Legislative Update - February 23, 2009

TAPC Holds "Day on the Hill" - Unveils Legislative Priorities

On January 28, 2009, members of our many TAPC member companies, fanned out across the Texas Capitol with the TAPC advocacy team in an effort to educate members and staff of the 81st Texas Legislature about issues affecting our industry.

The TAPC message is simple: (1) keep taxes on businesses low; ( 2) remove punitive reporting requirements for staffing and recruiting companies; and (3) support further efforts to clarify1099 labor deduction payments.

Keep Taxes on Texas Business Low

The legislature will be considering a number of bills this session designed to raise the minimum threshold for triggering franchise tax payments in Texas. The TAPC supports our legislature’s efforts to reduce the number companies that pay the franchise tax so that the Texas economy can continue to grow and recruit quality jobs to our state. In addition to raising the threshold for payment of franchise taxes in Texas, the legislature is also considering measures to hinder efforts to raise tax rates on Texas businesses by requiring a super majority vote – such as three fourths (3/4) – of the legislature to raise the franchise tax rate in Texas. Again, the TAPC supports this policy as well as proposals to offer additional franchise tax deductions for the provision of health benefits to employees.

Remove Punitive Reporting Requirements

In 2007, the Texas Legislature passed HB 3928 during the 80th Legislative Session. HB 3928 was designed to mitigate the effects of the previously passed Margins Tax bill during the summer of 2006.

Designated Highlights of HB 3928 include:

> Clarifies that amounts reportable from revenue lines of federal forms are reportable to the extent the number complies with federal income tax law.

• The “Otto” amendment - offered in support of TAPC.
• Allows for the pass through of funds for qualifying subcontractors such as 1099 and C2C.
• Removes the threat of “double taxation” to staffing companies.

> Institutes a .575% gross receipts tax as an alternative tax for entities with $10M or less in total revenue.

> Provides for a sliding scale “tax break” for entities earning up to $900,000.

> Provides for changes to the definition and reporting requirements for staff leasing companies doing business in Texas.

The changes highlighted above were added as an amendment to HB 3928 and currently require staffing and recruiting firms to document, via Comptroller form, the amounts paid in wages and cash compensation to employees assigned to client companies. In practical terms, this method of reporting reveals staffing and recruiting firm margins to their clients and otherwise provides a competitive disadvantage to your company. The TAPC is addressing this punitive reporting requirement by supporting filed legislation to statutorily change this requirement.

The TAPC has coordinated with key House and Senate members to submit draft legislation designed to decouple “temporary employment” firms from the statutory definition of staff leasing service providers. Doing so will eliminate the punitive reporting requirements mentioned above and restore TAPC member companies ability to withhold information directly linked to their margins from clients. Once this bill has been filed we will, of course, update all members so they may support its passage.

Support Efforts to Enhance 1099 Payment Deductions

The TAPC has continuously supported the available labor deduction for 1099 employment labor to companies who provide 1099 services to their clients. In 2007, the TAPC was instrumental is passing changes to HB 3928 which allowed staffing and recruiting firms to “flow-through” revenue paid to 1099 contractors. Today, legislation has been filed which would allow client companies to deduct wages paid to 1099 workers as a part of their franchise tax reporting. The TAPC believes that this is good policy as it will undoubtedly help support the creation of additional jobs in an otherwise slowing Texas economy.

Bills of Interest

During this session, members will be seeking ways to help companies achieve greater tax savings, create more jobs, and enhance Texas economy in the face of a national recession. The TAPC supports common sense legislation which, we feel, will help strengthen the job market in Texas and provide the right kind of incentives to keep employers hiring in Texas.

TAPC Holds Successful Legislative Rally in Austin
1/28/09!

To see a short video about TAPC's Legislative Rally in Austin Click Here!

TAPC held it's "Legislative Rally" in Austin on January 28, 2009. Owners from across the state attended and the morning was spent in sessions with Lance Lively from NFIB and then with Jennifer Patterson, the state's leading expert on the Margin Tax.

After the sessions ended, the group met with David Dewhurst, Texas Lieutenant Governor and got a feel for some of the objectives for the 81st legislative session. Following a photo opportunity, a portion of the group watched the proceedings on the Senate floor and the "Legislative Angels", a select group of owners who financially support our legislative inititatives, participated in a meet and greet with the Secretary of State. The "Legislative Angels" then met with the new Speaker of the House, Representative Straus.

The group had a Capitol tour and then went to lunch off site for some training in preparation for legislative appointments that afternoon.

The afternoon was full of appointments with legislators. Our goal to develop new relationships and further develop existing relationships with Senators, Representatives, and their staff was realized as the group split up and met with 31 Senators and Representatives and countless staff. We made our legislators aware of our industry and the vital part we play in job creation and development. We discussed the specifics of our industry and the differences between Staffing/Recruiting and PEO/Employee Leasing, a hot button regarding the Margin Tax. Our legislators know they can count on TAPC members to serve as experts when needed regarding our industry and employment in general.

After a full afternoon, TAPC hosted a legislative reception at III Forks in Austin which ended a very productive legislative day. Our legislative efforts will continue throughout the legislative session and throughout the year with more legislative activities planned in Austin and in districts throughout the state.

Helene Cavanaugh, TAPC Executive director is featured on "Great Day, Houston" to discuss TAPC and working with a recruiter!

Helene Cavanaugh, CTS, TAPC's Executive Director made an appearance on "Great Day, Houston" on January 13, 2009 in a local talk show devoted to job seekers, the current job market, and other job searching related topics. In her segment, TAPC was discussed as an excellent vehicle for job seekers. Job seekers were encouraged to go to the TAPC website and find a recruiter in their area of expertise or geographical area to find a recruiter. They were given tips about how to best find and work with a recruiter and were encouraged to keep their options open by maintaining a few good relationships with trusted recruiters who can act as their "Career Coach". In addition, a panel discussion about strong industries for job growth was held and again, TAPC and working with a recruiter was featured as a good route for candidates to use to find those growth industries and good jobs they can't find on their own.

A message from Jim Hezel, CPC about this year's Lock-Matthiessen Award Winner, Rick Marshall!

It is with great pleasure and admiration that I announce Rick Marshall, of Marshall Career Service as the 2009 Locke-Matthiessen award winner. I find it remarkable how many great people I have met through my involvement with TAPC. Rick is one such person. His tireless dedication to the TAPC has brought the Association to new heights, and we all enjoy the fruits of his labor and leadership.

Being awarded this very special award last year was a highlight of my professional life. It will be an honor to present Rick the award at the TAPC Conference in April. Rick is a mentor, trusted advisor, and most importantly, a dear friend. I think many, many people would say this about him and share my excitement in this milestone.

Be sure to attend the lunch on Saturday, April 4, 2009 at the TAPC Conference for this very special award presentation for Rick Marshall, TAPC’s 2009 Locke-Matthiessen Award Winner!