CA tax preparers, important

Technical topics regarding tax preparation.
#1
JAD  
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From CalCPA:

ACTION NEEDED: SB 993 (Hertzberg) Sales Tax on Services

SB 993 (Hertzberg), which would impose a sales tax on business services, including professional services provided by CPAs, is scheduled to be heard in the Senate Governance and Finance Committee on May 16, 2018.
This is a significant issue that CalCPA has been fighting against and we need your help in opposing this legislation. We urge you to call, fax or email Sen. Hertzberg and the senators on the Senate Governance and Finance Committee to express your opposition to SB 993. We ask that you act by May 15 so senators have time to read and listen to your comments.

In an already challenging business climate, SB 993 would impose a massive new tax that will needlessly complicate an already complex state tax code and add a substantial new tax burden to California businesses and consumers without any corresponding benefit. You can read the language of SB 993 online, as well as CalCPA's formal opposition letter.

This is your opportunity to express to Sen. Hertzberg and Senate Governance and Finance Committee members the detrimental impact a services tax would have on your business and clients. Sen. Hertzberg and committee members need to hear directly from those who would feel the weight of this tax. The voice of 44,000 members cannot go unnoticed and will be an invaluable tool as we continue to oppose SB 993.

Below are resources and contact information for Sen. Hertzberg and Senate Governance and Finance Committee members.

Sorry, everyone, I can't get this to copy in properly

Author of SB 993 Phone Fax Email Room #
Sen. Robert Hertzberg
San Fernando Valley Dem-18 (916) 651-4018 (916) 651-4918 Click Here
4038

Senate Governance and Finance Committee Members Phone Fax Email Room #
Sen. Mike McGuire (Chair)
North Coast/Napa Area Dem-2 (916) 651-4002 (916) 651-4902 Click Here
5061
Sen. Janet Nguyen
(Vice Chair)
Santa Ana/Orange County Rep-34 (916) 651-4034 (916) 651-4934 Click Here
3048
Sen. Jim Beall
San Jose/Campbell
Dem-15 (916) 651-4015 (916) 651-4915 Click Here
2082
Sen. Ed Hernandez
Azusa/West Covina Dem-22 (916) 651-4022 (916) 651-4922 Click Here
2080
Sen. Ricardo Lara
Bell Gardens/Long Beach Dem-33 (916) 651-4033 (916) 651-4933 Click Here
5050
Sen. John Moorlach
Costa Mesa/Orange County Rep-37 (916) 651-4037 (916) 651-4937 Click Here
2048


Make a Phone Call
Call the offices of Sen. Hertzberg and members of the Senate Governance and Finance Committee to share your opposition to SB 993 and why it will be a negative impact to the profession. Share with the staff member the following points:
• SB 993 is a massive new tax that will complicate an already complex state tax code and add a substantial new tax burden to California businesses and consumers.
• Nearly every business in your district will be faced with a huge new tax and significant administrative costs. Your constituents will ultimately bear the burden of these taxes.
• Not only will CPA services for businesses be more expensive, but CPAs will be faced with sorting out a number of complex issues as they advise taxpayers on how to navigate the compliance of a complicated new tax.
• SB 993 places a tax on services needed to comply with the law. Businesses rely on tax preparation, auditing and accounting services to meet their obligations with the law.
• Any personal points that illustrate the negative impacts of SB 993.

Writing a Letter
We have provided a template that you can send as is or add your personal remarks.
http://calcpa.informz.net/z/cjUucD9taT0 ... index.html

Personalizing to highlight the direct impact to you and your clients is encouraged to maximize its effectiveness.
At the top of the letter, we ask that you insert your letterhead, the appropriate date, the first and last name of the senator, and their room number. After "Dear", insert the senator's name. At the bottom of the letter, please sign and print your name and address.

If you are a constituent of one of the senators, we encourage you to highlight this point.

Sending Your Comments
Sending a Fax: Capitol offices still regularly collect faxed comment letters on legislation. You can fax a copy of your letter to the senate offices. Please see above fax numbers.
Sending an Email:
Click on the link in the above list for the senator you wish to email. The link will take you to their website, where further information will be provided. You can use the points from the template letter and any personal perspective you wish to include.
Additionally, we encourage you to circulate this request to your colleagues and urge them to also call and fax a letter.
Please report your advocacy efforts to the Government Relations team. Send a copy of your letter, the names of those you called or emailed, and any feedback you received. Copies of your letters and notes can be sent to CalCPAGR@calcpa.org or faxed to (916) 441-5354.
Time is short, so we encourage you to make your phone calls and fax your letters as soon as possible.
Thank you.

Questions?
Contact our Government Relations Team at (916) 441-5351 or via email.
 

#2
makbo  
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JAD wrote:In an already challenging business climate, SB 993 would impose a massive new tax that will needlessly complicate an already complex state tax code and add a substantial new tax burden to California businesses and consumers without any corresponding benefit.


Glad you posted this; I was about to post something similar based on similar CSEA notfication.

