CPA Out-of-state licensing

CPA Mobility Issue Close to Resolution

2009-05-06T19:15:00.000-07:00

From the AICPA:

Momentum Continues on CPA Mobility Success as Florida Becomes 39th State to Enact Legislation

An unprecedented wave has moved across the country to enact a uniform mobility provision in every jurisdiction that licenses CPAs. Nearly every state is at some point in the process of considering this concept.

Thirty-nine states have now passed legislation that allows CPAs to gain a practice privilege in another jurisdiction without providing notification, while at the same time agreeing to the automatic jurisdiction of the state. Florida became the most recent state, when the legislature approved a measure on Apr. 29. Other mobility states are: Arkansas, Arizona, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Currently, eight other states have mobility legislation pending: Alabama, Hawaii, Massachusetts, Nevada, New Hampshire, North Carolina, Oregon and Vermont, and it is anticipated that by the close of the 2009 legislative sessions the number of mobility states could reach 45. Enacting mobility legislation in these states would mean the profession has moved significantly closer to a national uniform mobility system among all 55 U.S. jurisdictions.

The success of this initiative is due to the ongoing collaborative efforts among the AICPA, the National Association of State Boards of Accountancy, state CPA societies, state boards of accountancy and CPA firms across the country.

Of course, you should notice that one of those states not yet complying is my home state of California, or as we like to phrase it: "The Grand Dutchy of California".

Latest Information on CPA Mobility

2009-01-01T08:33:00.000-08:00

Now that the AICPA and NASBA have made this issue a priority, it is no longer necessary for me to keep up with the constant changes for CPA out-of-state licensing (now known as CPA Mobility). For the latest changes go to: AICPA Mobility

New Developments on State Mobility

2007-03-14T04:53:00.000-07:00

Accountingweb.com reported that several states are seeking to change state law to allow for individual CPAs licensed in other states with substantially equivalent licensing requirements to provide client services in person, by mail or electronically without securing an additional license or temporary registration. (For the complete story go to: http://www.accountingweb.com/cgi-bin/item.cgi?id=103244&d=815&amp;amp;amp;amp;amp;h=817&f=816&dateformat=%B%20%e,%20%Y)

AICPA/NASBA Joint Committee Proposal on State Mobility

2007-01-04T07:20:00.000-08:00

IMPORTANT ANNOUNCEMENT ON STATE MOBILITY

For everyone who has clients outside of their home state, the proposal released on December 11, 2006, by the AICPA/NASBA Joint Committee on Mobility represents an important step in solving the out-of-state licensing issue.

Under the proposal, all notification requirements will be eliminated! State Boards will be given automatic jurisdiction over a CPA and the CPA firm employing them.

I urge everyone who has any interest in the out-of-state licensing issue to read the exposure draft. Comments are due by May 15, 2007. Before you get wrapped up in tax season, please take the time to help yourself and our profession bring this issue to a just conclusion. Go to: http://www.aicpa.org/download/states/UAA_Section_23_Exposure_Draft_2006.pdf

Most of you know I have been working on this issue for over two years now. We need your help now!

Meanwhile all of us who have out-of-state clients will have to navigate the landmines for at least another year. For the most up-to-date information on the current laws in each of the 50 states, you might want to access my excel spreadsheet on the rules for each state. www.artberkowitz.com/Licensing.xls

If you are interested in the history of this issue, continue reading the posts on this blog.

For those who also need CPE, each of my 2007 self-study courses has up-to-date information on the issue of out-of-state licensing. Visit my website at: www.artberkowitz.com and go to the self-study link for courses on accounting, fraud, and ethics.

Great News From Illinois

2006-10-03T19:40:00.000-07:00

Just when everything was beginning to look bleakest for CPAs with out of state clients, Illinois came through with emergency legislation that alleviates most of our concerns.

Just a few weeks ago, I had spoken with representatives of the Illinois CPA Society. They told me that they were resigned to the fact that the toughest restrictions in the country were indeed going to go into effect on October 1, 2006 and they were unable to stop it. In fact, some of them had adopted a new "spin" that the rules which would prevent out of state practitioners from preparing even a non resident Illinois tax return without registering in Illinois were actually a good thing for the profession - Huh?

