In our March/April Capitol Beat column, we covered CPA Day, marking the start of CalCPA’s advocacy efforts for the year and highlighting key policy issues critical to the CPA profession. During their meetings with legislators, our members emphasized the importance of further refining the pass-through entity tax (PTET), extending the regulatory role of the California Board of Accountancy, promoting personal financial policy education and countering the misguided idea that a tax on professional services is a solution to the state’s budgetary problems.

Thanks to the diligent and proactive efforts of our members, this investment in advocacy is already yielding benefits as these messages were positively received across the political spectrum.

PTET Action

Since the introduction of the Pass-Through Entity Tax (PTET), CalCPA members have been assisting taxpayers of various sizes with assessing and implementing the PTET framework. Their practical experience and understanding of the challenges facing California businesses have provided CPAs with unique insights into the PTET. Leveraging this expertise, CalCPA has collaborated with policymakers to make PTET provisions simpler, more flexible and more effective.

CalCPA has specifically advocated for addressing two issues: the rigid June 15 estimated payment deadline that complicates participation in PTET, and the PTET’s impending expiration date. As a result, two bills have been introduced to address these concerns:

• SB 1501 (Glazer) introduces a more flexible payment process allowing payments after the June 15 deadline. Currently, entities must make a minimum estimated payment by June 15 to participate in the PTET for that tax year. This can be challenging as unforeseen changes later in the year may impact their financial situation. SB 1501 proposes adding a late or underpayment penalty to maintain the incentive for timely payments, while providing a pathway for taxpayers to participate in PTET after the deadline. This bill is moving forward without opposition.

• SB 1192 (Portantino) aims to extend the PTET provisions until January 2028. Initially aligned with the federal limits on individual SALT deductions, the future of these federal limits remains uncertain. Extending the PTET provisions provides stability, allowing taxpayers and tax practitioners to make informed decisions and plan effectively. It also offers policymakers and tax agencies more time to assess any changes at the federal level. This bill is advancing through the legislative process with CalCPA’s support and no opposition.

CBA Earns Positive Review

Following the Legislature’s oversight hearings on the California Board of Accountancy, AB 3251 was introduced to renew the CBA’s mandate and update the Accountancy Act.

CalCPA actively collaborates with the CBA to enhance the CPA profession and ensure consumers have access to reliable accounting services from trustworthy licensees. Together, we have refined key regulatory provisions to support the CBA’s goals of consumer protection and effective oversight of public accountancy.

This review process and subsequent legislative actions are vital to maintain rigorous oversight of public accountancy through licensing and enforcement, thereby protecting consumers and strengthening the CPA profession. CalCPA advocacy was critical for smooth review process.

Personal Financial Education in the Classroom

Due in part to groups like CalCPA being vocal advocates for personal financial education, AB 2927 was introduced to require students to complete a one-semester personal finance course to graduate high school.

For young adults, the lack of financial knowledge and understanding of financial systems can lead to uninformed and risky decisions with long-term detrimental effects. Alternatively, students exposed to financial education early and frequently are more likely to make more informed and wiser financial decisions.

AB 2927 aims to ensure that all students in California receive essential financial education and the opportunity to build financially secure futures. The bill is moving through the legislative process without opposition.

Tax on Services Gets No Traction

Despite a tough state budget situation and some progressive voices in the Legislature proposing tax increases as a budget solution, there has been no progress on a tax on services. This lack of momentum is largely due to CalCPA and the broader profession’s strong and sustained opposition to this misguided “solution.”

A successful start to the advocacy year is the direct result of the hard work by CalCPA’s dedicated leaders willing to put the work in on behalf of their profession.