However, I am in favor of the legislation based on what I've read so far, and I think the lobbying groups opposing this are leaving out some important facts. The biggest being, due to recent amendment, it would REDUCE the state sales tax significantly. Why is this not a good trade-off? The proposed services tax only applies to services purchased by businesses, not consumers, and those with under $100K gross receipts in last four quarters are not affected. Many other states tax services, including tax prep, and I haven't heard that any of those states or tax prep businesses have suffered unduly.

https://leginfo.legislature.ca.gov/face ... 20180SB993

"This bill would reduce the rate of tax imposed by the Sales and Use Tax Law incrementally every calendar year beginning on January 1, 2020, until January 1, 2022, at which time the rate would be reduced by a total of 2%."

The new tax also would not be imposed until 2020. It would be phased in over several years, and of course it would be an income tax deduction for businesses.

I used to think CA had the highest state and local sales taxes, but "the five states with the highest average combined state and local sales tax rates are Louisiana (9.98 percent), Tennessee (9.46 percent), Arkansas (9.30 percent), Alabama (9.01 percent), and Washington (8.92 percent)." [source taxfoundation.org] CA gets bad press for high personal income tax rates, but certainly offsetting that with lower sales tax is good for the state, and good for lower-income taxpayers (since the sales tax is so regressive).
 

#3
Nilodop  
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"This bill would reduce the rate of tax imposed by the Sales and Use Tax Law incrementally every calendar year beginning on January 1, 2020, until January 1, 2022, at which time the rate would be reduced by a total of 2%."


Or would that be 2 percentage points?
 

#4
WEISSEA  
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"However, I am in favor of the legislation based on what I've read so far, and I think the lobbying groups opposing this are leaving out some important facts. "

I agree. I too was against taxing services until I met with a CA assemblyperson 5-6 years ago. Arguments were: Unfair that the narrowing manufacturing base picks up total burden for sales tax. (The ratio of taxable sales to income in California fell from 55 percent in 1980 to 35 percent today because of the shift toward services).
The legislature in past attempts has proposed dropping the sales tax rate( example 5-6%) if the sales tax base can be broadened. I certainly would rather pay 5% sales tax rather than 8.75% on all the goods I buy for the minor inconvenience of filling out a BOE form( which I have tax sw that can do).
The assembly person also mentioned there would be exemptions for what is considered basic rights services, such as medical services, education, possibly some legal services like prosecution defense. Isn't tax representaion a basic business and consumer right?
 

#5
JAD  
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It is interesting to read your opinions and perspective. I did not know that there were tax preparers who thought that this was a good idea. My perspective is that anything that increases the cost of my services to my clients, increases my paperwork burden, and increases the reach of the CA govt is not good. They call it increasing revenue. I call it their never ending money grab. I do not believe for 1/2 second that a lower sales tax rate across the larger base would last very long.

This thread probably belongs in a different forum.
 

#6
makbo  
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Nilodop wrote:Or would that be 2 percentage points?


https://www.smartersolutions.com/relati ... tages.html

"Focus on actual numbers, not the percentage, because the value is more difficult to game."

Yes, it would be better if the legislation stated the ultimate rate intended: 6.25% for example.

Separate comment:

Sales taxes are generally not tax deductible for individuals in California, even less so under the new law. Services taxes for businesses will be.
 

#7
makbo  
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http: //calcpa.informz.net]

Interesting, that CSEA (Calif Soc. Enrolled Agents) also sent a link using the same domain - informz.net. I didn't know CSEA and CalCPA were working together on this.

I also want to give CSEA credit, as they actually did include the facts I mentioned earlier, they were not leaving them out (contrary to my previous claim about all lobbying groups):

"On Wednesday night, Senator Hertzberg substantially amended his tax on services bill, SB 993. What makes this latest version of tax on services so dangerous? It is potentially more palatable for legislators than previous incarnations because it attempts to create a “revenue neutral bill.” The revised bill would reduce state sales tax incrementally, ultimately resulting in a 2% reduction while imposing a 3% tax on the receipt of services purchased by qualified businesses.

While health care services, education services, child care, rent, interest, and services provided by certain unspecified small businesses would be exempted from the sales tax on services, EAs’ services would be taxed. "


I received this email from CSEA even though I'm not a member, so I figured it was OK to post here.
 

#8
CathysTaxes  
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Internet retailers are a major contributor to the reduction in sales tax revenue. I would not be happy if my services were taxed.
Cathy
CathysTaxes
 

#9
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In Hawaii, if it can be taxed, it is taxed. My services are subject to the GE Tax which is always a surprise to newcomers. It's a nuisance, but you do get used to it.
 

#10
Jimi  
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Read the bill.

Don't like specific dollar amounts without an adjustment for inflation.

Is this bill aimed at 1099 "employees?"

Will services like web hosting, Office 365 and Dropbox be taxed?
 

#11
skassel  
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https://www.csea.org/CSEA/Your_CSEA/Soc ... vices.aspx

The California Society of Enrolled Agents is strongly opposed to this new bill.