On September 29th the Governor signed emergency legislation that exempts the most onerous parts of the registration requirements.

Here is what it says:

An individual certified public accountant lawfully practicing in another state shall not be required to file for temporary practice or obtain registration as a certified public accountant under this Section so long as the individual CPA is temporarily practicing in this state incidental to practice in another state and does not solicit Illinois clients nor have a physical presence in Illinois.

Interestingly, just like in Georgia, a letter from a California CPA to an official in Illinois seemed to play a large part in overturning the planned restrictions.

I will continue to keep you informed of new developments with regard to out of state licensing as we approach tax season 2007.

Update on Out-of-state Licensing

2006-06-23T07:00:00.000-07:00

I continue to get numerous inquiries about the status of out-of-state licensing regulations - most hoping that the issue will just go away. But the facts are still the facts!

NOTHING HAS CHANGED since the beginning of the year!!

If you follow two of the biggest states - California and Illinois - you will have a pretty good idea of where we are in the debate. In the past few days I have spoken with representatives of the boards of accountancy and the state CPA societies for each of these states.

Legislation has been proposed, but nothing has been passed.

California's law went into effect on January 1, 2006. Illinois' law goes into effect on October 1, 2006... and many more states have restrictions on the practice of public accountancy by out-of-state CPAs. See my chart at www.artberkowitz.com

While enforcement has been inconsistent, the fact remains that in many, many states, the practice of public accounting by unlicensed (or unregistered) out-of-state CPAs is a violation of the law.

Many CPAs have chosen the ostrich method of dealing with this issue. We prefer the direct approach - a national public debate on the advantages and disadvantages of restrictions to the interstate practice of accounting by CPAs.

We urge you to contact your congressmen, your state legislators, your state society, your state board of accountancy, NASBA, and the AICPA.

Update to Excel spreadsheet

2006-02-26T10:15:00.000-08:00

I have updated the excel spreadsheet (updated to 2/24/2006) showing the rules for out-of-state licensing in all 50 fifty states.

Go to http://www.artberkowitz.com. The link is on the home page.

If you are still seeing the old spreadsheet (dated 12/13/2005), you may need to clear your cache. First try pushing F5 on your computer to refresh the page. If that does not work, there are instructions on how to clear your cache at: http://www.chami.com/tips/internet/021198I.html.

The Tide has Definitely Turned

2006-02-23T23:00:00.000-08:00

California's restrictions on out-of-state licensing are about to change - and for the better. (It's not yet law so you might want to stay tuned.)

The California Board of Accountancy will be seeking a legislative change to restore a form of "temporary and incidental practice." In addition, the proposal will exempt the preparation of all tax returns from the practice prvilege laws that went into effect on January 1, 2006. On that date, California became the only state to have different licensing rules for the preparation of individual and business tax returns. Also, out-of-state CPA firms will not have to be registered in California in order for the individual CPA to prepare the tax return.

Remember that the recommendations of the California Board of Accountancy must still go through the legislative process and a lot can change.

But the big news is that the people have spoken and the tide has definitely turned. The assumption that the public is better served by more and more restrictions on practitioners rights to practice is up for debate.

Thank you all for your E-mails, letters, telephone calls, and faxes.The AICPA, state CPA societies, governmental regulators and legislators are now listening to what you have to say.

So let's not stop here. We need to resolve the issue of out-of-state licensing across the country.

MORE GOOD NEWS - GEORGIA

2006-02-09T15:59:00.000-08:00

In response to an inquiry from a California CPA to the Georgia Secretary of State, the Georgia Board of Accountancy has ruled that their out-of-state licensing rules no longer apply to tax returns (either individual or business).

A new trend has begun. We have to keep up the pressure.

Please contact the California Board of Accountancy and any California legislators you know. Tell them that the rules on practice privilege must change.

