Legislative / Regulatory | Taxation

How will Maryland’s new tax preparer law affect CPAs?

CPAs and their staff who file income taxes in Maryland almost had to register, pay another license fee, take 16 hours of tax CPE and submit to oversight by another state agency.

Remember the 2008 legislative session? We successfully passed our CPA mobility bill at 10:44 p.m. on the last day of the session -- despite heavy opposition by unlicensed accountants. A recent mailing by the Maryland Society of Accountants has Maryland CPAs upset.Msa_letter

Well, the MSA is now claiming to take credit for mobility (House Bill 1296) and the tax preparer legislation (Senate Bill 817), which in its original version would have adversely affected CPAs and your staff.

I have received several calls and e-mails from concerned members about a letter from the MSA dated June 6, 2008. The letter is an invitation to a special CPE session held by the MSA on Sept. 17 outlining two bills that will affect CPAs and accountants (HB 1296 and SB 817). Take a look at their letter by clicking on the image at the right and see if you agree with your colleagues.

The reason your fellow CPAs are so upset is that many of them were in Annapolis fighting the MSA about both of these bills! We also reported extensively on this during the General Assembly session on our CPA Insider blog.

Msa_hb_1296The point is that we need to set the record straight and let you know that the ultimate agenda of these types of organizations is to blur the distinction between CPAs and unlicensed accountants. We feel the need to disclose the facts in order to recognize the time and energy that many of our members invested in fighting for legislation and changes that protect CPAs from special interest groups like the MSA.

Look at the timeline of our mobility bill. This legislation was important to CPAs because of recent developments in interstate practice and licensing. It turns out that more than 40 states were requiring CPAs who filed taxes in their states to get a license in their state. That meant that if you filed taxes in eight states, you were required to go through the trouble and expense of getting eight CPA licenses! The MSA literally fought us at every step of the legislative process. Yet in their letter, they make reference of "exciting news" about their "victory" for "accounting professionals" in Maryland.

Then there is the tax preparer bill (SB 817). Check out the amendments (in the picture) that we worked to add onto this billl. The original bill would have required another license / registration for all CPAs who prepare taxes and their staff. It would  have also required that for every out-of-state CPA. We worked to exempt CPAs, your staff, tax attorneys and enrolled agents (Circular 230 practitioners) from this law, additional fees and additional CPE. We also added a "safe harbor" provision that requires a "registered Tax Preparer" to provide a written disclosure that they are not a CPA, enrolled agent or tax attorney.

Tax_preparer_legislationYou should also know that their counterparts in several other states aggressively fought mobility and even attempted to re-introduce licensed accountants, creating even more "blur." How can they claim "victory" for a bill that they aggressively opposed to the final passage? How can they get away with saying they represent CPAs when they oppose legislation designed to address multi-state practice issues of small practitioners (and all CPAs)?

This is at least the second time we have seen this type of misleading communication that hides a legislative agenda that is clearly against the CPA profession. See our prior post about this from last year here: CPAs: Beware of misinformation about mandatory tax CPE requirements.

We are having a special CPE session covering these and all of the significant changes in Maryland legislative / regulatory structure on Sept. 17 (which will be live in Columbia and webcast for all of our members' convenience), when you can hear the "rest of the story."

Oh, and by the way, they are not even mentioning the most significant new issues -- Maryland's new corporate reporting requirements, which feature significant penalties of $10,000 per day if you miss the deadline of Oct. 15, 2008. We will be covering this also in our update.