CAPITOL REPORT

Rendezvous with Reality

A recap of the spring legislative session, and an update on what we’ve been doing for Illinois CPAs.

By Marty Green, Esq.

Medicaid, public pensions and the state operating budget were at the heart of discussions during the Illinois General Assembly’s spring legislative session. Reining in Medicaid spending and the state’s public pension debt both directly impact the state operating budget. With this in mind, the General Assembly passed legislation that reduces provider reimbursement rates, narrowing coverage and raising the tax on cigarettes.

Several proposed pension reform measures that would help to control the spiraling cost of public pensions were considered during the final hours of the spring session. However, Speaker Madigan and Minority Leader Cross determined that a consensus could not be reached, and legislation was not called for an up or down vote. All have highlighted the enormity of our state’s budget problems and the difficult decisions that must be made in order to restore Illinois’ fiscal integrity.

Also during the spring session, ICPAS government relations staff was actively involved in a number of areas. Here’s a synopsis of just a few of them.

Introduced by Senator Linda Holmes and sponsored in the House by Speaker Madigan, Senate Bill 3794 creates a board of five CPAs to work with the comptroller and the various state agencies in improving the timeliness, quality and processing of financial reporting for the state. Government relations staff provided Senator Holmes with technical information on auditing and accounting principles, and background on the internal audit function and financial statement preparation. The impetus behind this legislation is an audit conducted by the Illinois Auditor General’s Office that was critical of the State of Illinois’ outdated and multiple financial reporting systems.

What’s more, House Bill 5289 introduced by Illinois Attorney General Lisa Madigan enhances criminal penalties for entities that fail to pay the Illinois Department of Revenue (IDOR) collected motor fuel tax. This legislation was highlighted in the April 30, 2012 Chicago Tribune editorial on the State’s loss of sales tax.

As part of the negotiations process, the ICPAS joined the Illinois State Chamber of Commerce and the Illinois Taxpayers’ Federation, as well as the Attorney General’s revenue criminal prosecution attorneys and legislative staff, in narrowing the definition of tax evasion. Collectively, we were able to amend this legislation to mirror portions of federal tax guidelines and case law.

Also, House Bill 5192 details the establishment of an Independent Tax Tribunal, which will greatly benefit taxpayers in resolving tax disputes with the IDOR. While not everyone got everything they wanted, we were particularly pleased with the outcome of the creation of this Tax Tribunal and, most importantly for the profession, with enhancements the legislation requires in the informal conference process within the IDOR. The ICPAS will provide more information on this legislation if signed into law by the Governor.

Outside of these significant bills, there’s some unfinished business that we hope will be addressed during the November veto session or in the following spring session when the 98th General Assembly is inaugurated.

Specifically, as part of Illinois’ transition to a one-tiered license-only state, the ICPAS worked with Representative Robert Rita, chair of the House Business and Occupational License Committee, to introduce House Bill 5773, which would update the Illinois Public Accounting Act.

Our legislation, along with most of the other professional licensure acts that are scheduled to sunset on January 1, 2013 (ours sunsets in 2014), was not assigned to a committee for a substantive hearing, and therefore didn’t meet the House’s hearing deadline. We will continue to work with our Bill’s sponsor and Speaker Madigan to ensure that the Accounting Act update remains at the forefront of discussion.

The Attorney General also has indicated that her office would like to review the criminal penalty section of House Bill 5289 more comprehensively later this summer, with a working group in which the ICPAS likely will participate.

We’ve also been working with members of the Illinois Congressional Delegation, the AICPA and other state societies on federal issues of interest to the profession. The Mobile Workforce State Income Tax Simplification Act of 2011 (H.R. 1864), for example, would create a uniform national standard, and limits state or local taxation of compensation earned by employees who perform duties in more than one state or locality. Taxation would fall to the state or locality of the employee’s residence and the state or locality in which the employee is physically present when performing duties for more than 30 days. Working with our Illinois Delegation, this legislation passed out of the House and is currently pending with the Senate.

The ICPAS VP of Government Relations, Marty is a practicing lawyer and member of the Illinois Bar. Marty previously served as executive assistant attorney general for Illinois Attorneys General Lisa Madigan and Jim Ryan, and as director of the Governor’s Office of Citizens Assistance and assistant to the Governor for Public Affairs, both under Governor James Edgar.