This is another example of legislators trying to raise taxes on business without individual taxpayers really understanding the impact. This is one we are always watching for, and it is no surprise it came up again. See our position paper we handed out on CPA Day by clicking here.
House Bill 448 would impose sales taxes on CPA services, including tax and management consulting. The real issues for our CPAs in practice are the following:
- It is very hard to determine where consulting and tax services actually occur. What if you are doing a tax return for a client in Virginia from one of your offices in D.C.? Is the taxable service in Maryland,Virginia or D.C.?
- It is an administrative burden as CPA firms will have to register with the state and file sales tax returns.
- It puts Maryland CPA fims at a competitive disadvantage to neighboring states that do not impose sales taxes on tax and consulting services.
- It seems unfair to tax services that are effectively mandated by the state and federal governments. They rquire busineses and individuals to file and pay taxes and then will tax the services they need to help them comply with the laws.
- It is unfair to pick out some services and not tax all services. The argument can be made that Maryland is transfering from a manufacturing tax base to a services tax base. If that is the case, shouldn’t all services be taxed?
Our members in business and industry will see increases in all professional services that are taxed and be forced to absorb those costs or pass them along to Maryland consumers. They will also feel the pain of paying a tax on services they need to comply with state and federal laws.
The bill will be heard by the House Ways & Means Committee on March 14, 2007 at 1 p.m. We will have a panel of experts testifying against this proposal.
The chair of our Legislative Executive Committee, Allen DeLeon of DeLeon & Stang; the chair of our State Tax Committee, Ed Ben of Stout Causey & Horning; and business and industry member Fred Mertes of Newborn Caulk Guns will testify on behalf of the MACPA and our members.
Download our letter of opposition here.
You can help us by writing and contacting members of the House Ways & Means Committee to voice your opposition to HB 448. See our legislative / regulatory resource center for more information.