This is like early election results: It is based on the best information available since speaking with our lobbyist over the weekend and this morning. 

However, I have read the bill and amendments as available on the General Assembly Web site and they seem to corroborate the reporting I am seeing in the news as well. Should there be any minor differences, I will correct them later today or tomorrow.

The compromise tax bill has passed the combined legislative body by a vote of 78 – 56 (out of 141 senators and delegates).

Here is a summary:

• Corporate income tax rates increased from 7 percent to 8.25 percent (a 17.85 percent increase).
• The sales tax rate increases from 5 percent to 6 percent (a 20 percent increase).
• Individual income tax rates increase from 4.75 percent to 5 percent, 5.25 percent and 5.5 percent (a 15.8 percent increase).
• The vehicle titling tax increases from 5 percent to 6 percent (a 20 percent increase).
• The sales tax base is expanded to include computer services. All other services were removed.
• The tobacco tax has increase.

Combined reporting is not in the bill, according to the The Daily Record. The Maryland Chamber of Commerce has a recap this morning in its blog.

According to the amendment, computer services are defined (on page 12) as:

1. Computer facilities management and operation (data centers and hosting companies?)
2. Custom computer programming
3. Computer system planning and design that integrate hardware, software and communication technologies
4. Computer disaster recovery
5. Hardware or software installation or maintenance

I have not determined if the Chamber’s amendments to ease the reporting requirements contained in the original Senate bill were accepted (which we actively supported), and it looks like the MACPA  has been acknowledged in the Maryland Business Tax Reform Commission but did not get the “seat” we requested. A provision was added stating that each of the three members of the public “should be an attorney at law or an accountant” (see page 8 of this amendment). You can be sure we will be making efforts to get qualified CPAs appointed to this commission.

Other bills that were tabled included the increased filing fees (HB 55) and the alternative minimum tax for corporations (SB 22).

Several victories for MACPA members: We opposed the sales tax on services, and we opposed the filing fees and combined reporting (in its overly broad form).  Thanks to the hard work of our State Tax Committee and all of our volunteers who took time to write letters, we did it! Don’t forget: We get to do this all over again in January. (Register now for CPA Day in Annapolis by clicking here.)

The other major development was the passing of the slots bill (See The Sun’s reporting here), which will go to a voter referendum in November 2008.  The state will be counting on the estimated $650 million in revenues attributed to this approach.

What do you think will happen if the voters turn this down?