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Legislative Update - July 20, 2009
GOVERNOR PERRY SIGNS BILL TO CUT TAXES FOR SMALL BUSINESS The TAPC strongly supported HB 4765, along with forty (40)other similar pieces of legislation, designed to lower taxes for Texas businesses. From an advocacy perspective, the TAPC joined other major state trade associations such as the National Federation of Independent Business Texas (NFIB Texas) and the Texas Association of Business (TAB) in attending House and Senate hearings on these important measures to provide a public voice of support for the staffing industry in Texas. This session, the TAPC was the only staffing industry trade association to register public support for these important measures. Together, the TAPC, aligned with other state trade associations, helped to bring home a substantial victory for small business owners in Texas by realizing a tax cut for Texas businesses during the midst of one of our nation’s worst recessions. While this certainly was no easy feat, it should serve as a reminder that dedicated advocacy efforts in Austin by the TAPC and others do make a difference for their members! Practically speaking, the Legislature's goal in creating the Margins Tax was to close loopholes in the franchise tax, equalize the burden among large and small businesses and enable lowering of property taxes while maintaining school revenues. However, since the base for computing the tax is gross profits, the bill to many small businesses went up by thousands of dollars, and some found themselves with a tax bill for the first time. The TAPC would like to know how your business is dealing with this tax in order to share strategic ideas and tactics between our members for resolving it’s effects. For example, one TAPC member recently pointed out the following margins tax dilemma to me and said:
“We are now beginning to deal with the impact that the margin tax has on our industry, and have realized that the margins tax has a major impact on permanent placement fees. In fact, I'm contemplating deducting the tax from each placement fee prior to paying commissions. For instance, a $20,000 fee will generate a $200 tax. One strategy is to deduct the $200 tax from the fee, and then pay commissions on the $19,800. On a 20% commission rate, that would mean that the commission would go from $4000 to $3960. The cost to the Counselor/Recruiter would be $40.”
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.
> 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.
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.
Become a TAPC "Legislative Angel"! Become a TAPC "Legislative Angel" by paying $500.00 toward TAPC's legislative initiatives! This payment covers your attendance at TAPC's Wednesday, January 28, 2009 "Legislative Rally" in Austin. The day is a full day of activities with programs in the morning, lunch, a tour of the Capital, afternoon appointments with your legislator(s), and an evening reception at IIIForks in Austin! TAPC "Legislative Angels" will be included in an elite group of staffing/recruiting firm owners who care deeply about being engaged in legislative solutions for issues affecting the staffing/recruiting industry in Texas. In addition to the day's activities, TAPC "Legislative Angels" will be introduced on the Senate or House floor on 1/28/09 and will receive recognition on printed and email materials as well as recognition at TAPC's Annual Conference in April 2009 in Houston.
By Jake Posey and Steve Koebele Calendar year 2007 was a tremendous success for TAPC legislative advocacy and the good work of the TAPC advocacy team is once again laying the ground work for a successful session in 2009. Our priority: addressing important legislative planning in 2008 by developing a comprehensive strategy to deliver meaningful changes in 2009. Monitoring Interim Legislative Activity. The Texas House and Senate have received Interim Charges for 2008 and are required to study and report on the issues in those charges prior to the 2009 legislative session. Issued by the respective leaders of each legislative chamber, Interim Charges provide the key topics to be researched and studied by the numerous committees during the interim period between sessions (basically, calendar year 2008). While the revised franchise tax (aka, the Texas Margins Tax) is not an expressly stated focus for either chamber in 2008, please anticipate and expect that it will remain a topic of debate during the interim and the 2009 legislative session. Several entities, including the NFIB (National Federation of Independent Business) and the TAB (Texas Association of Business), continue to push for deeper reductions in tax rates for Texas small businesses. Steve and I are working closely with the appropriate staff, agency and policy stakeholders to ensure that your voice is heard as the representative of Texas staffing industry in the Interim Study process. We are doing this by attending House and Senate Interim Committee Hearings, visiting with member and staff offices, and working closely with relevant state agencies such as the Office of the Comptroller to prepare for possible legislative action in 2009. Continuing Advocacy. The TAPC executive leadership and advocacy team previously met with the Texas Comptroller of Public Accounts executive staff to discuss TAPC member concerns with the implementation of new disclosure requirements applicable only to the staffing industry. This part of the law allows the clients of temporary employment firms to deduct the wages and benefits of the temporary employee assigned to the client company when calculating the client’s tax liability. However, in making such a deduction, the client may now statutorily – because of an amendment to HB 3928 that was not supported by the TAPC – rely on the temporary employment firm’s invoice or information that is provided by the firm to the client on a Form issued by the state Comptroller. Removing the above reporting requirement for temporary employment firms is a major priority for the TAPC advocacy team, looking ahead to the 2009 legislative session. Minding Elections. Texas, as well as the rest of the nation, is experiencing a period of unprecedented voter turnout. This high level of turnout will likely have an effect on the current composition of the Texas Legislature. Also, several legislators decided not to run for office again. In the state House, for example, the current Speaker of the Texas House of Representatives has been under criticism from a small, but vocal group of Republican insurgents. If the balance of power in the Texas House of Representatives is altered, the TAPC advocacy team will need to reach out to new members on behalf of the TAPC, monitor new committee assignments, and evaluate the impact that any new balance of power might have on the staffing industry. Building Bipartisan Branding. With legislative races ongoing, the TAPC advocacy team is working hard to appropriately build our bipartisan brand with as many members as possible, regardless of where their loyalties are pledged.
So What Does a Lobbyist Actually Do? Lobbyists are one of the staffing industry’s tools for protecting your interests at the Texas Capitol. Last year, over six thousand bills were introduced in the Texas Legislature. Many of these affect how business are treated in Texas and some can be directly targeted at the staffing industry. The primary job of your lobbyist’s during session is to monitor the introduction of legislation, assess its impact on Texas staffing industry and present to the association any bills that may be of interest to the industry. If the association needs clarification as to what a bill will do, the lobbyist will take several actions including contacting the author’s office, the committee clerk, and/or the sponsor. If it is determined that a bill will hurt the staffing industry, the TAPC advocacy team must work to either defeat the bill or to have it amended. This requires lobbying the author and members of the Legislature, working with the author’s staff and committee consultant, negotiation with other stakeholder groups, and working with the association to coordinate effective grassroots lobbying, if necessary. A lobbyist must also monitor the budget process and lobby to protect the industry from additional fees and taxes. As many of you are aware, the Texas Revised Franchise Tax (a.k.a. The Margins Tax) was set to deal a crippling blow to the temporary staffing industry in Texas until the TAPC advocacy team passed key amendments to the Revised Margins Tax bill which effectively blunted theses negative effects. Lastly, if the industry needs a change in the law, the lobbyist attempts to obtain an author for a bill and lobbies it through the legislative process. The highlights above are a sampling of activities that are directed for member benefits. We look forward to seeing you, the members, at the 2009 TAPC Day on the Hill in Austin. We always enjoy visiting with you about how we can work together in TAPC’s legislative growth and advocacy! Thank you again for your genuine support and excitement about the TAPC. Your dues contributions help to defray the expenses associated with the commitment toward fighting legislation that is detrimental to our industry and to supporting issues which are favorable. As always, if you have any questions or ideas, please call Jake at (512) 646-0828 or Steve at (512) 646-7406. |