Accountants get to escape sales tax on insurance products

Lawmakers pass a bill exempting professionals in response to a lobby

Accountants get to escape sales tax on insurance products

Insurance News

By Allie Sanchez

In response to a lobby by certified public accountants (CPAs), Texas lawmakers have passed a bill exempting such professionals from sales tax for providing insurance services to their clients.

However, the law qualifies the exemption with a caveat that the provision of these services has to constitute only 1% of the CPA’s total sales revenues. Otherwise, applicable taxes will be imposed on them.

Trade publication Accounting Today reported that the passage of Senate Bill 1083 was the result of a lobby by the Texas Society of CPAs (TSCPA), after one of its members locked horns with authorities after an audit found that the CPA provided insurance services, but was unable to file related taxes on them. The association worked with the comptroller to apply a de minimis exemption for CPA firms whose work for a client may unintentionally constitute insurance services, as defined by the law.

“The passage of SB 1083 is a win for Texas CPAs and the TSCPA governmental affairs volunteers who worked so hard to lobby for this important issue,” TSCPA managing director of governmental affairs John Sharbaugh said in a statement.

“It’s important for CPA firms to have some protection in the event they inadvertently perform insurance services, as defined by the Texas Comptroller, as part of their work for their clients, and this bill accomplishes that by providing a limited safeguard for CPAs,” he concluded.

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