats in each house to regain a two-thirds majority in both houses, while Republicans will be working to defend their seats.

Additionally there will be tight races between moderate Democrats backed by pro-business groups and more liberal democrats backed by labor groups.

In addition to elected representatives, there will be 17 state ballot initiatives ranging from use of plastic bags to marijuana legalization, some of which could impact to the CPA profession.

Prop. 55 would extend the temporary tax increase from 2010 on high income earners to fund education and health social services. If it passes it could stymie future tax increase proposals for the next few years. If it fails, though, it may expedite the conversation of other tax increase proposals to fill the void left by the expiring tax increases.

Another initiative of interest is Prop. 64, which would legalize the recreational use of marijuana. An already rapidly growing sector of the economy would continue to grow, including a need for tax and consulting services. However, with the opportunity comes various nuances and factors related to how the federal government will treat marijuana legalization.

For an analysis these propositions and others, see the Legislative Analyst's Office website at BallotAnalysis/Propositions.

Jason Fox is CalCPA's director of legislation. Kasey O'Connor is CalCPA's government affairs communication manager. You can reach them at and
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Title Annotation:Capitol Beat
Author:Fox, Jason; O'Connor, Kasey
Publication:California CPA
Geographic Code:1U9CA
Date:Oct 1, 2016
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