Advocacy

Session ends, session begins

The 2018 Virginia General Assembly session is over — for now. While most of Virginia’s (and the VSCPA’s) legislative priorities have been dealt with, there are two large issues looming on the horizon: The budget and tax reform. Those topics should necessitate two special sessions to determine how Virginia will spend its money the next two years and how it will incorporate the Tax Cuts and Jobs Act into its tax code.

The budget session is already underway, having started April 11. This session didn’t necessitate as much direct input from the VSCPA as the tax reform session, which will occur later in the year, but we’ll continue to keep you updated on key developments through our Session Watch e-newsletter.

With that covered, here’s how things went for the VSCPA during the regular legislative session.

TAX CONFORMITY

Tax conformity proved more complicated than usual because of the aforementioned Tax Cuts and Jobs Act, as well as tax extenders included in federal budget legislation passed in February. The General Assembly delayed much of the discussion until the special session but did focus on items dealing with the 2017 tax year, conforming to those provisions with the exception of the decrease in the medical deduction floor. That floor remains at 10 percent for state returns despite the drop to 7.5 percent for federal returns.

While the VBOA did get conformity legislation (HB 154/SB 230) passed, the conformity discussion will ramp back up later in the year when the tax reform special session convenes. We’ll have further updates for you then.

CPA LICENSURE

There were two bills introduced at the VSCPA’s request with the goal of simplifying the CPA licensing process in Virginia, and both bills passed. The first bill (HB 752/SB 428), which went into effect with Gov. Ralph Northam’s signature Feb. 26, moves the Virginia Board of Accountancy (VBOA) one step closer to a uniform license renewal date of June 30.

All Virginia CPA licenses will have an expiration date of June 30 effective that date in 2019. Until then, renewal breaks down as follows:

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• Licenses renewed, issued or reinstated Feb. 26–June 30, 2018, will expire June 30, 2019, at the normal applicable fee.

• Licenses renewed, issued or reinstated July 2018–

March 2019 will expire June 30, 2019, with renewal fees prorated by month, but the full fee amount applicable for new licenses and reinstatement.

• Licenses renewed, issued or reinstated April–June 2019 will expire June 30, 2020, at the normal applicable fee.

Moving forward, all renewals will be handled between April and June. Initial applications and reinstatements will be handled as they are received. (See page 7 for a chart of these dates.)

The VSCPA’s other bill (HB 753/SB 279), which passed and was signed into law, allows the VBOA to lower fees as an exempt action. Any fee increases will still have to go through the full regulatory process.

TAX ISSUES

Without taking a position, the VSCPA consulted on two bills that affect preparers of Virginia income tax returns, both of which passed. HB 788 requires the use of a Preparer Tax Identification Number (PTIN) on state tax returns, but does not expand the scope of who is required to get a PTIN.

Meanwhile, HB 183 and SB 271 require tax preparers to inform the Virginia Department of Taxation (TAX) of any data breach affecting Virginia taxpayers. The VSCPA worked with TAX to ensure the scope of the requirement was appropriate and did not conflict with U.S. Internal Revenue Service (IRS) rules.

TAX REFORM

No tax reform legislation passed during the regular session, but three bills were sent to the Joint Subcommittee on Tax Preferences for further study:

• HB 966, which included a sales tax on professional and personal services as introduced. The patron agreed to amend the bill to exclude most professional services, including accounting, but the amendment was not formally introduced since the bill went to study.

• HB 1444, which would have allowed taxpayers selecting the standard deduction on federal returns to itemize on state returns

• SB 390, which included a tax on personal services, but not professional services REGULATORY REFORM

HB 883/SB 20, which passed, create a pilot program to help reduce regulatory requirements, requiring the Virginia Department of Professional and Occupational Regulation and the Virginia Department of Criminal Justice Services to reduce regulatory requirements by 25 percent over the next three years. Failure to accomplish that 25 percent reduction would trigger an analysis of whether Virginia should adopt the “2 for 1” model, in which every new regulatory requirement would require the repeal of at least two existing requirements. If successful, the program could be expanded to other state agencies, including the VBOA.

HEALTH INSURANCE

The VSCPA supported SB 672, an insurance-related bill with the potential for great positive impact for the VSCPA’s sole proprietors. With the passage of this bill, they and the self-employed are now eligible to participate in the small-group health insurance market, allowing for significant savings on insurance plans. Look for future communications from the VSCPA about how sole proprietors can get into those markets.

SPOILATION OF EVIDENCE

The VSCPA opposed HB 1336, which, as introduced, would have allowed judges to instruct juries that destruction of records, whether intentional or not, should be interpreted to mean that the records would have been detrimental to the party who destroyed them. The VSCPA and other parties argued that such a significant policy change should have only come after extensive study and input from stakeholders. The bill was sent back to committee before passing the Senate, essentially killing it for the year.

WE NEED YOUR HELP

One of the main planks of the VSCPA’s advocacy strategy, part of the VSCPA2025 strategic framework, is building relationships with legislators and regulators. That became even more crucial with the 2017 elections, which saw a wave of 19 freshman legislators voted into the House of Delegates.

We’re launching an outreach plan aimed at connecting with these legislators through events in their own districts, with the goal of meeting with one-third of the freshman legislators by the beginning of the 2019 session. This is a volunteer opportunity for any members interested in helping with the VSCPA’s advocacy efforts. Contact VSCPA Vice President, Advocacy Emily Walker, CAE, at ewalker@vscpa.com or visit vscpa.com/Volunteer for more information. n