Springing Into Action

In my nine years with the Illinois CPA Society, by far this has been one of the busiest for legislative issues impacting both the CPA profession and the businesses it serves.

As part of the Society’s ongoing advocacy efforts, the Government Relations Office worked with members of the General Assembly either to amend or oppose legislation that was adverse to the CPA profession and our business climate. Without progress on resolving the ongoing budget dilemma, legislators turned their attention and focus to professional licensure, business regulation, and contingency fee audits, among other things.

PROFESSIONAL LICENSURE

The Illinois CPA Society, in working with the Illinois Department of Financial and Professional Regulation (IDFPR), was successful in passing Senate Bill 899, which amends the Illinois Public Accounting Act. This legislation accomplishes four things: (1) extends individual CPA mobility to CPA firms; (2) provides for Continuing Professional Education (CPE) reciprocity by exempting CPAs who hold multiple state licenses from having to meet each state’s CPE requirements so long as the licensee meets the CPE requirements of their home state; (3) makes a technical update to Section 16(e) of the Public Accounting Act to reflect professional practices and the Public Accounting Administrative Rules; and (4) creates a CPA Coordinator as a full-time in-house resource within the IDFPR. This legislation is on its way to the governor for action. We’ll work with the governor’s legislative staff and encourage the governor to sign SB 899 into law.

A second professional licensure bill awaiting the governor’s signature is HB 2408, which amends IDFPR’s Law of Administrative Code to reflect the department’s migration to email as its delivery method of official notices to licensees and requires professional licensure applicants and licensees to maintain active email addresses with the department.

We also saw six bills introduced regarding treatment of felony convictions by licensing and regulatory agencies. On first blush, the legislative sponsors’ original intent in filing these bills was to enable past offenders to become productive citizens, pay taxes, and meet family obligations by obtaining and maintaining professional licensure for employment. Working closely with the Illinois Realtors Association, legislative staffs, and other stakeholder advocacy groups, we successfully dodged the more severe bill that would’ve prohibited the IDFPR from denying a CPA license based solely on a criminal conviction. The better of the six bills passed don’t negatively impact the CPA profession, preserving the high standards and integrity of our profession. A big part of this “victory” was our ability to emphasize the trusted and confidential roles CPAs play when handling confidential financial information of clients and when performing audit and forensic work.

BUSINESS REGULATION

On a different employment front, for the better part of a year now, employment and human regulations issues have been gaining widespread attention among the public and legislators alike. In Illinois, two bills focused on equal rights and discrimination advanced. HB 2462, which will be presented to the governor, creates the Equal Pay Act to prohibit employers from screening job applicants based on wage history. HB 3539, also awaiting the governor’s review, requires bidders on state contracts to obtain equal pay certificates before purchasing agencies may issue them contracts. SB 1502/HB 2774, which passed the Senate but failed in the House, aimed to create the Right to Know Act in effort to require operators of websites or online services that collect Illinois customers’ personally identifiable information to notify the customer and provide an email address and toll-free number for customers to request that information.

TAXING INVESTMENT MANAGEMENT SERVICES

As the state looks for new sources of revenue, investment services have been a target for years. SB 1720 originally aimed to impose a 20 percent privilege tax on investment management services, but the Senate amended the bill to narrow the application to “the fees calculated by reference to the performance of the investment portfolio funds and not from the investment itself.” The amendment also removed the enactment tie-in provision to other states passing similar legislation.

A mirror image of the original senate bill was introduced in the House (HB 3393) as an initiative of the Chicago Teachers Union to address perceived inequities with the carried interest provision in the Federal Tax Code. We joined a coalition with the Illinois Bankers Association and Venture Capital Association to oppose both bills— HB 3393 was successfully stopped, but SB 1720 emerged and passed in the Senate and is pending consideration by the House. It’s expected that this concept may become a part of the House Democratic Revenue Proposal.

CONTINGENT FEE AUDITS

HB 2717 is another sensitive piece of legislation that would authorize the Illinois Department of Revenue to disclose confidential taxpayer information to an authorized independent third-party vendor in relation to the Retailer’s Occupation Tax. At the invitation of the House Revenue Committee Chair, we testified in opposition of contingent fee audits before a Joint Committee of the House Revenue Committee and the House Subcommittee on Cities and Villages. Due to opposition from additional stakeholder organizations, this legislation was not called for a vote, but I suspect that this bill will ultimately be voted on in the House.

In similar fashion, State Treasurer Frerich’s legislation (HB 2603) to revise the Uniform Unclaimed Property Act met stiff opposition from us and other organizations and was not called for a vote. The bill proposed the elimination of the businessto- business exception for reporting requirements and provisions that would expand contingent fee audits to in-state businesses and entities. Stakeholder groups are now working with the Treasurer’s staff on improving the legislation.

As with any legislative session, we’ve had some victories and some losses. Throughout the Spring Session we supported and opposed bills in committee, testified in support of bills that were favorable to the CPA profession, and testified against bills that were not. We joined coalitions to actively work each member of the General Assembly to oppose bills, such as the 20 percent Gross Receipts Tax on investment management services. And we have always closely watched and positioned ourselves to respond to proposals to tax professional services.

As the budget gridlock continues—we’re entering three years without a state budget—the state is sinking into deeper debt and disrepair. The ultimate solution will be raising more revenue from more sources. Your ICPAS Government Relations Office will continue to closely monitor revenue proposals and take action when necessary. As always, keep the lines of communications open and let us know if you have concerns on pending legislation.