MACPA earns key legislative victories as '06 session ends

ANNAPOLIS, April 20, 2006 — The MACPA has been instrumental in the passage of a number of bills this year that make life easier for Maryland tax practitioners and their clients.

The CPA profession's victories in the 2006 session of the Maryland General Assembly include the following:

Giving Maryland corporations more time, under certain conditions, to file their income tax returns. Senate Bill 484, titled, "Income Tax — Extensions for Filing Returns," increases to seven months the period for which Maryland's comptroller may, under specified circumstances, extend the time for a corporation to file an income tax return. Get details about the bill here.

Maryland departs from federal income tax, thus increasing the complexity and requiring additional time for CPAs to prepare and review their clients' Maryland corporate tax returns. S.B. 484 provides that additional time.

Through their testimony and support, members of the MACPA's State Tax Committee were instrumental in the bill's passage.
Creating an incentive for e-filing tax returns. A bill that offers an extension of time for paying taxes due to April 30 as an incentive for e-filing individual returns has been approved unanimously by both houses of the Maryland General Assembly.

The bill, Senate Bill 93, states that "an individual who files a Maryland income tax return no later than April 15 of the next taxable year may pay the income tax due with the return on or before April 30" if the return is e-filed and the income tax is paid electronically.

E-filing is not mandatory in Maryland as it is in many other states. As a result, Maryland has had one of the lowest rates of e-filing in the country.

Rather than make e-filing mandatory, the Maryland Comptroller's Office worked cooperatively with the MACPA to develop the incentive for e-filing. Their efforts included several planning meetings between Comptroller's officials and MACPA representatives, a survey of MACPA members to determine the issues related to e-filing, and town hall meetings with MACPA members and representatives from the Comptroller's Office to discuss the issues and offer incentives.

The new incentive will be beneficial to taxpayers as well as the Comptroller's Office, because it will actually save time in the processing of the payments received.
Implementing reforms to Maryland's estate tax: S.B. 2 and H.B. 1219 limit the amount of the federal credit used to calculate the Maryland estate tax to 16 percent of the amount by which the decedent's taxable estate exceeds $1.0 million. The bill also clarifies Maryland estate tax law to reflect the partial decoupling of the Maryland estate tax from the federal estate tax.

In addition to limiting the estate tax, the bill also is intended to address administrative issues that have arisen due to the partial decoupling of the Maryland estate tax from the federal estate tax. The bill takes effect July 1, 2006. Get more information about the bills here or by reading the bill's fiscal note.

A number of proposals for estate tax reform were introduced in the General Assembly this year. The MACPA supported this bill along with the other proposals as steps in the right direction to cure the complexity and unintended consequences caused by the disparity between Maryland and federal estate tax laws.
Creating a 'special fund' for the State Board of Public Accountancy. House Bill 103 calls for the creation of the "State Board of Public Accountancy Fund," a special, non-lapsing fund in the Department of Labor, Licensing and Regulation. The fund would be paid for by the licensure fees of Maryland CPAs and would provide the State Board with the resources necessary to carry out its duties and responsibilities and protect the interests of the public.

Beginning July 1, 2008, the State Board shall establish fees based on calculations of the direct and indirect costs attributable to the Public Accountancy Board. The amount of increase in the fees cannot exceed 12.5 percent of the current fee. For example, the fee for license renewals currently is $40 every two years. That fee would not increase by more than $5 in 2008.

"It is only logical that the fees paid by licensees for the privilege of practicing public accountancy cover the cost of administering the State Board of Public Accountancy," the MACPA said in a position paper on the issue. "No other group of licensees would understand this better than licensed CPAs, and our members have expressed that understanding to us."

CPAs' support is vital

The legislative victories underscore the importance of legislative action on the part of CPAs. They also underscore the important role the MACPA's political action committee plays in the legislative process.

The committee, known as the CPA Committee on Political Action, enables the profession to support legislators who share our views. It does this by making contributions to key leaders and members of the legislature.

The profession has enjoyed a long list of legislative victories, but none of those successes would have been accomplished without legislators who listen to and support our position. It is more important than ever that we continue to support those who protect our interests.

Our interests include not only what is important to CPAs, but also to a broader base of business clients. Proposed legislation that jeopardizes the contributory negligence system and other matters, such as sales tax on services, are intensifying every year, and the efforts to pass such legislation are gaining momentum.

Political action committees are the appropriate and most effective means of dealing with legislative issues. Financially supporting the PAC is the best way to reduce the chances of harmful legislation impacting your firm and your clients.

With your donation to the CPA Committee on Political Action, we are able to:

educate legislators about matters that are important to the profession;
realize greater legislative effectiveness;
send a clear, consistent message;
effectively fight challenges to the contributory negligence system and sales and use taxes on services;
keep the MACPA membership fully informed.

For details on how you can support our PAC, click here.

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