California's Practice Privilege Being Challenged

2006-02-07T18:22:00.000-08:00

For all those practitioners who have been struggling trying to comply with the various state rules on out-of-state licensing, good news may be on the way.

The California Society of CPAs has reversed its position on California's out-of-state licensing rules and has asked the California Board of Accountancy to reconsider its position and hold a “thorough discussion of all issues” during a meeting on February 22nd and 23rd in Sacramento.

We feel that it is imperative for you to join in this discussion!

Please send your thoughts and correspondence to the California Board of Accountancy, 2000 Evergreen Street, Suite 250, Sacramento, CA 95815. You may also want to copy Bruce Allen, CalCPA, Director of Government Relations, 1201 "K" Street, Ste. 1000, Sacramento, CA 95814-3922.

From the beginning of the push toward restrictions on out-of-state licensing, this website has called for a full and open public debate on the merits of these rules as a way to protect the public.

Most state CPA societies ignored the obvious implications of higher costs and complexity to small and midsized CPA firms without a corresponding benefit to the public. There were just a few of us who asked questions that were never answered.

We knew that eventually the problems associated with 54 jurisdictions each having their own rules to limit the practice of public accounting was not in the best interest of the public.

Now is the time for CPAs from across the state and throughout the country to speak out and have their voices heard.

Art Berkowitz, CPA

Q&As from the California Board of Accountancy

2006-01-31T17:09:00.000-08:00

Effective January 1, 2006, the new practice privilege rules went into effect in California. The Board of Accountancy has issued a revised set of questions and answers that are available on their website. Here is a direct link to those Q&As:

http://www.dca.ca.gov/cba/forms/pphandbook.pdf#page=14

I noted a couple of interesting issues contained in the California Board of Accountancy Q&As.

Specifically for California CPAs

Q: I am a California CPA and prepare tax returns for a few clients in other states. Do other states require a practice privilege in order to continue to serve these clients?

A: The requirements to practice public accountancy vary from state to state. It is your responsibility to comply with the laws and requirements of any jurisdiction in which you practice. Therefore, it is suggested you contact the relevant state board(s) to determine what is required. Unauthorized practice in another state can be cause for discipline against your California license.

Specifically for out-of-state licensees with California clients

Q: I’m a CPA in another state and do not plan to be in California. I do only one tax return for a California client. Do I need a California practice privilege?

A: Yes, in order to provide public accounting services to clients who reside in California you will be required to obtain a California practice privilege or obtain a California CPA license. Preparing tax returns as a CPA is a service that falls within the definition of the practice of public accountancy contained in Section 5051 of the California Accountancy Act.

If tax returns are prepared in the name of a firm, the firm would also need to be registered in California. You can visit the Board’s Web site at: www.dca.ca.gov/cba to review the firm registration requirements and obtain the application.

However, Section 5054 of the California Accountancy Act allows for a narrow exception from the practice privilege requirements for the preparation of tax returns for clients who are individuals (natural persons) or the estate of individuals (natural persons) who were clients at the time of death.

The exception provides that an individual or firm holding a valid and current license, certificate, or permit to practice public accountancy from another state may prepare tax returns for natural persons who are California residents or estate tax returns for the estates of natural persons who were clients at the time of death without obtaining a permit to practice public accountancy issued by the Board provided that the individual or firm does not physically enter California to practice public accountancy pursuant to Section 5051, does not solicit California clients, and does not assert or imply that the individual or firm is licensed or registered to practice public accountancy in California.

For a complete discussion of the new California rules on practice privilege go to: http://www.dca.ca.gov/cba/new.htm

Comments from Practitioners

2006-01-11T09:47:00.000-08:00

In the first 72 hours after I published the excel spreadsheet on out-of-state licensing, over 1650 practitioners accessed the chart. I have received dozens of E-mails and telephone calls thanking me for my efforts and asking me questions about how to use the chart.

Now that the information has been out there for nearly a month, I thought it might be helpful to publish some of the ideas that practitioners have discussed with me regarding what they are considering doing in response to this difficult challenge.

