"Over the past several years, the [Rhode Island Society of Certified Public Accountants] has dedicated resources to creating quality programs geared specifically to business and economic development for our members."
David C. Morganelli is a partner at Partridge Snow and Hahn, LLP and is chair of the firm’s tax group. He advises and represents business and individual clients concerning federal and state tax issues and related corporate governance issues. He concentrates on taxpayer advocacy, mergers and acquisitions, nonprofit taxation, business incentives and compensation and benefits.
Morganelli has been an attorney for 20 years and is also a Certified Public Accountant.
He is the chair of the Federal and State Taxation Committee of the Rhode Island Society of Certified Public Accountants. He also serves on the Board of Governors for the Providence College Alumni Association and is a member of the Town of Milford, Mass. Finance Committee. He is a member of the Rhode Island Bar Association, Massachusetts Bar Association and the Massachusetts and the Rhode Island Society of Certified Public Accountants.
Morganelli has a bachelor’s degree in accounting from Providence College, graduated from the New England School of Law, J.D. in 1993 and from Boston University School of Law, LL.M. in 1994.
PBN: The Rhode Island Society of Certified Public Accountants supports some reforms in the state personal income tax to fix an oversight in legislation passed by the state legislature. Can you explain what this oversight is?
MORGANELLI: The Rhode Island Society of Certified Public Accountants supports a proposal to fix an oversight in the personal income tax reforms enacted a couple of years ago by the Rhode Island General Assembly. The reforms dropped the high marginal tax rates of 9.9 percent down to 5.99 percent and replaced itemized deductions with standard deductions. This was good public policy and we supported that proposal. Here’s what we’d like to see fixed – under the new law, money received through a state tax refund from 2011, or any year, that was received in 2012, or any following year, was counted as part of 2012 Rhode Island taxable income. The amount of the refund was no longer deductible, since itemized deductions were no longer allowed. Therefore, the refund from over-paying 2011 taxes was taxable as Rhode Island income in 2012.
PBN: How did members of RISCPA discover this tax consequence?
MORGANELLI: Many CPAs who are society members realized while preparing their clients’ tax returns earlier this year that there was likely an unintended adverse tax consequence to taxpayers in the original reform.
PBN: What is RISCPA supporting to fix this oversight?
MORGANELLI: Two legislators, Sen. Michael McCaffrey, D-Warwick, and Rep. Joseph McNamara, D-Warwick, have both introduced bills to address this oversight. The society supports these bills.
PBN: If these changes were made, would they mostly benefit individuals on their personal taxes or would they also be advantageous for business?
MORGANELLI: This issue relates only to personal taxes, but a business owner of a sub-chapter “S” corporation or an LLC would likely benefit as well, since profits from these entities flow to the owner’s individual personal tax returns.
PBN: From a broader perspective, what are some of the initiatives RISCPA supports in terms of making Rhode Island more attractive for economic development?
MORGANELLI: Over the past several years, the society has dedicated resources to creating quality programs geared specifically to business and economic development for our members. RISCPA’s networking events in January and in the fall draw in excess of 500 and
300 people, respectively, from the accounting, legal, financial, academic and political communities. There are no speeches at these events – just the state’s leading professionals coming together to create business development opportunities. Importantly, the concept is working for our members, guests and for our collaborating sponsors. Also, the RISCPA has significantly elevated its advocacy efforts in order to help support key initiatives that will improve the business climate and overall economy of the Ocean State.