Advocacy with an Impact

The legislative process can be unpredictable and frustrating. As PICPA’s vice president of government relations, I live with this on a daily basis. Frustration with the process, not to mention some of the individuals in charge of the process, can at times overshadow the good that can be achieved.

A legislative “win” can mean many things. From having a bill introduced (or blocking a bill from being introduced) to simply getting a vote in committee, all can be considered victories in the world of government relations advocacy. A bill actually signed into law by the governor is the ultimate legislative victory, though. Those accomplishments are, relatively speaking, rare occurrences. After all, year-to-date, nearly 3,000 bills have been introduced in the House and Senate combined, and less than 100 have made it through the entire process. I would say maybe 10 percent of the bills introduced during a two-year session actually make it to the governor’s desk.

The PICPA and its advocacy efforts achieved several big “wins” in Harrisburg this year.

The process does work, however, and the results can be very positive. For example, this year the PICPA and its advocacy efforts achieved several big “wins” in Harrisburg that members and the clients they serve will benefit from.

The first significant victory was a reform of the Board of Finance and Revenue. Called a “kangaroo court” by CFO Magazine and given a “D” rating in a 2010 report by the Coalition on State Taxation (COST) due in large part to its lack of independence, the Board of Finance and Revenue is the second level of appeal after the Board of Appeals in the Department of Revenue and before the courts. Working with key stakeholders, the PICPA was able to fashion a legislative reform package and carry it through the legislative process—all in a little over six months. The end result is Act 52 of 2013, which includes the most significant reforms in Pennsylvania’s tax administration process in more than 20 years.

These changes won by the PICPA resulted in COST changing Pennsylvania’s grade in the area of tax administration from that “D” to an “A-,“ which will be in a report being released later this year. More importantly, taxpayers will experience savings in time and money by having a more streamlined and efficient system in which to operate.

A second big win was the enactment of House Bill 40, now Act 15 of 2013. This amendment to the Pennsylvania CPA Law permits CPA candidates to attain their required experience through employment in public practice, industry, government, or academia. By adopting this change, Pennsylvania became the 27th state to adopt this general experience requirement.

Act15

The Governor and PICPA representatives at the ceremonial bill signing of Act 15 of 2013 in Harrisburg.

The reality is that CPA candidates who provide services in the attest area will most likely receive all of their experience hours in the attest function, plus this area is subject to additional oversight through standards and programs such as peer review. Candidates not working in the attest area will be able to maximize their training in areas related to their responsibilities. This change opens the CPA profession to many potentially worthy candidates who were otherwise qualified but blocked by an inflexible barrier from licensure.

A third victory was elimination of the Corporate Loans Tax. This arcane provision in the Tax Code will be gone beginning Jan. 1, 2014, saving Pennsylvania taxpayers more than $30 million over a five-year period.

Last but not least, the PICPA scored a major victory when the House overwhelmingly defeated an amendment to a property tax reform measure that would have added accounting, auditing, tax, and related services to the items subject to the state sales tax. The ill-conceived “Property Tax Independent Act” is not only bad tax policy, but it effectively increases taxes by more than a $1 billion on Pennsylvania taxpayers.

None of this success could have been possible without a concerted team effort. As legendary football coach Vince Lombardi famously put it, “The achievements of an organization are the results of the combined effort of each individual.”

To all PICPA members, our allies in the legislature, and the executive branch of state government, thank you for a successful 2013!

Advocacy with an impact.

7 responses to “Advocacy with an Impact

  1. Can someone tell me what states still require attestation experience?

  2. School property tax is an antiquated system which now has become a burden many are collapsing on. Over 3.5 million property owners pay over $12 billion in education funding. Over $1 billion in delinquent property taxes shows SB76, school property tax elimination, is critical it passes. This bill will fund public education through the people instead of property. Those against are protecting their interest not property owners. The funding shortage of over $1 billion is a smoke screen. If SB76 is not passed then runaway education increases will occur by 2019 to the amount of the $1 billion. SB76 ties education increases to CPI, not the average 4% increases. Read the IFO report which shows how education funding is projected to increase without SB76. This is unsustainable!

  3. You state “The ill-conceived ‘Property Tax Independent Act’ is not only bad tax policy, but it effectively increases taxes by more than a $1 billion on Pennsylvania taxpayers.” Please explain from where you got the $1 billion figure. The Independent Fiscal Office (IFO) analysis of this bill states that the plan is tax revenue neutral- that means there is no tax increase. As CPAs, you should know this. You must be terrible at your jobs. Further, do you think it’s acceptable that people lose their homes because of an unfair school property tax? You would rather see people lose their homes than for someone to pay a measly 7% sales tax on your service? That’s despicable. No tax should have the power to leave you homeless!

  4. Sharon Turchick – The amount and type of experience for initial CPA licensure varies from state to state, ranging from no experience to more than two years, some with very specific provisions. However, Vermont is now the only CPA licensing jurisdiction that still requires a portion of the experience requirement to be within the attest function to become a CPA.

