AP NEWS

Susan Martinelli Avoid a new tax on taxes

March 22, 2019

I’m writing as the president of the statewide, 6,000-member Connecticut Society of CPAs to alert your readers to the fact that if a bill currently proposed in our General Assembly becomes law, half of all Connecticut taxpayers will face the prospect of “paying a tax on paying their taxes.” Specifically, Section 22 (TT) of Senate Bill (SB) 877, “An Act Concerning Revenue Items to Implement the Governor’s Budget” calls for the expansion of the state sales tax to accounting and tax return preparation services provided to individuals.

According to the 2017 Internal Revenue Service Data Book, more than half of all federal tax returns filed that year were professionally prepared. This is for good reason: estimates put the length of the federal code at 75,000 pages, and a report from the IRS’s own Taxpayer Advocate’s office more than 10 years ago stated even at that point, “The Code has grown so long that it has become challenging even to figure out how long it is.”

According to that same publication, nearly all taxpayers (95 percent) say it’s their civic duty to pay their fair share of taxes. These taxpayers want to make certain their pay their share without unwittingly making mistakes, so they seek professional assistance in dealing with a tax code that is complex and difficult to apply. The government realized this as well, and for many years allowed a deduction for fees paid for professional tax return preparation. That deduction disappeared, however, with the tax reform of 2017, and now taxpayers face not only the loss of the deduction, but also a new sales tax in its place.

As the New Haven office managing partner of a global audit, tax, and consulting firm, I believe that my clients will view a tax on accounting and tax return preparation services as “getting taxed for wanting to pay my taxes accurately and honestly.” As a CPA, I understand the fiscal challenges Connecticut faces to regain sound fiscal footing. But taxing taxpayers for paying their taxes is fundamentally flawed. Should we penalize taxpayers for their compliance and due diligence with a voluntary system? I, along with the Connecticut Society of CPAs, believe that in the spirit of advocating for CPAs and those individuals and corporations that they serve in Connecticut, that it is necessary to build awareness of this proposal, and the impact that it would have on many service providers and their clients in Connecticut.

Susan Martinelli is president of the Connecticut Society of Certified Public Accountants.