Call to Action: Tax on Services
Tax on Services is back and more dangerous then ever!
On Wednesday night, Senator Hertzberg substantially amended his tax on services bill, SB 993 . What makes this latest version of tax on services so dangerous? It is potentially more palatable for legislators than previous incarnations because it attempts to create a “revenue neutral bill.” The revised bill would reduce state sales tax incrementally, ultimately resulting in a 2% reduction while imposing a 3% tax on the receipt of services purchased by qualified businesses.

While health care services, education services, child care, rent, interest, and services provided by certain unspecified small businesses would be exempted from the sales tax on services, EAs’ services would be taxed.

This bill will be heard in the Senate Governance & Finance Committee in four work days on Wednesday, 5/16. CSEA is urging ALL MEMBERS to contact the Committee members listed below before the Committee hearing with this simple message:

“Please oppose SB 993, the bill to tax services. This new tax will harm my business!”

The names of all Committee members and their office numbers are as follows:

Sen. McGuire (Chair) (Healdsburg) (916) 651-4002
Sen. Nguyen (Vice Chair) (Garden Grove) (916) 651-4034
Sen. Beall (San Jose) (916)651-4015
Sen. Hernandez (Los Angeles) (916) 651-4022
Sen. Hertzberg (Van Nuys) (916) 651-4018
Sen. Lara (Bell Gardens/LA) (916) 651-4033
Sen. Moorlach (Costa Mesa) (916) 651-4037
Steve Kassel, EA
 

#12
Wiles  
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https://eastcountytoday.net/hertzberg-p ... -tax-plan/
Revenue collected under Senate Bill 993 will be used to provide tax relief to middle-income and low-income Californians negatively affected by the Trump tax law. It will also be used for California infrastructure, workforce development, and to support education at all levels.

SB 993 places a modest tax aimed at high-end business services, such as those provided by lawyers, consultants, and accountants for corporations and other high-income businesses.

Better roads. Better jobs. Better schools. Why would anybody except the evil super wealthy oppose this? Thank goodness we have politicians watching out for our best interests.
 

#13
JAD  
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That's how one side "controls the dialogue", right? Tie what you want to have to something that only the demonically evil could complain about. And yes, thank goodness the politicians are watching out for us. Their good work is evidenced by the excellent running of this state. And good thing that this new revenue source could be made available, because of course, no promises have ever been made before for funding infrastructure and education.
 

#14
Frankly  
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Wiles wrote:Thank goodness we have politicians watching out for our best interests.

And on the other hand we have CSEA saying "This new tax will harm my business!”. It would be interesting to hear how an EA is harmed. Do EAs believe they are the ones to pay the tax?
 

#15
skassel  
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You must be nuts, Wiles. California is the worst run state in the country by the most corrupt and inept legislators this side of Hungary and Turkey. No way in hell ANY taxes should be raised here.

Unless, Wiles is being sarcastic...
Steve Kassel, EA
 

#16
JAD  
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We both were being sarcastic. Wiles, correct me if I'm wrong in assuming your sarcasm.
 

#17
Wiles  
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Sarcasm confirmed. I only like new regulations that create paid work for me.
 

#18
JAD  
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I have sent faxes since email is not available for people not in the politician's district. There is no point in complaining if we take no action. If this thing passes, I will know that at least I responded to the Cal CPA's call to action. I hope everyone else is responding also so your voice is heard, whatever your position on this.
 

#19
dave829  
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Thanks, JAD, for providing the fax numbers. I, too, tried to send emails, only to have all of them rejected except for the politician who represents my district. Instead, I sent faxes to all 7 of them saying that I urge them to oppose this bill and that it will harm my business.
 

#20
JAD  
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http://www.calcpa.org/government-relations/advocacy

Updated: May 17, 2018

The Senate Governance & Finance Committee met May 16 to hear SB 993 as a special order agenda item. However, before the bill was heard, the committee chair and Sen. Hertzberg, the bill’s author, indicated that there would not be a vote on the bill. Rather, they would present the bill, take testimony, open it to the committee for discussion and treat this as the first in a series of additional hearings on the topic of a services tax and broader tax reform.

Another hearing is scheduled for June 13 to discuss additional specifics and stakeholder input.

At this point, it does not appear there will be a vote on a services tax anytime soon, but it does increase the discussion of comprehensive tax reform and how a services tax would fit into that. It was a wide ranging conversation and there were a number of business groups, industries and professions—including CalCPA—that testified in opposition to the bill as written.

If you are interested, you can watch the hearing online. (The discussion begins at 1 hour 46 minutes).

Thank you to all of you that made phone calls, sent letters and encouraged your colleagues to do the same. All those efforts made a difference. It is a success that CalCPA was able to work with other stakeholders and engage our grassroots on such short notice. These efforts raised enough issues and concerns to stall any swift actions to jam this proposal through the Legislature.

While the immediate threat of this bill has subsided, the broader issue of tax reform and sales tax on services will continue to be a discussion topic. CalCPA will continue to stay on top of this issue and make sure the profession has a seat on the table as subsequent discussions occur.
 

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