Connecticut’s CPAs condemn proposed service tax

The Connecticut Society of Certified Public Accountants (CTCPA) is condemning the Connecticut General Assembly’s plan to tax CPA and other professional services as “devastating” and the group is adamant that legislators remove the sales tax on services from their proposed budget bill.

In testimony submitted for the public hearing on Monday, May 11, at the Legislative Office Building, CTCPA Executive Director Arthur J. Renner, CPA made the following statements:

“A sales tax applied to business-to-business services will have a devastating effect on all of us. It will raise business costs which will raise prices or drive the business out of state.

“Even if the proposal didn’t include a tax on CPA services, my perspective would not be altered.

“Only three other states place a tax on these business-to-business services, Hawaii, New Mexico, and South Dakota. Those states could not be more unlike Connecticut in terms of geography or demographics.

“Let me speak to what a sales tax on CPA services would do: Raise the cost on the annual audits of GE, UTC, and International Paper by millions of dollars each. How long they will call Connecticut home if that happens?

“There is also the question of fairness. Many lawyers provide the same tax services as CPAs. If this proposal becomes law, you will be charged the sales tax by the CPA, but not by the lawyer. That‘s discriminatory.

“Three states passed a law to tax services. Florida repealed its law in six months; Massachusetts in two, and Michigan in 17 hours. It is a nightmare. The DRS will need to hire a virtual battalion of agents to enforce these new taxes if they pass. It will be extremely complex to administer and enforce.

“I’ve heard some members of the majority party leadership say that applying the sales tax to additional services is not a tax increase, but an expansion of the tax base. That is pure semantics.

“As a CPA I know what constitutes a tax increase and this is a huge one that Connecticut and its citizens cannot afford. The consequences will be devastating.”

“Again, thank you for the opportunity to express the strong opposition of Connecticut’s CPA profession to the proposed tax on services.”

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