AICPA takes profession's concerns over financial reform and tax patents to the Hill

Financial regulatory reform topped the lobbying list of pressing issues for Council members of the American Institute of CPAs during their biennial visit to Capitol Hill.

Barry Melancon, president and chief executive of the institute, welcomed more than 350 members to the nation's capital during the Spring Meeting of Council, providing them with talking points on how to address and best educate lawmakers on profession-centric issues.

"I thank all of you for being here and being willing to subject yourself in some way to this town and this process," Melancon said. "It's not the prettiest or may not be the most comfortable, but the effectiveness of our profession is really dependent on you. We could have an army of people we hire and pay to go up on the Hill, but that visit from the constituents is really the most significant thing that could possibly happen."

Melancon, who has come to Washington to represent the profession for almost 25 years, acknowledged that it was currently a "bizarre time in the city," a not-so-veiled reference to the economic crisis and the new administration.

"We all come to a town like this with our own personal perspectives, our own beliefs," he said. "But we have to be mindful that the approach to some of the answers are going to be filtered through a different set of eyes, a different set of approaches, than may have been [the case] two, three or four years ago."

This year, Council members brought four major issues to the forefront for political leaders and top legislative aids during their meetings on Capitol Hill.

First, the AICPA presented its position on financial regulatory reform. The organization recommended that Congress enact a series of measures to promote transparency and strengthen investor protections in the U.S. financial system by requiring tighter audit requirements.

"Congress is going to look at financial regulation," said Mark Peterson, vice president of congressional and political affairs, during a session that provided preparatory tips to the Council members. "We as a profession have some recommendations."

According to the AICPA, reforms to current regulations should recognize both the clear need to enhance existing investor protections and the systemic risks presented by activities engaged in by broker/dealers, hedge funds, investment advisors, hedge fund advisors and custodians.

Secondly, they reminded lawmakers that CPAs have been, and are, trusted advisors during the economic crisis. The goal is to share what the profession has been doing and what resources have been created to guide businesses through the current economic slide.

Another burning issue that members brought before legislators was the AICPA's ongoing opposition to patents on tax-planning methods. The organization believes that granting such patents limits the ability of taxpayers to utilize various interpretations of tax law that may have been intended by Congress and may cause some taxpayers to pay more tax than others in similar situations.

It was also announced that Florida became the 39th state to pass mobility legislation - the ability of a CPA to gain practice privileges outside of their home state without getting an additional license in another state where they would be serving clients.

TAXING MATTERS

In addition to reviewing central issues, AICPA vice president of taxation Tom Ochsenschlager went through a list of other topics critical to the institute.

One such issue is Section 7216 of the Tax Code, which went into effect in January. According to Ochsenschlager, the regulation requires advance written permission from clients - separate from engagement letters - to use their tax return information in any capacity other than tax prep. This, he pointed out, is of great concern to many because it is the only regulation with a criminal penalty.

"It's the provision we all love to hate," Ochsenschlager said, while describing the revised regulation as "draconian."

In response, the AICPA submitted testimony to congressional committees on the rule, and believes that the best chance for relief is to work with the Internal Revenue Service and the Treasury.

"We have had our hands tied behind our back to some extent because of the change in administration," admitted Ochsenschlager.

Other tax topics on the spring meeting docket included the federal regulation of tax return preparers, estate tax reform and the Alternative Minimum Tax, which the AICPA would like to see repealed because, said Ochsenschlager, "It's complicated and unfair."

Michael Niles, CPA and principal at Berry, Dunn, McNeil & Parker in Portland, Maine, who attended the meeting as a guest, pointed to regulatory reform as a crucial topic for the profession, particularly those who provide investment and wealth management services. "All the investment advisors being on the same playing field, I think that in particular has to be a continued focus of ours," he said.

"I always come away inspired," added Carleton Williams, managing partner at CW Associates in Honolulu, Hawaii. "There are so many issues - national, international and local - affecting the profession. We try to take as much of that home as we can."

"I've learned so much," said Genevia Gee Fulbright CPA, president and chief operating officer at Fulbright & Fulbright, in Durham, N.C., who also serves as chair of the AICPA's Minority Initiatives Committee and as a Foundation trustee. "As a freshman member of the Council and a first-time visitor to Capitol Hill. I found this meeting and opportunity to visit with the various legislative leaders to be very engaging."

SPEAKERS AND AWARDS

Aside from being prepped by AICPA staff, attendees heard from political pundits such as David Gergen, editor-at-large for U.S. News & World Report; Patrick Buchanan, columnist and MSNBC political analyst; and Donna Brazile, CNN political contributor and ABC political consultant.

A number of lawmakers also were on hand to give brief perspectives on the state of affairs in Washington.

Rep. Lynn Jenkins, R-Kan., particularly resonated with conference-goers, drawing gratitude and congratulatory greetings from the audience because she is the fifth CPA currently holding national office. "I saw a federal government in need of fiscal discipline and I felt my skills as a CPA were well-suited to address those issues," she said, adding, "I believe an exit strategy needs to be created to remove government from private business."

Jenkins didn't hold back her criticism for the Obama administration. "The Republicans have been run over in Congress," she said. "This administration inherited a mess [but] I am not pleased with where this Congress and administration is taking the nation."

When asked about House Speaker Nancy Pelosi's role in the administration's decision-making, Jenkins was more than candid. "I'm being very frank and honest," she said. "I think Nancy Pelosi is President Obama's worst nightmare. She has a different agenda in the House, and it's to spend our way out of this mess. My sense is he needs to put his big-boy pants on and stand up to her."

The AICPA also presented three awards. Beverly Nichols received an individual Public Service Award for her volunteer work in helping New Orleans-area students cope with the aftermath of Hurricane Katrina. The Little Rock, Ark., firm of JPMS Cox won a firm-wide Public Service Award for its collective work in assisting schools and nonprofits in Arkansas. Ira Solomon, head of the Accountancy Department at the University of Illinois at Urbana-Champaign, received the 2009 AICPA Distinguished Achievement in Accounting Education Award.

(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.

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