DISCLAIMER

First let me state clearly that everything discussed on this blog site is unofficial. It is up to you and your firm to decide how best to deal with the issue of out-of-state licensing. One of the major purposes for my blog (and the spreadsheet) was to bring this issue to the forefront so that CPAs, CPA associations, and maybe even regulators and legislators will deal with this issue now (not two or three years from now). From the comments I have been receiving, the number of calls being made to state boards of accountancy and state societies has already resulted in some states reconsidering their interpretation and/or enforcement of these laws.

BENIGN NEGLECT

Unfortunately, the inconsistent responses and difficulty encountered by many practitioners in getting meaningful information from state boards of accountancy has also led some to conclude that their best option is one of "benign neglect". I'll keep doing what I am doing until they catch me.

I do not believe that is a proper response. Yet I do understand the level of frustration.

Do you really want to be the test case?

ALTERNATIVES BEING DISCUSSED

Limited Exposure

One of the things I discovered when talking to state boards of accountancy was the difference between how many states look at the preparation of tax returns. While some states have restrictions on who can be a paid preparer, other states permit anyone to prepare tax returns. Therefore you will find in my spreadsheet that many states do not include tax preparation at all in their definition of out-of-state CPA regulation. Others only include tax preparation if the practitioner sets foot in their state. There are currently only 17 states where tax returns are included in the definition of out-of-state practice AND the rules apply even if the practitioner does not set foot in the state.

Hiring EAs or getting your EA license

Several firms have been discussing having an Enrolled Agent (EA) sign all of their out of state tax returns. EAs are nationally licensed. The only exception we have heard about is in Oregon. I still don't fully understand how or to what extent Oregon has limited EA tax practice, but if you do not have a tax client in Oregon, this might be something to consider.

Signing the Tax Return Without Using Your CPA Designation

I first encountered this option when speaking with the Illinois Board of Accountancy. They said that they would not have any problem or oversight if a CPA signed an Illinois tax return without using their CPA designation. My immediate reaction to that suggestion was very negative. I worked hard for my CPA license and felt that a practitioner was still holding out as a CPA even if he/she did not use the designation on the tax return. I also heard unofficially that the California Board of Accountancy would frown upon such a decision. In the past week, I have heard from several CPAs who are seriously considering using this alternative. They state that they have received approval from their board of accountancy. I unofficially spoke with my board, who offered these thoughts:

1. It is doubtful whether the issue would come to their attention in such a situation.

2. Only if the tax return "blew up" and the other agency found reason to discipline the practitioner would out-of-state licensing become a violation to be dealt with.

3. Because of the growing nature and controversy surrounding out-of-state practice, the penalties for this rule violation will probably not be very harsh.

4. They wondered how the firm was going to deal with the line on the tax return that asks for the firm's signature.

Dealing with Temporary Practice on an Individual Basis

Several states do not have any temporary practice privilege rules for firms. In addition, the fees could become prohibitive when registering both the firm and the individuals. Some of the practitioners who spoke with or E-mailed me have been exploring the alternative of just having the tax returns signed by the individual and some are even considering it for financial statements. If someone comes up with an effective way to do this, please let me know and I will publish the idea on this blog so others can comment.

Added - January 15, 2006

I received this recent comment from a California practitioner. Does anyone have any thoughts?

I am having an anxiety attack. I have been investigating the out of state temporary licenses. I am a professional corporation. It appears, I have to ALSO pay a fee for my corporation as well as myself in those specific states. However, I am finding that I may have to file a corporate tax return in some states as well which then imposes another minimum tax fee.....this is a nightmare.

HOW DID THIS HAPPEN

Probably the most common question I get is how and when did this all happen. The truth is that several states have had rules on their books restricting out-of-state licensees from practicing in their state without obtaining a license or permit to practice. But it has only been in the last year or so that the number of states passing new restrictions and promising to enforce these laws has blown up.

