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Have CPA, will travel?
Mobility requirements in other states keep profession on its toes
When it comes to practice privileges in other states, the C in CPA might just stand for “confusion.”
Troublesome events in Illinois and California in recent months have prompted the profession to closely examine the rules that apply to CPAs who have clients in multiple states. Both issues have resolved themselves – at least temporarily – in the profession’s favor. But the question remains: What additional rules apply to CPAs who do business across state lines?
The AICPA has prepared an online study of the mobility requirements in every state. Download or bookmark the helpful document here.
In the meantime, here’s a quick look at the latest developments in some important states.
Maryland practice privileges clarified
In Maryland, CPA firms (those with a Maryland firm permit) and licensed sole practitioners can hire and / or temporarily transfer CPAs from other states to work in Maryland without requiring a temporary or reciprocal license in Maryland, unless that CPA is a partner in charge of an audit.
That's a summary of Maryland Statute 2-102, which was clarified by the Maryland Association of CPAs in a recent letter to the Maryland Board of Public Accountancy.
The letter states that the statute "does not prohibit a licensee or permit holder from:
- "employing a certified public accountant licensed by another state or a foreign country; or
- "listing that individual as a certified public accountant, if the listing is followed by the name of or usual abbreviation for the other state or country where the individual is recognized as a certified public accountant."
In a recent meeting with the State Board, the letter states, "it was agreed that the license was required when a CPA was 'conducting an audit' in Maryland. Our research indicates that the 'term of art' in the profession for 'conducting an audit' is the partner in charge of an audit and / or the partner signing the audit report. Thus, the interpretation of this statute is such that any CPA who is not the partner in charge of or signing the audit report can transfer into the state without additional licensing. In the case of a partner in charge of an audit, that CPA is required to have a valid Maryland license.
"Futhermore," the letter continues, "any CPAs working under this statute should be listed on business cards or firm listings as a CPA with the usual abbreviation for the state or country where the individual is recognized as a CPA (for example, 'Joe Smith, CPA-NC' for North Carolina)."
Illinois amends rule for out-of-state CPAs
Emergency legislation has been passed in Illinois to help resolve a problematic situation for CPAs who file clients’ tax returns in Illinois.
A new Illinois law had required out-of-state CPAs filing returns in Illinois to get an Illinois CPA license, even if the client is not located in Illinois. The law would have affected Maryland CPAs filing multi-state returns for clients.
After hearing strenuous objections from CPAs nationwide and their membership organizations (including the MACPA), Illinois lawmakers have enacted emergency legislation stating that out-of-state CPAs — those who do not have a physical presence in Illinois and do not solicit clients in Illinois — will not be required to register for temporary or incidental practice in Illinois.
The emergency regulation will remain in place for 150 days, allowing sufficient time for formal rule-making to take place and clarify the language of the law.
The Illinois law in question requires CPAs who hold out in the state in any way to register with the licensing department. Since the law allows for temporary or incidental practice, the emergency regulation is in keeping with state law.
For questions or concerns about licensing, please contact the Illinois Board of Examiners.
The latest from California
A law signed by Gov. Arnold Schwarzenegger in September does, among others, the following things:
- The law “allows a practice privilege holder to practice in California and sign in the name of his or her firm even if the firm is not registered by the California Board of Accountancy.”
- The law also “permits out-of-state CPAs, PAs and public accounting firms to temporarily practice in California incident to practice in another state provided that the individual or out-of-state firm does not solicit California clients, does not assert or imply that the practitioner or firm is licensed or registered to practice public accountancy in California, and does not engage in the development, implementation or marketing to California consumers of any abusive tax avoidance transaction.”
Get complete details about the California law here.
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