Proposed Schedule CA changes related to property tax deduction

To:  CSEA Legislative Affairs Committee (Members and Supporting Members), CSEA Directors, CSEA Chapter Presidents, other CSEA leaders

Re: CSEA letter to FTB urging postponement of the implementation of the Schedule CA changes related to the property tax deduction

Attached you will find three documents:

1.       CSEA letter to FTB (which included the following two documents)

2.       May 2009 Government Accountability Office (GAO ) Report to the Joint Committee on Taxation addressing the real estate tax deduction – the first page describes why the GAO did their study and their recommendations

3.       November 24, 2003 IRS Chief Counsel memorandum addressing the deductibility of California Mello-Roos taxes 

This effort on behalf of CSEA Members, our clients and our profession was a true collaboration. 

CSEA

-          The CSEA Legislative Affairs Committee analyzed and authorized this action

-          Sacramento Valley Chapter President, Benita Meyers, EA recalled and located the Mello-Roos memo

-          The CSEA Legislative Affairs Committee drafted the letter

-          Jeanie Clapp, CSEA Director of Legislative and Public Affairs, masterfully edited and submitted it to FTB 

NAEA

-          Lonnie Gary, EA, Chair of NAEA Government Relations Committee (GRC), recalled the GAO report

-          Bob Kerr, NAEA Senior Director of Government Relations, obtain the report from the head of the GAO Tax Division

California professional partners

-          Lynn Freer, EA (Spidell Publishing) and Gina Rodriguez, EA (CalTax) sent letters to FTB urging postponement of the proposed Schedule CA change implementation.  They also provided invaluable background and insights to CSEA. 

As leaders of CSEA, please use this effort as an example of:

-          The responsive and high level of advocacy for EAs provided by CSEA

-          The resourcefulness and collaboration that has become associated with our advocacy efforts

-          The value of advocacy as a Member benefit – CSEA and NAEA

-          The opportunities for enhanced public awareness of issues and our expertise as resources to the media and the public 

The joint contribution solicitation campaign for the Legislative Action Fund (LAF) and the PAC is beginning soon and this effort should be used to demonstrate the need for and value of our advocacy on behalf of EAs and our profession.

We will keep you apprised of developments as FTB considers this issue. 

Gary Anspach, EA, Chair

CSEA Legislative Affairs Committee

• Letter to FTB RE: Property Tax on Schedule CA
• Real Estate Tax Deduction
• Mello Roos

New addition added to the safe harbor letter language

To:  CSEA legislative Affairs Committee, CSEA Directors/Officers, Chapter Presidents, Other CSEA Leaders

Re:  Safe Harbor letter – preparation of financial statements

I attended the California Board of Accountancy (CBA) meeting this morning via their webcast.

Moments ago, the CBA approved the following additions to the safe harbor letter language: 

“We [I] are [am] not licensed nor required to be licensed by the California Board of Accountancy for the preparation of these financial statements.  If compiled, reviewed or audited financial statements are desired, the services of someone licensed by the California Board of Accountancy would be required.” 

These approved changes were referred to the CBA “rulemaking process”.

Some comments of interest:

-          The attorney for the CBA warned that it was a “risky proposition to regulate” unless there are misleading or untrue statements. She reminded the CBA that the California Supreme Court (Bonnie Moore vs. the CBA) provided two options for disclaimer:  I am not required to be licensed and these services do not require a license. She also stated that the courts tend to support businesses and anything that would unnecessarily threaten a business could lose in a challenge.

-          It was also mentioned by a member of the CBA that the Supreme Court voted 4-3 in this case to require any disclaimer.

-          Another CBA member suggested that it was not prudent “to go to war with their limited resources” over this language.

-          The NSA Executive Director spoke in opposition to adding “compilation” in the approved new language.

-          The CBA seemed to believe that since SARS regulates compilation, review and audit, they all should be mentioned. 

I will provide additional comments and perceptions at the meetings in Sacramento.

Gary

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Ca Board of Accountancy proposed changes to the Safe harbor letter

On August 1, the California Board of Accountancy (CBA) notified CSEA of their intent to propose changes to the Safe Harbor Letter for non-CPAs who prepare financial statements that was negotiated by CSEA (and others) in 2000, following the Bonnie Moore decision by the California Supreme Court.  We were given an opportunity to make comments.  This letter with their proposed changes is attached.

The CSEA Legislative Affairs Committee agreed that we should comment. The attached response was drafted by the Committee and submitted by Scarlett Vanyi, EVP of CSEA. The CBA will consider their proposed changes and our comments/suggestions (among others)  at their next Board meeting on September 22-23.

Gary Anspach, EA, Chair

CSEA Legislative Affairs Committee

• CBA Proposed Safe Harbor Language
• CSEA Response to CBA Proposed Changes

CALL TO ACTION - Letter from Gary Aspach, EA - Legislative Affairs Chair

Re: Status of SB 543 (limited exemption from Professional Fiduciary status for enrolled agents)

As I notified you last week, SB 543 passed the Assembly Appropriations Committee, but only after our exemption language was removed.  Our language was opposed by the Professional Fiduciaries of California (PFAC) and also by AARP and the CA Congress of Seniors.  The AARP and CA Congress of Seniors were brought in by PFAC, whose arguments alone had not been successful.  We were surprised by their appearance at this point in the process.

Our legislative advocates at Aaron Read Associates are working on educating both AARP and the CA Congress of Seniors on the issues and hopefully will convince them that their constituents are well-served by EAs working within the proposed limited exemption. We are not the threat to seniors that the PFAC has used as a scare tactic. On the contrary, we are the trusted advisors for our clients, especially seniors who dealing with issues such as the death of a spouse or the limited capacities of aging. We work with the highest ethical standards (governed by Circular 230) and can provide our clients with efficient and effective services without incurring the expense of another license or forcing them to work with a stranger to do what we are highly qualified to do on their behalf.

Now is the time to contact your legislators – both Senators and Assembly Members.  Although the bill has passed the Senate with our language, the Assembly will pass a different version reflecting amendments made since the Senate passage.  A compromise will be reached before the bill is ultimately sent to the governor for his signature.

No one has a stronger voice on behalf of EAs than EAs themselves.  Please call, write and/or email the offices of your representatives advocating for the reinstatement and passage of our limited exemption language.  Communicate this to your chapter members and encourage them to participate in this important effort.  You are speaking on behalf of taxpayers who should not be deprived of the use of our valuable, competent and ethical services because of unwarranted fears.  You also represent our profession and our right to practice, both of which are being challenged by the PFAC and reflected in the omission of our exemption. 

The limited EA exemption language that was removed in the Assembly Appropriations hearing on 8/25 is:

Section 6530 of the Business and Professions Code

(d) This section does not apply to a person enrolled as an agent to practice before the Internal Revenue Service pursuant to Part 10 of Title 31 of the Code of Federal Regulations, who is providing nonmedical-related, incidental, fiduciary services and those services are provided at the request of a client with which the enrolled agent has an existing professional relationship. However, an enrolled agent who is soliciting clients for fiduciary services or holding himself or herself out as a professional fiduciary shall hold a license in accordance with this chapter.

Your advocacy on behalf of taxpayers, our profession and CSEA is in your own self-interest and truly appreciated by your colleagues. 

Gary Anspach, EA, Chair

CSEA Legislative Affairs Committee