    I hope this helps. Please do not hesitate to contact me if you need more information or have additional questions.

  5. Some taxpayers and state lawmakers believe the current system we use to fund public education in Pennsylvania is broken and needs to be fixed. Yet, solving Pennsylvania’s property tax reform puzzle has eluded and frustrated governors, state lawmakers, and taxpayers alike for more than three decades. Different legislative proposals have come and gone. To date, finding the right balance that maintains local control while also generating the local tax revenues necessary to adequately fund public education—about $12 billion—has proven to be politically unattainable.

    The Property Tax Independence Act, which is found in SB 76 and HB 76, purports to eliminate ALL school property taxes, but it most definitely is NOT revenue neutral. According to the Independent Fiscal Office’s Oct. 1, 2013, analysis, link — http://www.ifo.state.pa.us/download.cfm?file=/resources/PDF/SR2013-07.pdf, the plan would create a $1 billion deficit by fiscal year 2018-2019. (Table 1.1)

    In addition, the proposal provides that school property taxes will continue to fund districts’ debt obligations. According to the Annual Financial Reports school districts provide the Pennsylvania Department of Education, as of June 30, 2012, Pennsylvania’s 500 school districts hold more than $23 billion in total outstanding debt. IFO projects debt service to decline by 6 percent annually. Therefore, Pennsylvania school districts would CONTINUE to assess a property tax for years to come while taxpayers also would have to shoulder the new taxes, which would be the largest tax increase in the Commonwealth’s history.

    The PICPA understands the challenges in trying to address this issue. We can and will support a strong property tax reform plan. Unfortunately, the Property Tax Independence Act is not a viable plan, and it is a bad remedy for Pennsylvania taxpayers.

  6. Peter – there are a few things about HB/SB76 that you obviously don’t fully understand. First of all, it WILL eliminate all school property taxes, for those school districts with no debt – and there are a few. It is only fair that those of us with debt in our district pay for that debt, not expect the entire state to do so. What you don’t mention is that the average debt service in the school districts is about 10%, which means that the average property owner would see a 90% reduction in their school taxes – and that amount will NOT continue to grow over the next few years, as it does now. When the debt is paid off – and it cannot be added to without a no-exemption voter referendum, their school tax will also disappear.

    I read the IFO report, as did about 100,000 other Pa. supporters of the bills. That “deficit” as you call it just shows how much the school taxes go up at a greater rate than the cost of living/CPI/inflation, whatever you want to call it. This is totally unsustainable and has already driven most of our businesses and many of our homeowners out of the state. Would the schools be getting less overall funding over the years under our bill than under the current system? Well, yes, they would, however, they would be fully funded at their current level in year one and then they would have to live with the CPI increase – just like every other individual, business and organization in the State.

    I also attended the Senate hearing when the IFO representatives were there. It was very clear that HB/SB76 would stabilize school funding, as the schools would no longer be at the mercy of successful assessment appeals, and the ever increasing non-profit organizations popping up all over the place. They would know the funding they would be getting, adjusted each year for inflation, and they could budget accordingly.

    Without school taxes, businesses would return to Pa. People would go back to work, thereby reducing the amount of “free” programs (such as free and reduced lunches, etc) that the schools have to fund. More people working means more Pa. State taxes being paid. This translates into more funding for our deteriorating roads and bridges.

    Everyone agrees that school taxes are a problem but nobody wants to do anything about it. Now we finally have a viable option and certain groups say “no, don’t tax MY goods, don’t tax MY services!” What about the three “essentials” that we have learned about since elementary school: food, clothing and shelter? People cry out against taxing food and clothing but you and groups like yours don’t seem to mind taxing our shelter.

    I’m glad you didn’t say “it’s all about the children” in your article. That is another argument that we always hear. Why should we keep throwing more and more money into the schools “for the children” when some of those same children are living in overcrowded and substandard housing, deteriorating properties and hazardous conditions because either their parents can’t or won’t make necessary improvements, due to the property taxes.

    I work for a law firm. The Pa. Bar Association is where you are – they are fighting the bills, however, the individual lawyers here in our county are all for it. The individual accountants are too. Most lawyers (and many accountants) own more than just their homes. They own businesses, rental properties, vacation homes, etc. Their savings would be substantial under HB/SB 76! So much so that, if the 7 percent tax on their services drives their clients away (which is really crazy unless they aren’t that good at what they do), they could even lower their prices for their services and STILL make a hefty profit.

    I would urge you to rethink your position on HB/SB 76. You may find that, looking at it from a different angle, your businesses would INCREASE, even with the tax, because there will be more working Pennsylvanians that can afford their own lawyer or their own accountant. More Estate planning, etc. Think about it.

  7. Great info! I have dealt with many tax property issues and I have to agree with Margie and Sue Engler, property taxes can be a pain, though I am not sure how you got the $1 billion number.

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