PROFESSIONAL NEWS

Spring Season is a Winning One for RISCPAs' Government Affairs Team

It was a busy and productive spring for the RISCPA, which targeted important issues both locally and on a national level. On Smith Hill, RISCPA Executive Director Robert A. Mancini was especially pleased to see legislation adopted that aligns Rhode Island’s accountancy statute with the national Uniform Accountancy Act (UAA).

The reform measure, passed by the General Assembly and signed by Gov. Lincoln Chafee on May 27, requires that CPAs own a simple majority of the equity in a CPA firm, making the Rhode Island law similar to that in 43 other states.

In the House of Representatives the legislation (2011 H-5576) was introduced by Rep. Robert Flaherty, a Warwick Democrat, and in the Senate, the bill (2011 S-716) was sponsored by Sen. Louis DiPalma, a Democrat representing Little Compton, Tiverton, Middletown, and Newport. Testifying on behalf of the legislation was Ernie Almonte, the state’s former Auditor General. He explained to state lawmakers that the legislation would be a boon to smaller firms who often can’t afford the expenses that the big national firms can for non-CPA expertise. The proposal allows smaller firms to offer non-CPA employees equity ownership – or stock – in the firm instead.

“CPAs, however, would retain control of the firm, as it should be,” said Almonte.

Sen. DiPalma, who works as a technical director at Raytheon, told his Senate colleagues that the new measure would be a valuable recruitment tool for local CPA firms. And Rep. Flaherty, an attorney, described the measure as critical in terms of fostering a competitive economic climate for Rhode Island.

Mancini praised the efforts of Almonte, as well as the Society’s long-time lobbyist David Preston, president of New Harbor Group, in promoting the legislation. Mancini called the passage of the measure in just five months, an “astounding accomplishment.”

The RISCPA also made its mark on the national level this spring, working closely with the AICPA and once again connecting closely to a Congressional delegation with which it has fostered an especially effective relationship. From May 22nd through the 24th, Mancini spearheaded a delegation that included Arthur Lambi, Jr., Samuel K. Suls, Mary Bernard and Kevin Currier to the nation’s Capitol.

Among the key pieces of legislation they lobbied for was the Mobile Workforce State Income Tax Simplification Act of 2011 (H.R. 1864). U.S. Rep. Howard Coble (R-NC) and U.S. Rep. Hank Johnson (D-GA) sponsored the bill, which creates a uniform national standard that limits state or local taxation of the compensation of an employee who performs duties in more than one state or locality to: (1) the state or locality of the employee’s residence; and (2) the state or locality in which the employee is physically present performing duties for more than 30 days.

Some states, for example, actually require withholding for as little as one day of work. The RISCPA and AICPA delegation pointed out that the recordkeeping, especially if business travel to multiple states occurs, can be voluminous.

The bill has been sent to the House Committee on the Judiciary for further action.

“This is a key issue around the country,” said Mancini.

The RISCPA contingent also supported the AICPA with regard to difficulties taxpayers face when receiving delayed Schedules K-1, which are required Partnership, S Corporation, and Trust information documents sent to owners and beneficiaries so they can prepare their tax returns. The AICPA is touting a proposal to remedy the situation. An example of the type of problem the proposal is meant to fix is when an individual partner receives a late K-1 as an investor in a limited partnership. The partnership return is due on April 15. Individual returns are also due on April 15. The partnership return includes a Schedule K-1 that must be delivered to each partner so they can prepare their personal returns. The partnership completes its return and delivers the K-1 to the partner on April 15. The individual partner does not have enough time to incorporate that information into their personal return and still file “on time.” So, they have no choice but to file for an extension. To remedy the problem, the AICPA generally supports requiring Schedules K-1 to be filed in advance of the owners/beneficiaries return due date.                

The RISCPA also extended its support for a series of tax simplification proposals, including the Alternative Minimum Tax (AMT). The AICPA has lobbied for the repeal of the AMT, one of the tax law’s most complex components. The existing law requires taxpayers to make a second, separate computation of their income, expenses, allowable deductions, and credits under the AMT system. In addition, Mancini testified before the Senate on non-CPA ownership.

Mancini retuned from the Capitol with a renewed sense of appreciation for the relationship that has been built between the RISCPA and the Rhode Island Congressional delegation. Not only the individual members of Congress, he said, who have been extremely cooperative, but the members of their collective staffs.

“They move mountains on behalf of the people of Rhode Island,” said Mancini.