California Board of Accountancy amends practice privilege rules

The California Board of Accountancy has amended a rule that requires out-of-state CPAs who prepare business or fiduciary tax returns for California clients to first obtain a practice privilege.

According to the California Society of CPAs, the practice privilege program remains in place, but amendments will be made to provide temporary changes to California law that will allow out-of-state CPAs to:

provide tax services to California clients without a practice privilege if the CPAs (a) do not solicit California clients, (b) do not physically enter California, and (c) do not imply that they are registered with or licensed by the California Board of Accountancy;
obtain a practice privilege without requiring that the firm register with the California Board of Accountancy, the California Secretary of State and the California Franchise Tax Board.

The temporary changes are effective through Jan. 1, 2011.

"The bill will also provide for a limited temporary practice without registration as long as the practice is incidental to practice in another state, California clients are not solicited, and there is no assertion that the individual or firm are licensed or registered to practice in California," stated Jeannie Tindel, director of legislation for the California Society of CPAs. "Additionally unregistered individuals and firms that are providing services will be subject to the authority of the CBA.

"We will provide additional information as events continue to unfold," Tindel added. "The California Board of Accountancy is to be congratulated for responding quickly to resolve this urgent issue."

The California Board of Accountancy received letters of opposition to the original practice privilege requirements from the Maryland Association of CPAs, the American Institute of CPAs and numerous other state CPA societies.

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