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Other Comprehensive Basis of Accounting Fundamentals | 4152308D

July 1, 2015
Sacramento Area

Sales Tax on Services Legislation Introduced

Tax on services continues to be a topic of discussion in the Legislature. A recently introduced bill, SB 640 (Hertzberg), proposes to enact a sales tax on services—including those provided by CPAs. While the bill does not articulate how such a complex shift in the tax burden would be accomplished, the introduction of this legislation keeps the issue on the radar within the public policy arena—particularly as tax reform conversations heat up.

Similar far-reaching tax on services proposals were introduced in 2015 and 2016 by Sen. Hertzberg, but both bills died in the Legislature when they failed to meet legislative deadlines. These proposal have been characterized as a way to broaden California’s tax base to address a volatile stream of tax revenue. However, the proposal would impose an extremely complex shift in the tax burden to raise billions in new tax revenues.

The grassroots efforts of CalCPA members continue to be instrumental in making sure that CPAs are not unfairly treated or harmed should a tax on services proposal take a more substantive form. At CPA Day, CalCPA members reiterated concerns with sales tax on services, including increased cost to comply with the law, competitive disadvantage for California roviders, negative impact on small business and costly administrative burden, among other major challenges with imposing a tax on accounting services.

CalCPA will continue to be active in communicating to members of the Legislature the significant concerns with this proposal.

For further information, stay tuned for more updates from our government relations team or contact them via email or phone, (916) 441-5351.