I have two thoughts as to how it passed under the radar:

1. The Big Four international CPA firms have people licensed in every state. To them this was not a huge issue. And they may be the only entities that have the power and resources to stop the tidal wave. Some have suggested that they were actually behind the movement to restrict smaller firms from competing with them. If this is true, I have no evidence to support it.

2. CPAs did not consider these new laws as a threat because they only affected practitioners from other states. Some even looked at them as protection from outsiders who might take away some of their business. It is now quite obvious that states were not going to sit idly by while neighboring states put restrictions on their state's professionals. For many this has become "tit for tat". For others it has become a way to raise revenue. Whatever the reason, the issue has now taken on a life of its own.

FRUSTRATION

Although a wide range of feelings (many of which could not be displayed on this website) were expressed in the calls and E-mails to me, by far the most prevalent expression was frustration - frustration with the 50 different rules; frustration in obtaining information about the rules; and frustration with the time and cost involved in providing a needed service for their clients.

I believe that we can effectively turn that frustration into productive change. Now is the time to contact your state society, your state board of accountancy and tell them what you would like done.

Should we go back to a system of temporary and incidental practice?
Should we have a de minimus exception (something that one state recently implemented)?
Should we have national licensing (politically not a likely outcome)?
Should the states agree to one system under the guidance of NASBA or the AICPA?

or perhaps you have another solution to this problem that you would like me to post on this website.

YOUR COMMENTS ARE WELCOME!

Chart on out-of-state licensing

2005-12-15T17:00:00.000-08:00

My chart on out-of-state licensing has been prepared as an excel spreadsheet and is posted on my website. This spreadsheet is based on information obtained from state Board of Accountancy websites and from Board personnel. It is not intended to provide legal advice as to the requirements of licensing in the individual states. It is intended to assist those individuals and firms in obtaining the necessary information to make informed decisions.

The rules related to out-of-state licensing are not fixed and will change!

I will attempt to update the spreadsheet as I become aware of changes to the rules. Please let me know about any errors or changes that you become aware of: artbcpa@aol.com.

UPDATE: DECEMBER 2005

2005-12-08T07:16:00.000-08:00

From the interest I have received at my seminars and in response to my blogs, I have come to believe that one of the most important issues facing CPAs as we approach this year end accounting and tax season has been the rapidly changing rules related to out-of-state licensing. It is not unusual for even the smallest CPA firm to prepare tax returns for clients from five, ten or even more different states. As they prepare year end accounting and tax work this year they may be in for a BIG SURPRISE.

States, one after another, have been modifying their laws to require out-of-state CPAs to file notification of their intent to "practice accounting " in their state or even to require them to be licensed in their states. Your state may require a practice permit for out-of-state CPAs who practice accounting for a client even if they never set foot in the state.

BUT SO DO MANY OF THE STATES SURROUNDING YOUR STATE AND SOME REQUIRE SUCH NOTICE/LICENSING EVEN FOR FILING TAX RETURNS.

I believe that these changes flew under the radar because most CPAs and many state societies were only thinking about the impact the law would have on their instate CPAs - not that other states would also be putting in restrictions of their own.

The biggest problem has been that there has been no one place for CPAs to go to find out what the rules are.

I have released several blogs on this topic to help warn CPAs of what has been going on, but there was still no single place for CPAs to go to help them meet this very important challenge.

In the next few days I will publish a chart showing out-of-state licensing information for all 50 states and provide a link to the portion of their websites directly related to the topic.

I hope this will be helpful for CPAs across the country and I look forward to seeing you at my seminars: www.artberkowitz.com/calendar

You Could Have a Big Surprise Next Tax Season

2005-08-26T10:41:00.000-07:00

The Facts about Out-of-State Licensing

Perhaps you were not paying attention when your state legislature and state Board of Accountancy were debating the issue of out-of-state licensing. Or maybe you said, “What does this have to do with me, since I am already licensed in ….”

Whether it is called interstate practice, the term used by the National Association of State Boards of Accountancy (NASBA), temporary licensing, right to practice, or practice privilege, as we do here in California, one after another, states have been strengthening their laws regarding practicing public accounting within their state.

