The Maryland Association of CPAs is urging its members and the General Assembly at large to oppose a plan to close ever-widening state budget shortfalls in part by exacting a sales tax on professional services, including accounting and financial services.
House Bill 1515, titled “Sales and Use Tax — Rate Reduction and Services,” would reduce the sales tax rate from 6% to 5% but extend the 5% sales tax to various everyday services that were previously untaxed, including accounting services.
Other never-before-taxed services that would be impacted include:
- child care services;
- legal and appraisal services;
- real estate services;
- shipping and delivery services;
- transportation, towing, parking and automotive services;
- home repair, cleaning and improvement services;
- dry cleaning and laundry services;
- salon and barber shop services;
- veterinary and pet grooming services; and
- advertising, printing and media streaming services.
The proposed bill is identical to a bill that the CPA profession and Maryland’s business community opposed and defeated in 2020.
The MACPA opposes any attempt to enact a sales tax on professional services for a number of reasons. Such a tax would burden the citizens and businesses of Maryland unnecessarily with additional taxes and compliance complexity. It also would negatively impact economic growth and development and would result in:
- reduced competitiveness for Maryland CPAs due to the addition of a 5% sales tax;
- the imposition of a "tax on tax compliance" since the majority of CPA services involve assisting businesses and individuals in complying with taxes and regulatory reporting requirements; and
- expensive and complex compliance challenges in identifying the origination and delivery of these services.
In addition, such a tax will have a disproportionate impact on small businesses that need outside CPA services and other related services, as opposed to much larger businesses that have their own internal accounting and finance employees.
CPAs believe any proposal to implement sales taxes on professional services would be bad for small business in Maryland, and the MACPA will work diligently to defeat HB 1515 and any other similar such legislation.
Read the MACPA’s position paper on this issue.
Here's how you can help
HB 1515 will receive its first hearing before the House Ways and Means Committee on Monday, March 11.
The MACPA's key persons and legislative volunteers have already contacted their representatives on the Ways and Means Committee to voice our opposition to the bill.
If you are represented by a delegate on the committee, please reach out to him or her and ask them to oppose this misguided attempt to address Maryland's budget shortfalls.
