CPA Day: Meetings with Legislators Kick Off the Year.

• Author: Fox, Jason
• Position: CapitolBeat

January marked another successful CPA Day at the Capitol. More than 200 CalCPA members participated in more than 100 meetings with legislators and staff to show that the CPA profession is willing to participate in public policy discussions.

CalCPA member commitment to these advocacy efforts are a big reason why CalCPA and the CPA profession is well respected within the Legislature. We are thankful for our passionate members who are committed to the success of their profession.

The materials used during CPA Day can be found at calcpa.org/governrnent-relations/cpa-day-at-the-capitol. The main topics this year included working with the CPA profession for practical policies to manage the impact of new federal tax policies and the ongoing concerns of a potential sales tax on services.

Navigating the New Federal Tax Policy

With new federal tax laws a reality, state legislatures are trying to manage the impact on their own economies and budgets. California is no exception, and being a hightax state, there are some unique challenges.

One such effort is SB 227 (Sen. President Pro Temp Kevin de Leon), which attempts to counteract the cap on state and local tax deductions. The bill would allow taxpayers to make charitable contributions to the state in exchange for a tax credit equal to 85 percent of the contribution. The idea is that taxpayers would be able to reduce their state income tax liability and take advantage of federal charitable tax deductions.

Proposals like this contain many unknowns, logistical challenges and raise questions that would need to be addressed before any tax practitioner could consider this option. And it's unclear whether the IRS would even accept this type of deduction.

As such, Ca1CPA members advocated for workable tax policies and offered to work collaboratively to manage the impact of the new tax laws. Members explained that the full impact of federal tax reform on California taxpayers is yet to be determined.

Based on the size, complexity and a multitude of external factors, it may take years to fully understand the impact of the federal changes. Even then, the impact could be drastically different depending on each taxpayer's situation.

Before undertaking drastic changes that may not be fully developed, California will first need to understand how the new laws will work and make decisions to conform to, or decouple from, aspects of the federal changes. This process takes time and requires policy decisions that will...