Legislation creating taxes on professional services, which oftentimes includes accounting and tax preparation services, is popping up around the United States. From California to Florida, states are looking for quick revenue gains by attempting to broaden the tax base to include services. In Utah, lawmakers introduced an omnibus tax legislation (House Bill 441) that included a tax on all services, not just accounting services. More than 500 individuals and organizations, including AICPA and the Utah Association of CPAs, sent letters in opposition to House Bill 441.
Susan Speirs, CEO of the Utah Association stated, “CPAs are very passionate about the services they provide and the clients they serve. We sent out a call to action to our members and they did not hesitate to send that same call to their clients. Our industry members were quick to calculate the economic impact the proposed legislation would have on their various businesses. The CPA community quickly responded to one of many of our strategies we were running to kill the bill.” The Utah Association’s quick reflexes proved effective, and within days of introduction, the bill was dead. Additionally, the Utah Legislature will likely have a special session soon to address taxes, including taxes on services.
Neighboring Wyoming also saw legislation (House Bill 67) this year that specifically called out taxes on accounting and tax preparation services. The Wyoming Society of CPAs moved quickly, testifying in opposition to the legislation, which eventually died in committee. In California, legislation that is introduced year after year was brought forth yet again, with House Bill 522.
Other states that have introduced taxes on services legislation include: Montana, Nebraska, Texas and Florida. The AICPA is also closely watching rumblings in Maryland (the legislature is considering a study bill), Connecticut and South Carolina (both with no legislation as of this writing). The idea to tax services isn’t a new one. Minnesota, Massachusetts, Michigan and Florida all tried to tax services in the past, but their efforts were quickly repealed. The AICPA continues to monitor this issue across the country and offers support to states grappling with a possibility of taxing services.