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CPAs, legislators connect at CPA Day 2007

New faces on both sides highlight annual events

By Bill Sheridan
Statement editor

It’s held every January, but the 2007 edition of CPA Day in Annapolis had the look and feel of a brand new event.

New faces were everyone. About 40 percent of the more than 90 MACPA members who descended on Annapolis on Jan. 24 were first-time CPA Day attendees. Similarly, some 20 percent of Maryland’s 2007 legislators are new to their jobs this year.

That latter figure is particularly important to the profession. New legislators are often unfamiliar with the issues that impact CPAs and their clients, so it was vitally important that CPAs educate the new lawmakers about the issues of the day.

“It was a pleasure meeting my delegates for the first time, and it was interesting to see the political process in action,” said first-time attendee Bob Zink, a member with Arthur F. Bell Jr. and Associates. “It was an educational experience, and hopefully some good came from it as well.”

That’s undoubtedly the case, said Allen DeLeon.

“What we do here is critical,” said DeLeon, managing partner at DeLeon and Stang of Gaithersberg and chair of the MACPA’s Legislative Executive Committee. “If you want to have an impact on what happens to you and your business, you have to be a player.”

That’s what brought Shirley Bors to her first CPA Day. In fact Bors, who recently re-entered the profession after taking some time off, joined the MACPA specifically so she could attend the event. That’s how important CPA Day is, she said.

“If we don’t (support) businesses in Maryland, where are our kids going to work?” said Bors, the mother of two teen-age children. “I think it’s important to promote this state as a good place in which to do business.”

Among the issues CPAs are watching this year are:

• Recoupling federal deductions for Section 179 and estate tax: A number of MACPA members have said the current decoupling provisions are burdensome not only to CPAs but, more important, to their small business clients. Legislation to re-couple with the federal tax provisions would help Maryland CPAs and their clients in a variety of ways.
• Double taxation for flow-through entities: Maryland residents who are owners of businesses that operate out-of-state income as flow-through entities are credited for taxes paid to the other state, but only to the extent of the Maryland state rate (4.75 percent). The reduction does not consider the local rate. This results in double taxation if the out-of-state rate exceeds 4.75 percent. It is a disincentive for business owners to locate in Maryland. Maryland residents should be allowed a credit against income in the full amount of the tax that has been paid in the other state up to the total Maryland state and local income tax.
  
  Conversely, the mechanism for designating income tax was a boon to non-residents who earned income within Maryland. However, this was recognized and corrected by the Maryland Budget and Reconciliation Act of 2004. It provided that a non-resident's Maryland income would be subject to the Maryland state tax rate plus an additional tax rate to equal the total Maryland tax liability.
• Sales tax on services: The MACPA believes a sales tax on services would burden the citizens and businesses of Maryland unnecessarily with additional taxes. It would negatively impact economic growth and development. CPAs believe this proposal is bad for small business in Maryland and will work to defeat such legislation if introduced.
• Contributory negligence vs. comparative fault: In many past years, trial lawyers have introduced bills designed to replace Maryland's current system of determining a defendant's liability with a "comparative negligence" system that makes recovery against a defendant easier — even when the person bringing the lawsuit substantially contributed to his own injuries.
  
  At present, the Maryland courts allow a person sued for negligence or wrongdoing to raise the "contributory negligence" defense — that is, the party sued may claim that the plaintiff contributed to his injury and thus should not be allowed to recover from the defendant. This long-standing rule in Maryland courts prevents a person from shifting his or her responsibility to others. The MACPA will again work to retain the contributory negligence rule.

By all accounts, legislators were receptive to the profession’s position on many of these issues.

More worrisome to DeLeon, though, are rumors that lawmakers may want to raise taxes – and may even try to implement a sales tax on services – a year from now to help pay off the state’s budget deficit.

“It looks like there is going to be quite a bit of pressure with the budget deficit that will hit next year,” he said. “We have to start working now on some of the issues we are going to encounter next year. If we wait until next January, it will be too late.”

It seems there is no off-season for legislative advocacy.