JANUARY 25, 2018

Getting Ready for CPA Day 2018

Resources for you to easily make the biggest impact.

The Gameplan


STEP 1

Register to Attend

(*includes 2-hour complimentary CPE)


REGISTER HERE

STEP 2

Day-Of Resources



TALKING POINTS TO REMEMBER

When talking to legislators, an easy way to remember your points about the value of the CPA is to remember what CPA stands for and remember: In Maryland, only CPAs are licensed to serve.

CPA vs. Accountant? Let’s spell it out.

CERTIFIED:
In Maryland, CPAs are required by law to:

  • Obtain a baccalaureate degree
  • Complete the equivalent of five years of college
  • Demonstrate competency by passing the Uniform CPA Exam
  • Display understanding of professional ethics by passing an ethics exam
  • Be licensed by the State Board of Public Accountancy and pay a license fee
  • Maintain competency by obtaining 80 hours of continuing education every two years

PUBLIC:
CPAs in Maryland must:

  • Comply with professional standards in all services to the public
  • Comply with professional ethics in performing accounting services
  • Protect the public – this is the cornerstone of our profession

ACCOUNTANT:
As financial service professionals, CPAs:

  • Follow generally accepted accounting principles in preparing financial statements
  • Comply with Statements on Standards for Accounting and Review Services in reporting on financial statements
  • Earn the continued trust of individuals, institutions and businesses for providing unique financial insight and expertise
  • Complete rigorous examination and education requirements
  • Commit to high ethical standards and the protection of the public
  • Continue their education to maintain professional excellence

 

IN MARYLAND,
ONLY CPAs ARE LICENSED TO SERVE.

One More Way of Looking at it

The CPA profession encompasses the four Es:
 
EDUCATION. Maryland CPAs must obtain a bachelor’s degree and 150 credit hours of education and complete 80 hours of CPE every two years to continue to practice in Maryland.

EXAMINATION. Maryland CPAs must pass a rigorous exam to earn the CPA designation.

ETHICS. Maryland CPAs must pass an ethics exam to earn the CPA designation.

EXPERIENCE. Maryland CPAs must acquire 2,000 hours of practical work experience for initial licensure.

OPPOSE SALES TAX ON SERVICES

The Maryland Association of Certified Public Accountants is a membership organization with nearly 10,000 CPA members. Our members serve thousands of business clients in Maryland. We strongly oppose legislation that would impose sales and use tax on services, because it would have a direct negative impact on the Maryland businesses and consumers.

According to the fiscal note on a previous similar bill, “This bill will have a substantial effect on small businesses that provide or purchase the services on which the sales tax is imposed. Small businesses that purchase these services will either pay more for these services, lowering profits or causing a reallocation of other spending decisions, or will purchase smaller quantities of these services. Small businesses providing these newly taxable services will experience losses in sales for the reasons noted above. The amount of such losses will vary and cannot be reliably estimated at this time.”

The biggest obstacle to implementing a sales tax on professional services relates to the difficulty in administering the tax. This complexity exists for both the State and taxpayers. The multi-state nature of both the customers and the taxpayer in many instances make it difficult to determine where the service takes place. The following example illustrates this complexity:

A CPA travels to several states to provide tax, consulting or other services to a client that does business in several states, including other states the CPA has not visited. The sales tax for Maryland cannot be based on the amount of time the CPA spent in Maryland, because that may be disproportionate to the value of the service the client will actually enjoy in Maryland. It cannot be based on the client’s percentage of business in Maryland versus other states, because that may have nothing to do with the particular service the CPA provided. You can’t base the Maryland sales tax on whether the contract for the service was signed in Maryland, because that may have absolutely nothing to do with where the CPA will do the work or where the client will enjoy the service.

Not only are sales and use taxes a bad idea when applied to the services typically supplied by CPAs, they are also a bad idea when applied to a host of other services for the following reasons:

  • Discrimination against small and emerging businesses. Small firms typically find it necessary to use outside services while larger companies likely have in-house expertise that can provide otherwise taxable services at no cost. Also, a small company whose services may become taxable will have to incur additional costs to establish and maintain collection and reporting mechanisms while larger companies likely have similar mechanisms already in place. Diverting capital into payment of additional taxes and administrative costs limits the growth of small companies.
  • Pyramiding taxes on services and final goods. Taxing services increases the potential for goods and services being taxed several times resulting in higher consumer costs.
  • States with service taxes are at a competitive disadvantage compared to states that do not tax services. Not only does it discourage the use of services, but it discourages companies seeking to relocate or expand.
  • Taxing services will affect those who can least afford it more than those who are well off. Sales tax by its very nature is a regressive tax. The tax rate remains the same no matter what an individual’s income level may be. If more services become taxable a larger portion of disposal income for those on the lower end of the socio-economic ladder will go to satisfy sales tax obligations than that of others who are more well off.

