Letter to Rep. Forbes on Mobile Workforce Bill
October 19, 2009
The Honorable Randy Forbes
U.S. House of Representatives
Washington, D.C. 20515
Dear Rep. Forbes:
On behalf of the 8,900 members of the Virginia Society of CPAs (VSCPA), we want to thank you for your leadership and your willingness to serve the people of the 3rd District of Virginia. Because you have always been supportive and helpful on issues relevant to the accounting profession, we are writing to bring to your attention two important pieces of legislation in hopes you will consider cosponsoring: HR 2110, the “Mobile Workforce State Income Tax Fairness and Simplification Act,” and HR 2584, a bill to limit the patentability of tax planning methods.
HR 2110
HR 2110, introduced by Reps. Hank Johnson (D-Ga.), Jim Jordan (R-Ohio), G.K. Butterfield (D-N.C.), Bob Goodlatte (R-Va.) and Virginia Foxx (R-N.C.), would reduce the regulatory burden placed on employees and employers trying to navigate nonresident state tax laws and enhance nonresident state tax compliance through the establishment of a nationwide, uniform standard.
Where businesses once tended to be local, they now have a much broader reach. Accounting firms, including small firms, do a great deal of business across state lines and many clients have facilities in other states that require on-site work during the conduct of an audit. Additionally, consulting, tax or other non-audit services that CPAs deliver may be provided to clients in other states, or to facilities of local clients that are located in other states. Therefore, accounting firms, small businesses and their clients and customers are all affected by the current complex system of nonresident income tax withholding laws.
Having a uniform national standard, as envisioned in HR 2110, for nonresident state income tax withholding would significantly ameliorate these burdens. Without a bright line test, many residents of Virginia traveling for business unknowingly are forced to file state income taxes in other states. HR 2110 would establish a practical 30-day work threshold in a nonresident state before one would be obligated to file nonresident state income taxes.
HR 2584
We also would like to call your attention to HR 2584, a bill that would limit the ability to patent tax planning methods, introduced by Reps. Rick Boucher (D-Va.) and Goodlatte (R-Va.).
For several years, the VSCPA has actively voiced its concern about the patentability of tax strategies, which is a growing problem among tax practitioners and taxpayers. In 1998, the U.S. Federal Circuit Court of Appeals, in State Street Bank & Trust v. Signature Financial Group, Inc., held that business methods could be patented. Since then, many patents for tax strategies have been granted and many more applications are pending.
Patents for tax planning methods have been granted in a variety of areas, including the use of financial products, charitable giving, estate and gift tax, pension plans, tax-deferred exchanges and deferred compensation. For example, one patent granted is for the process of simply computing and disclosing the federal income tax consequences involved in the conversion from a standard Individual Retirement Account — IRA — to a Roth IRA. Surely lawmakers never intended for their constituents to be at risk for litigation simply while making the best decisions possible for their retirement.
We expect more tax planning method patents to be issued, directly targeting average taxpayers in a host of areas including: (1) income tax minimization; (2) alternative minimum tax (AMT) minimization; and (3) income tax itemized deduction maximization. We hope that we can count on your continued leadership and co-sponsorship to solve this problem once and for all.
It is critically important, both for taxpayers and for their advisers, that we solve this problem. Moving this legislation forward in order to protect the public interest is an immediate and top priority for the accounting profession nationwide.
Thank you again for your leadership and we hope we can count on you to help move legislation addressing these problems for taxpayers, their advisers and the residents of the Commonwealth of Virginia.
Together, we can fix these problems. The Virginia Society of CPAs is happy to help you in any way as legislators seek solutions to these issues. If we can be of any service to you, please contact me or VSCPA Government Affairs Director Emily Walker at ewalker@vscpa.com or (804) 612-9428.
Sincerely,
James K. Walker, CPA
Chair, Virginia Society of CPAs
LAST UPDATED 10/19/2009
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