Happenings On The Hill

Rhode Island state government continues to have a long road to travel to improve the state’s overall business climate, but some critically needed reforms have occurred this year. A few key regulatory changes have been made and the 2016 General

Assembly session saw passage of legislation that will help move the state forward on some important fronts. The following is an overview of recent state government activity and how it impacts the accounting industry and the wider business community.

CPA Industry: Attestation 

Rhode Island has joined 38 other states in strengthening the requirements related to the certifying test for CPAs authorized to perform tax audits, especially those involving 401-K accounts, by passing legislation on attestation for accountancy this year. The bill will help maintain high industry standards, enhance protection of individual and business clients, and establish a system of fines for violators. Those who contributed to the attestation reform effort included RISCPA President Robert Mancini; Jenna Algee, Attorney for the Board of Accountancy; and Mary Bernard, Chair of the Board of Accountancy. “We are pleased to see our state is now joining the majority of other states in setting these higher standards,” says Mancini. “This is good for both the profession and clients, and advances the overall business climate of Rhode Island.” Governor Raimondo signed the bill into law in July.

CPAs/Small Business: Letter of Good Standing

A significant step forward in regulatory reform was taken as the RI Department of Revenue’s Division of Taxation began a long-needed overhaul to the process and length of time involved in the state’s procedures for issuing a Letter of Good Standing (LGS) to businesses. The LGS, which is issued once the Division of Taxation confirms a business has no unpaid taxes due to the state, is a requirement for any entity seeking to merge, obtain a significant bank loan, or cease doing business in the state. Members of the Society, particularly RISCPA member Grafton “Cap” Willey, IV, of CBIZ Tofias, in conjunction with the RI Business Coalition, brought the problem of lengthy delays to the attention of top legislative leaders and Governor Raimondo during the SBA Small Business Summit held this past January. Accountants and attorneys had reported that businesses were often waiting six weeks to several months to obtain the needed LGS, while other states turn around the request in a matter of days.  CommerceRI officials, who also pushed for the overhaul, say a turnaround time of 5-7 business days by the start of 2017 is the goal. Cap Willey, who continues to monitor the ongoing upgrades to the system, says “the filing requirements for getting the LGS are critical for businesses that need government to operate at the speed of business. Loans and business transactions should not be held up waiting for a relatively simple review of the tax status of a business, especially when other states are processing theirs in a timely fashion.” 

Tax Reform

The Legislature passed several tax reforms to lower the costs of doing business and ease the tax burden on retirees. Some notable business tax overhauls included a reduction in the Unemployment Insurance (UI) rate, which is estimated to save RI businesses $30 million overall in FY2017, and a lowering of the annual corporate tax imposed on mid-size businesses from $450 to $400. Tax breaks on retirement income for public and private pensions were also approved. Retirees who have reached full Social Security retirement age will now be eligible for a tax exemption up to $15,000 on their personal RI income tax. It would apply to joint married filers on income up to $100,000, and to single filers on retirement income up to $80,000. 

The Legislature did not move forward with numerous misguided initiatives that would have hurt business by rejecting a 50-cent hike in the minimum wage, keeping the RI wage at its present $9.60 level; rejecting a new “carbon tax”, which would have resulted in higher electricity costs; and rejecting an overly broad mandated paid leave bill, and a proposed mandatory predictive scheduling bill.

Economic Development, Job Growth Incentives

The Legislature rejected a bill connected to local opposition to a new gas energy power plant in Burrillville. Business groups, especially the RI Business Coalition, which includes RISCPA, and Chambers of Commerce, were in joint opposition to the bill, which would have enabled local citizens’ groups to reverse the decisions of town councils and block economic development projects or utility and transportation infrastructure upgrades in local communities. 

Finally, the General Assembly approved a change in a tax credit program for businesses connected to the hiring of employees. The Qualified Jobs Program, which originally required the hiring of 10 new workers to be eligible for a tax credit, will now only require the hiring of five new employees.

Compiled by: Donna Perry, Media Relations, Public Affairs/Outreach, RISCPA