The American Institute of CPAs’ State Regulation and Legislation Team tracked over 400 bills affecting the CPA profession at the state-level in 2018. Among other profession victories, CPA mobility saw significant advancements.
Half the country now allows for full CPA firm mobility for attest services. Kentucky, Michigan and New Hampshire adopted firm mobility this year. Connecticut and Michigan passed legislation that provides for CPE reciprocity, further enhancing CPAs’ ability to work across state lines. 32 U.S. jurisdictions currently allow for CPE reciprocity for CPAs with licenses in multiple states. Arizona adopted the AICPA’s Code of Professional Conduct through rule, making it the 28th jurisdiction to do so.
As the profession continues to evolve, states are looking at new ways to expand and extend business opportunities, including reaching across an international border. In Washington, Governor Jay Inslee signed a bill that allows accounting firms in British Columbia, Canada to perform attest or compilation services for companies in the state that are a consolidated, subsidiary or component entity of another corporate entity registered in Canada.
Two states considered legislation related to partnership audits in 2018. In California, a bill was signed that requires a partnership to report any change or correction made by the Commissioner of Internal Revenue or other office of other competent authority with the State Franchise Tax Board for the reviewed year within a certain number of months. Legislation was also signed in Georgia that provides for the reporting of federal partnership adjustments and pass-through entity adjustments.
While no states successfully passed tax on services legislation, 11 states considered legislation on the issue. The Connecticut Legislature considered a study bill requiring the Commissioner of Revenue Services to study the tax policies of the state and identify improvements to the business climate and economic opportunities; however, the governor vetoed the legislation. Louisiana considered legislation taxing professional services during their special session, but the bill failed.
Occupational licensing reform
Legislation aimed at reducing licensing requirements for occupations also increased in 2018. Many of these bills, intentionally or not, negatively affect the CPA profession. Over 20 states considered legislation that would reduce licensing requirements in one way or another, with Idaho, Louisiana, Mississippi, Nebraska and Utah passing legislation. Bills in Louisiana and Nebraska were amended to blunt their impact on the profession thanks to the efforts of the state CPA societies and state boards of accountancy. Additionally, several states – Arizona, Colorado, Montana, North Dakota, South Dakota and Wyoming – considered a licensure compact that would have allowed states to issue temporary occupational licenses to individuals moving between the agreed states. While the compact did not pass, it is likely similar attempts will come up again in 2019.