Q&A talks with Bonnie Stewart, executive director of the Connecticut Society of CPAs, on the impact of federal tax reform and other issues impacting the accounting industry.
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Q&A talks with Bonnie Stewart, executive director of the Connecticut Society of CPAs, on the impact of federal tax reform and other issues impacting the accounting industry.
Q. All this talk of federal tax reform must create high anxiety for the state's accounting industry. What are you hearing from your members? Of all the new tax changes, what could benefit Connecticut businesses the most? What could hurt them the most?
A. Different parts of the tax overhaul will impact companies differently, depending upon whether a company is a domestic company vs. a multinational corporation, a C corporation or a pass-through entity, etc. The majority of Connecticut companies are domestic companies.
The thing that Connecticut's domestic businesses and, more specifically, C corporations will be most appreciative of is that the corporate tax rate will be permanently reduced from 35 percent to 21 percent. This is a significant reduction, and it's a permanent reduction. In addition, certain pass-through entities will be able to claim a 20 percent deduction against qualifying business income.
The worst thing about the tax reform again depends on what kind of company you are. For people in the process of developing new products, for example, one popular tax tool is the net operating loss (NOL) carryforward. A new measure limits the NOL carryforward to 80 percent of taxable income, which can be a significant change for companies doing a lot of research and development. Some manufacturers are also concerned with the repeal of section 199 deduction.
For pass-through entities, the worst part of the tax reform is that their tax relief is temporary. The provisions are only in place through Dec. 31, 2025, unless action is taken to extend the tax relief at that time.
Q. What role does the society play in trying to keep Connecticut CPAs abreast of potential tax changes and their impact?
A. We speak to our delegation on a regular basis to address members concerns, and we in turn share that information and feedback with our members, who depend on us to keep them in the loop. Our interest groups meet to discuss timely topics like federal tax reform, and we hold seminars and meetings around the state to make sure our members are well-informed.
Frankly, this is an extremely critical part of our existence. By staying in touch with our legislators and constantly working to communicate with our members we are able to achieve our three mission cornerstones of advocacy, community and education.
Q. Competition for talent has always been intense within the state's accounting industry. Is the talent pipeline adequate these days?
A. Schools across the state and country are graduating record numbers of accounting students, but even that is not enough to meet the demands of businesses. The skills required of accounting majors and finance professionals have morphed from the technical “debits and credits” to strategic planning, management and technology consulting, etc. — and our graduates are coming out ready to meet these demands.
This demand exists in both public accounting and industry; the CTCPA membership is now split 50-50 between public practice and industry. With increased regulations and constant talk of change at the state and federal levels, the CPA is a trusted advisor at every level.
We continue to encourage aspiring CPAs to go to school and not only get their accounting degree, but the CPA credential. Robert Half's 2017 salary guide says that CPAs can earn $1 million more than non-CPAs over the course of a 40-year career.
Q. How are CPAs playing a role in shaping Connecticut's future?
A. With the financial acumen and critical thinking skills we've mentioned, Connecticut CPAs are a hot commodity not only in business, but in government. Ninety-one percent of business decision-makers respect CPAs as valuable assets to their organizations, which certainly translates to the community and state level. Many of our members serve on their local boards of finance and education, for instance.
West Haven actually just elected a CPA to head up their municipality — the voters spoke and demonstrated that it's important to get the town's fiscal house in order. We've got another CPA serving in the legislature now, too.
CPAs are able to look at the bigger picture but also drill down into the details in order to help companies be their best, and those skills can help the state as well. We'd love to see more CPAs running for office.
Q. Does the stereotypical view of accountants hold true today?
A. The days of “bean counters” are long gone.
Technology is really changing the world. A recent Deloitte survey showed 21 percent of organizations currently have blockchain in production, and 25 percent plan to do so in the next year. CPAs have truly delved into things like artificial intelligence and cybersecurity and are becoming experts in order to better serve their companies and clients.