So when you begin to prepare those individual or business tax returns for your out-of-state clients, you and your clients may be in for a BIG SURPRISE. Several California practitioners have already found that out when they recently tried to e-file a return in Oregon. They were refused access because they were not licensed (either fully or temporarily) in Oregon.

How Extensive is the Practice?

In the last two months alone several states, including Colorado, Wyoming and Illinois, have revised their rules with regard to out-of-state licensing. And those are only the ones I know about. From a cursory review of state board websites, it appears that more than half of the states now have some kind of notification and/or restrictions on the practice of accounting in their state.

What Kind of Services are Covered?

Some of the states apply their temporary licensing rules only to attest work; some apply only if you set foot in their state; some apply to business, but not individual tax returns (like California); some apply only to residents of their state.

And then there are states like Illinois. If you do ANY accounting work for an individual or company that resides in Illinois or has any kind of filing requirement in the state, you must be licensed in Illinois. That includes nonresident returns and partnerships with multi-state filing requirements. (Fortunately, Illinois' rules do not go into effect until October 1, 2006 and there has been such a commotion that they are looking for ways to modify the regulations or enforcement of the law).

Now we just got word of a new problem in Nevada. The Division of Mortgage Lending (not the Board of Accountancy) is requiring that any financial statements filed with their agency “must be prepared by an Independent Certified Public Accountant licensed to practice in Nevada.” In other words, if you have a client that is required to file an annual statement with the regulatory agency because they sell mortgages in Nevada, the financial statements must be prepared by a CPA licensed in Nevada.

How Do I Find Out About the Rules?

The biggest problem is that there is no central place to go to get the latest state-by-state rules. In addition, the rules seem to be changing faster than anyone can keep up with. In researching the issue, I did find one website that has a great deal of the key information. The Idaho Board of Accountancy has put together a summary of the licensing requirements for all 50 states and the four additional jurisdictions covered by US accounting rules. I can’t guarantee that they have the very latest changes, but there are links to the specific sections of the individual state websites and it’s a great place to start: http://www.isba.idaho.gov/htm/states.htm.

The Emperor Has No Clothes

Most of the states are passing these rules in order to “protect the public”. However, the real and chilling effect is that small and midsized firms (including those in their own state) will not be able to comply with the various state rules because of the time and cost involved, unless they have numerous clients (or one large one) in the state. Their own states CPAs will feel the impact as they have to consider how they can efficiently handle their out-of-state clients. I guess some state legislators and state Boards of Accountancy don’t believe that giving people the widest choice possible and permitting people to make their own decisions about their professionals might truly be “protecting the public”.

What About NASBA and the UAA?

The National Association of State Boards of Accountancy on August 1st released proposed changes to the Uniform Accountancy Act to bring state rules closer together. They have proposed that firms be permitted to file a “master notice” with NASBA and consent to the state’s accountancy laws. However, NASBA has no enforcement power and depends on the cooperation of the individual states.

What Can You Do?

1. Don’t wait until tax season to decide how you are going to deal with out-of-state clients.

2. Consider the cost/benefit of temporary licensing, permanent licensing, and continuing to service out-of-state clients. (For example: Does it really pay to prepare one Illinois tax return?)

3. Contact your legislators, your Board of Accountancy, your state society and let them know your views about this issue. (For example: Do you believe there should be national licensing instead of state licensing of accountants or is the main problem just one of making the rules more widely known? Do you agree with the proposed changes being offered by NASBA?)

Do Accountant's Need to Be Licensed in Every State?

2005-07-11T09:00:00.000-07:00

One of the hottest issues in accounting today is the growing trend for state boards of accountancy to place new restrictions on accountants practicing in their state. These rules are being proposed and passed in order to “protect the public”. Since I strongly agree that the public should be protected from unscrupulous persons and fraudulent acts, let’s take a look at the benefits (and costs) to the public.

First, who is covered by these new rules?

· CPAs who are licensed in states other than the one placing the restrictions.

Does each of these states have requirements for CPAs to be licensed in their state, including education requirements, successfully passing the CPA examination, etc.?

