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 Legislative and Political Update Kmart Decision, Sales Tax on Services, Licensing Issues at the Forefront By John Lindley, Senior Director, Government Relations & Regulatory Affairs, MACPA
MACPA’s legislative affairs team, including the Legislative
Advisory Group, Lansing-based lobbyist and staff, have a full plate of
important issues heading into the Spring/Easter recess. A glimpse of these
issues follows; for more detailed information and up-to-the-minute status as
these issues progress, check MACPA’s website, read E-news or contact the
MACPA Government Relations
Department. Sales Tax on Services – Multiple proposals are being discussed – some have even been introduced – to expand the Michigan Sales Tax base to include services. These proposals also repeal the MBT surcharge and reduce the sales tax rate from 6% to either 5.5% or 5% and may also include reductions of the gross receipts rate within the MBT. After initial review, all proposals appear to exempt business-to-business services, educational services, services provided by a physician, and services provided by a nonprofit. These are lengthy and complex legislative packages that require continued analysis. Members of the MACPA State & Local Tax Task Force Subcommittee on Business Tax Restructuring continue to communicate technical observations on these proposals as a means to illustrate the factors that must be considered in such a substantial change in tax structure. It's important to note that while the House Democratic Caucus and the specific sponsors of these proposals understand the obstacles preventing the proposals from moving as is, 95% of all tax reform conversations in Lansing include two common elements – service tax and surcharge repeal. These legislative packages are seen as viable vehicles. Tax reform is on the top of nearly all legislative agendas in Lansing for 2010. CPA Licensing and Other Regulatory Changes Mobility Impacts Occupational Code and Rules – Following the passage of CPA license mobility legislation in June 2008, work began on a comprehensive review and rewrite of Article 7 of the Michigan Occupational Code and the Administrative Rules promulgated thereunder. These two documents are essentially the texts that govern licensing of the CPA profession in Michigan. Some of these updates are necessary given the new mobility provisions, such as altering the rule regarding temporary practice permits. Other items within this initiative are important reforms such as allowing the experience requirement for original licensure to be met in industry and adjusting the references to professional standards. The MACPA is working closely with the State Board of Accountancy and staff from the State of Michigan Licensing Bureau on finalizing language and is optimistic legislation will be introduced by month’s end. Expansion of Professional Liability Concerns – A bill in the State House (House Bill 4915) would negatively change professional liability exposure for regulated professionals – such as CPAs. Current case law in Michigan provides an exemption from the Michigan Consumer Protection Act for regulated occupations (CPAs, funeral directors, realtors, etc.). If one is going to sue a regulated profession, it must be under a "learned body of law." This bill eliminates that exemption. As a result, a litigant could file parallel suits and see which one “sticks.” The MACPA is actively opposing this legislation, along with dozens of other organizations. The legislation passed the House Judiciary Committee; however, due in no small part to the effectiveness of the MACPA’s opposition, it has stalled on the House floor. IAR Registration/Examination Requirements – The Michigan Office of Financial & Insurance Regulation (OFIR) has issued transition orders implementing the 2008 changes to the Michigan Uniform Securities Act. Among the changes is a new requirement for investment advisory representatives (IAR) to register with OFIR. Among the registration criteria is the requirement of having passed the Series 65 or 66 exams in the last two years. Those that have never taken it must do so. Anyone who has passed the exam more than two years ago must retake it. The deadline for having registration materials submitted to OFIR is currently May 1, 2010 – leaving very little time between the conclusion of tax season and the deadline. MACPA has met with OFIR Commissioner Ken Ross and is requesting an extension in the deadline for compliance as well as the potential for allowing “grandfathering” of those with consistent years in practice as IARs. Exclusion from Professional Investigators Act – Related to licensing and the regulatory front, but with a twist, the MACPA is currently working on a bill (Senate Bill 1091) to amend the Professional Investigators (PI) Act. During a re-write of their Act last year, the PIs provided an exemption for licensed CPAs from having to be licensed (i.e. for forensic accounting, fraud examination, etc.). This exemption, as it turns out, isn’t broad enough. The PI Association is supporting this legislation and the bill has unanimously passed the State Senate and awaiting action in the House of Representatives. Coming Up – Coming in the next edition of The Leaders’ Edge – from policy to politics…the coming November election is the most significant in the last several decades. Among important factors, four CPAs and MACPA members are running for state-level public office. Next edition will include information on the political landscape throughout Michigan, and profiles of those CPAs seeking office.
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| PO Box 5068 Troy, MI 48007-5068 Phone: 248.267.3700 Fax: 248.267.3737 E-mail: macpa@michcpa.org | |