The Maryland Association of CPAs believes a sales tax on services would burden the citizens and businesses of this state unnecessarily with additional taxes. It would negatively impact economic growth and development. We believe this proposal is bad for small business in Maryland and we will work to defeat such legislation if introduced. We note that other states such as Florida, and more recently Michigan, have attempted to tax a broad range of services only to quickly repeal them in part due to the complexity of administration as noted in the above example.


RETAIN CONTRIBUTORY NEGLIGENCE RULE: DEFEAT EFFORTS TO LEGISLATE COMPARATIVE NEGLIGENCE

In many of the past several years’ sessions of the General Assembly, trial lawyers have introduced bills designed to replace Maryland’s current system of determining a defendant’s liability with a 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.

If an injured party acts, or fails to act, with knowledge and appreciation that such conduct could result in harm and that party then is injured, he or she cannot recover against another for that injury. The defendant bears the burden of proving that the injured party’s conduct contributed to the harm, and this is generally considered by the jury. Because Maryland’s doctrine of contributory negligence allows a jury to take into consideration how an injured party’s conduct contributed to that party’s injury, it permits juries to more fairly evaluate what damages, if any, should be awarded to an injured party who may have contributed to his own injury. This, in turn, results in lower litigation awards and costs.

The contributory negligence standard should be maintained in Maryland and MACPA will work to defeat any change because:

  • the contributory negligence standard prevents a flood of suits by plaintiffs who have a disproportionate amount of fault;
  • the contributory negligence standard will keep the lid on insurance premium growth rates;
  • the contributory negligence standard fosters the exercise of due care by all persons;
  • the contributory negligence standard, as a long respected doctrine, enhances the predictability of litigation, including its costs;
  • the comparative negligence rule as outlined in prior bills would lead to higher premiums for automobile and homeowners’ insurance;
  • prior bills’ comparative negligence rule would lead to higher premiums for businesses’ general liability and product liability insurance; and
  • prior bills’ comparative negligence rule would lead to higher premiums for professional liability and errors and omissions insurance.

The increased cost of conducting business and the decreased productivity associated with the comparative negligence standard would, in the long run, lead to a loss of jobs, increased liability and a deterioration of the economic climate in Maryland. MACPA will again work to retain the contributory negligence rule.


STEP 3

After Meeting With Your Legislator



Legislative & Regulatory-Related Blog Posts

  • Give your name.
  • Tell the legislator where you work.
  • Identify yourself as a CPA and a member of the Maryland Association of CPAs.
  • Identify yourself as being one of the legislator’s constituents. Tell the legislator where you live and ask where he or she lives — that might help strike up a conversation about your neighborhood or the legislator’s district.
  • Tell the legislator the reason for your visit — namely, to state the CPA profession’s position on certain issues. State the issues in question and the profession’s position on each issue. (The MACPA will have briefed you about the issues prior to your visit. You also should have received copies of the MACPA’s position papers; these outline the profession’s position on the issues in detail.)
  • If the legislator asks you questions about the issues that you cannot answer, do the following:
    • Tell the legislator you don’t know the answer — it’s better to be truthful than to try to bluff your way through the response.
    • Tell the legislator you will pass the question on to the MACPA, and that an MACPA representative will respond shortly.
  • Make sure you follow through. Jot down the legislator’s question and, after your visit, pass the question on to an MACPA representative. We will respond to the legislator.
  • End your conversation by emphasizing the difference between CPAs and accountants. Other accounting groups also visit Annapolis each year and each group has its own agenda. It’s important to help the legislators differentiate between these groups and the MACPA.
 

Position Papers


What we are advocating for and why it matters:


OPPOSE SALES TAX ON SERVICES

The Maryland Association of Certified Public Accountants is a membership organization with nearly 10,000 CPA members. Our members serve thousands of business clients in Maryland. We strongly oppose legislation that would impose sales and use tax on services, because it would have a direct negative impact on the Maryland businesses and consumers.

According to the fiscal note on a previous similar bill, “This bill will have a substantial effect on small businesses that provide or purchase the services on which the sales tax is imposed. Small businesses that purchase these services will either pay more for these services, lowering profits or causing a reallocation of other spending decisions, or will purchase smaller quantities of these services. Small businesses providing these newly taxable services will experience losses in sales for the reasons noted above. The amount of such losses will vary and cannot be reliably estimated at this time.”

The biggest obstacle to implementing a sales tax on professional services relates to the difficulty in administering the tax. This complexity exists for both the State and taxpayers. The multi-state nature of both the customers and the taxpayer in many instances make it difficult to determine where the service takes place. The following example illustrates this complexity:

A CPA travels to several states to provide tax, consulting or other services to a client that does business in several states, including other states the CPA has not visited. The sales tax for Maryland cannot be based on the amount of time the CPA spent in Maryland, because that may be disproportionate to the value of the service the client will actually enjoy in Maryland. It cannot be based on the client’s percentage of business in Maryland versus other states, because that may have nothing to do with the particular service the CPA provided. You can’t base the Maryland sales tax on whether the contract for the service was signed in Maryland, because that may have absolutely nothing to do with where the CPA will do the work or where the client will enjoy the service.