· Yes; while the rules may be different, every state requires CPA candidates to pass the national examination and meet stringent ethical requirements.

Are unlicensed, unscrupulous persons covered by these new regulations?

· No; that is beyond the jurisdiction of state boards of accountancy and is not covered by these new restrictions on the practice of accounting in the states.

So what is really happening is that state boards of accountancy are saying that their requirements are better than another state’s.

How do these new state restrictions affect the public?

· The “Big Four” and other large accounting firms are already licensed in multiple states since they have offices throughout the country. However, local individual CPAs, as well as small and midsized accounting firms, are now forced to investigate the temporary licensing rules in every state where a client resides or must file a tax return. Clients with multiple state returns, long-time clients who have moved to another state, or even a client whose child is in college and earns money to help pay for school may now be forced to sever that relationship or use large international accounting firms.

· The economics for most sole practitioners and local firms to comply with each state’s temporary licensing requirements are simply not feasible. The cost and time involved in even researching the temporary licensing rules for each state, filling in the forms, and paying the fees for five, ten, fifteen or more states doesn’t make sense unless the CPA has large clients or many clients in the state. Thus states have effectively reduced the public’s choice of professionals through the passing of these restrictions.

But I thought the Uniform Accountancy Act (UAA) was supposed to reduce the differences between states and facilitate interstate practice.

· So did I. But after long discussions with the National Association of State Boards of Accountancy (NASBA) and more than a dozen state boards of accountancy, it appears that we are moving in the opposite direction.

States have apparently determined that in order to “protect the public”, they need to limit the public’s choice of accountants to big accounting firms and CPAs within their state.

Well, isn’t it important that the preparers of state tax returns be familiar with the rules in that state?

That is a valid point. However, most states piggyback their rules onto those of the Federal government. For those states that do have extensive differences between state and Federal tax laws, most practitioners today rely heavily on their tax software to make the appropriate adjustments and remind them of the different rules.

Isn’t this really just a big to do about nothing?

I recently tried researching the temporary licensing rules for a seminar I was doing in Colorado. Here are some the differences I found in the temporary licensing rules that affect CPAs in that class:

· One state had no provision for temporary licensing and required all accountants who performed any accounting work for a resident of the state to be fully licensed.

· One state had a 13-page form that included a requirement for copies of the applicant’s original college transcript.

· One state required out-of-state CPAs to be licensed only if they set foot into the state, but the requirements include all tax returns.

· One state had an exemption for sole practitioners; so if there were two CPAs in the firm, that state’s public would be protected from “bad” accountants, thus assuming that all sole practitioners must be “good” accountants.

· One state had a temporary licensing requirement by engagement with a $450 fee for each engagement.

In addition, states are not standing still. In response to the restrictions being placed on Colorado CPAs, the Colorado Board of Accountancy called an emergency meeting to effectively reciprocate what the other states were doing to their CPAs. So it may take a full-time employee just to keep up with the constantly changing rules.

One of the most frustrating parts of the issue is that there is no central place for CPAs to research each state’s rules. It sometimes took 30 minutes or more for me to locate the place on the State board’s website that related to temporary licensing. Some I never found.

So what is so different about accountants needing to be licensed in every state for which they want to practice? Don’t doctors, attorneys, and even contractors have to be licensed in a state before they can practice in the state?

This is a question that I labored with for quite a while. Was it really that we, as accountants, were just used to the freedom of being able to provide services to our clients around the country? After discussing this with numerous practitioners and gathering more of the facts, I realized that there is a big difference between representing a client in court with all the differences in state civil and criminal laws or building a home or office building and not knowing the local zoning laws or utility companies to contact. Many companies operate in multiple states. Individuals own property in different states. If they had to have a different CPA to prepare each state’s tax return or multiple CPAs to prepare a financial statement, it would be financially prohibitive.

Is the public really being protected by increasing the restrictions on the practice of accounting by duly licensed CPAs? Do accountants need to be licensed in every state? I believe this is an issue that needs to be reconsidered.