Sacramento roundup: News to note as you embark on 2002

California CPA, Jan-Feb, 2002 by Bruce C. Allen

CBA Client Notification Regulation Changes

The regulation requiring client notification that CPAs are licensed by the California Board of Accountancy is being revised to specify that posting a notice or certificate in the CPAs office may only be used for those clients known to appear personally at the licensee's office. This change is specifically addressing those instances in which the CPA has an office, but clients do not normally come to that office.

Current CBA regulation, Sec. 50 requires that CPAs engaged in the practice of public accountancy provide notice to clients that they are licensed by the CBA. This requirement applies to firms and individuals and there are several options for providing the notice including:

1) Displaying the certificate of licensure in the office or public area where licensed services are provided;

2) Providing a statement to each client to be signed, dated and retained by the CPA;

3) Including a statement on letterhead or on contracts for services;

4) Posting a notice in a public area of the premises where services are provided in 48-point type that states the named licensee is licensed by the CBA; or

5) Any other method of written notice, including a written notice that is electronically transmitted or posted on a Web site.

The change restricts use of options one and four to those clients who come personally to the licensee's office.

Moving or Changing Firms?

Make sure that you notify the CBA of your new address. Every year CPAs lose their licenses because they moved and failed to notify the CBA. After being delinquent for five years, licenses are automatically terminated.

To check your address of record with the CBA go to www.calcpa.org and click on License Lookup in the For Consumers section. That will take you to the CBA Web site. To ensure the privacy of your home address, you may choose to use a post office box as your address of record.

Is Your Birth Information Online?

On Dec. 6, 2001, Gov. Gray Davis issued an executive order that prevents the Department of Health Services from releasing birth and death indices to the public for 45 days.

The executive order followed a public outcry after it was discovered that the Department of Health Services had sold 24.5 million California birth records and 9 million death records to RootsWeb, www.rootsweb.com, for $900. These records included personal information such as birthdates, county of birth and mother's maiden name.

This information, which RootsWeb has since removed from its site, is enough to enable a thief to check an individual's bank accounts or get a new birth certificate. In most cases, however, a person would need at least one other piece of information--such as a bank account number or Social Security number--to access a financial account.

That's the good news; the bad news is that many clients already have their CPA's Social Security number on old tax filings.

Since genealogical and other sites have multiple information sources, you might want to check if your personal information is on RootsWeb and if so, demand its removal.

Other sites that contains birth and personal information that you might want to review are www.vitalrecs.com and www.anybirthday.com. If you find your personal information on these or any site, there almost always is an easy way to request its removal, usually in the site's privacy or contact us section.

LLC Fee to Stabilize

In 2001, CalCPA supported successful legislation authored by Assembly Member Lynn Leach to repeal the California Revenue and Taxation Code section that required the FTB to conduct an annual study and adjustment of the limited liability company fee. The legislation sets new fees for taxable years beginning on or after Jan. 1, 2001 as follows:

LLC FEE  TOTAL INCOME

$ 900    $250,000 or more,
         but less than $500,000
$ 2,500  $500,000 or more,
         but less than $1,000,000
$ 6,000  $1,000,000 or more,
         but less than $5,000,000
$11,790  $5,000,000 or more

This fee schedule replaces the one announced in June in FTB Notice 2001-5. Additional information is available at www.ftb.ca.gov/index.html.>

Independent Contractors

SB 1128 (Kuehl) would dramatically change the way independent contractor status is determined by California's employers by invoking principles established in a 1989 California Supreme Court case, S.G. Borello & Sons vs. Department of Industrial Relations, 48 Cal.3d 341 (1989).

As drafted, the labor-backed legislation would effectively end independent contractor status in California. The legislation requires businesses to consider which of the parties in a contractual relationship is in a better position to bear the risk of paying for social programs (e.g., unemployment; disability insurance and worker's compensation). There are almost no instances where an independent contractor is in a better position to assume the risk of unemployment.

CalCPA is part of a coalition opposing this legislation, SB 1128, which will be considered by the Assembly Insurance Committee anytime post-Jan. 7. CalCPA members have been meeting with members of the Assembly Insurance Committee to discuss this issue and the problems it could create for California businesses.