Not only are sales and use taxes a bad idea when applied to the services typically supplied by CPAs, they are also a bad idea when applied to a host of other services for the following reasons:

  • Discrimination against small and emerging businesses. Small firms typically find it necessary to use outside services while larger companies likely have in-house expertise that can provide otherwise taxable services at no cost. Also, a small company whose services may become taxable will have to incur additional costs to establish and maintain collection and reporting mechanisms while larger companies likely have similar mechanisms already in place. Diverting capital into payment of additional taxes and administrative costs limits the growth of small companies.
  • Pyramiding taxes on services and final goods. Taxing services increases the potential for goods and services being taxed several times resulting in higher consumer costs.
  • States with service taxes are at a competitive disadvantage compared to states that do not tax services. Not only does it discourage the use of services, but it discourages companies seeking to relocate or expand.
  • Taxing services will affect those who can least afford it more than those who are well off. Sales tax by its very nature is a regressive tax. The tax rate remains the same no matter what an individual’s income level may be. If more services become taxable a larger portion of disposal income for those on the lower end of the socio-economic ladder will go to satisfy sales tax obligations than that of others who are more well off.

The Maryland Association of CPAs believes a sales tax on services would burden the citizens and businesses of this state unnecessarily with additional taxes. It would negatively impact economic growth and development. We believe this proposal is bad for small business in Maryland and we will work to defeat such legislation if introduced. We note that other states such as Florida, and more recently Michigan, have attempted to tax a broad range of services only to quickly repeal them in part due to the complexity of administration as noted in the above example.


RETAIN CONTRIBUTORY NEGLIGENCE RULE: DEFEAT EFFORTS TO LEGISLATE COMPARATIVE NEGLIGENCE

In many of the past several years’ sessions of the General Assembly, trial lawyers have introduced bills designed to replace Maryland’s current system of determining a defendant’s liability with a 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.

If an injured party acts, or fails to act, with knowledge and appreciation that such conduct could result in harm and that party then is injured, he or she cannot recover against another for that injury. The defendant bears the burden of proving that the injured party’s conduct contributed to the harm, and this is generally considered by the jury. Because Maryland’s doctrine of contributory negligence allows a jury to take into consideration how an injured party’s conduct contributed to that party’s injury, it permits juries to more fairly evaluate what damages, if any, should be awarded to an injured party who may have contributed to his own injury. This, in turn, results in lower litigation awards and costs.

The contributory negligence standard should be maintained in Maryland and MACPA will work to defeat any change because:

  • the contributory negligence standard prevents a flood of suits by plaintiffs who have a disproportionate amount of fault;
  • the contributory negligence standard will keep the lid on insurance premium growth rates;
  • the contributory negligence standard fosters the exercise of due care by all persons;
  • the contributory negligence standard, as a long respected doctrine, enhances the predictability of litigation, including its costs;
  • the comparative negligence rule as outlined in prior bills would lead to higher premiums for automobile and homeowners’ insurance;
  • prior bills’ comparative negligence rule would lead to higher premiums for businesses’ general liability and product liability insurance; and
  • prior bills’ comparative negligence rule would lead to higher premiums for professional liability and errors and omissions insurance.

The increased cost of conducting business and the decreased productivity associated with the comparative negligence standard would, in the long run, lead to a loss of jobs, increased liability and a deterioration of the economic climate in Maryland. MACPA will again work to retain the contributory negligence rule.

ADDRESS


58 State Cir,
Annapolis, MD 21401-1906


DIRECTIONS


Take Route 50 East. Follow Route 50 East for approximately 22 miles. Take exit 24 (Rowe Boulevard/Route 70). Make a right at Taylor Avenue into the Navy Stadium parking lot for shuttle service. There is a $5 fee per vehicle to park at the stadium and the shuttle fee is $2 per person (exact change required). Parking is also available in one of the 4 City garages. For more parking information click here. To go directly to Governor Calvert House (no parking available) follow Rowe Boulevard to the end. The historic State House will be in front of you. Turn left onto College Avenue. Take the first right onto North Street. Make a right onto State Circle. Approximately halfway around the circle, you will reach the Governor Calvert House on your right.
Take I-695 West toward Glen Burnie/Annapolis to I-97 South toward Annapolis. Follow 97 South to 50 East for approximately 5 miles to Exit 24 (Rowe Boulevard/Route 70). Make a right at Taylor Avenue into the Navy Stadium parking lot for shuttle service. There is a $5 fee per vehicle to park at the stadium and the shuttle fee is $2 per person (exact change required). Parking is also available in one of the 4 City garages. For more parking information visit www.parkannapolis.com. To go directly to Governor Calvert House (no parking available) follow Rowe Boulevard to the end. The historic State House will be in front of you. Turn left onto College Avenue. Take the first right onto North Street. Make a right onto State Circle. Approximately halfway around the circle, you will reach the Governor Calvert House on your right.

Questions about MACPA's advocacy efforts? Contact:

Mary Beth Halpern
Manager, Advocacy and Technical Services

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