The Connecticut Society of Certified Public Accountants (CTCPA) has not surprisingly come out in opposition to Gov. Ned Lamont’s proposal to expand the state sales tax to include tax-return preparation and accounting services provided to individuals.
According to a statement by CTCPA Executive Director Bonnie Stewart, “Connecticut taxpayers will most certainly view it as having to pay a tax on paying their taxes.”
“The notion of taxing tax preparation services is fundamentally flawed,” said Stewart, “as it poses what taxpayers will view as a penalty for filing one’s tax return in a complete, compliant, and accurate manner by engaging professional assistance.”
On Feb. 20 Lamont issued his first biennial state budget plan, which would expand the sales tax and implement tolling on Connecticut roads and highways.
The Lamont plan also expands the state sales tax to services such as dry cleaning, haircuts, veterinary care, interior design consulting and real-estate services. And tax preparation.
Lamont says the new taxes and tolls are needed to close the state’s yawning budget deficit, estimated at $2 billion for the coming fiscal year and $2.4 billion for 2020-21 by the legislature’s nonpartisan analysts.
Just three states – New Mexico, South Dakota and Hawaii — broadly tax services. These states are geographically isolated and have relatively small populations, thus they are forced to consider all options of revenue, according to CTCPA. The CPAs say broadening the sales tax to include their services would place Connecticut at a competitive disadvantage not only to neighboring states of New York, Massachusetts and Rhode Island, but to other states with no sales tax on tax return preparation, as Connecticut CPAs serve clients from many states.
“The U.S. tax system is based on voluntary compliance,” Stewart said. “Most people realize taxes are the price of a civilized society, but they view paying their taxes and the very process of tax return preparation as onerous and expensive.
“Proposing to tax people for their voluntary compliance with a complex and convoluted tax code, again, adds proverbial insult to injury,” Stewart said.
With a membership of more than 6,000, CTCPA’s mission is to advocate on behalf of the accounting profession, foster a professional community among CPAs, and provide professional development opportunities for CPAs in Connecticut.
Contact Michael C. Bingham at mbingham@newhavenbiz.com
