AICPA Endorses Legislation to Assist Small Business
H.R. 3359 Would Create Uniform National Standard For State Withholding of Nonresident Income Tax

The American Institute of Certified Public Accountants (AICPA) endorsed legislation that would create a uniform national standard for state withholding of nonresident income tax, which would be especially helpful to small businesses, as well as larger businesses.

“We need a simple and uniform system governing how states apply taxes to nonresidents doing business in their states,” said James Metzler, AICPA Vice President - Small Firm Interests. “Recordkeeping can be voluminous under the current regulatory scheme.”

He said that the AICPA statement submitted to the House Judiciary Subcommittee on Commercial and Administrative Law for the hearing record on today’s hearing on H.R. 3359, the Mobile Workforce State Income Tax Fairness and Simplification Act of 2007, outlines the difficulties businesses face.

Now, Metzler explained, 41 states impose a personal income tax on wages and partnership income, and those states have many different tax requirements regarding the withholding for income tax of nonresidents. Further adding to the complexity, he said, is that de minimis exemptions are not handled uniformly and a number of states have reciprocity agreements with other states that exclude taxation of residents of those states that have signed the reciprocity agreement.

Metzler said businesses and accounting firms do a great deal of business across state lines and that many businesses and CPAs are negatively affected by nonresident income tax withholding laws.

The AICPA, U.S. Small Business Administration Form Alliance

The American Institute of Certified Public Accountants and the U.S. Small Business Administration signed a strategic alliance agreement giving CPAs greater access to the SBA’s programs and nationwide network. The alliance will help the SBA market and deliver its products and services through the AICPA’s network of 44,000 accounting firms nationwide.

“This is very important for CPAs,’’ said AICPA President and CEO Barry C. Melancon at a signing ceremony in Washington. “This agreement that we are signing today really aligns the AICPA and SBA and makes mutual resources available between the SBA and the CPA profession.’’

“We have an opportunity to make CPAs more aware of the resources of the SBA and serve as a conduit for clients to those resources,’’ Melancon said.

The strategic alliance agreement signed Nov. 1, will open pathways for CPAs to join the SBA in advocacy efforts for small businesses. It will help CPAs to help clients work more closely with the SBA’s network across America. CPAs will be able to draw more easily on SBA resources to help clients finance start-ups, expansions and -- very importantly -- recover from natural disasters such as the recent fires in California. It will enable firms in their local areas to work more closely with SBA resource centers and offices for the benefit of their small business clients.

“We had 8 million new jobs created in our country in the last four years, and two thirds of those have come from small businesses,’’ SBA Administrator Steven Preston said at a signing ceremony at the AICPA’s offices in Washington. “The small business community in this country is not only essential, it is the primary driving force in our economy.’’

“To have a national partnership with a group like the AICPA is incredibly important because when a small business owner is looking for answers, when they are looking for someone to trust, they are really in your hands as CPAs,’’ Preston said. “In the end, it is in all of our best interests to give small businesses the right kind of support so they can continue to create jobs, drive our economy forward and innovate.’’