Capitol Report | Fall 2022
The Mobile CPA: Navigating Remote Work, Principal Place of Business
With remote work becoming the norm, and as more state agencies scrutinize its practice, CPAs must stay abreast on the latest laws, the nuances of working remotely, and their designated principal place of business.
Marty Green, Esq.
Senior VP and Legislative Counsel, Illinois CPA Society
Unlike some other professionals, CPAs were well prepared to face the challenges of the worldwide pandemic—thanks to our mobility practice privilege and generally well-established routines of working remotely. Despite the perceived severity of the pandemic receding, remote work practices continue to be the norm for many firms and businesses, and state regulators across the country are taking notice and have begun discussing remote working and state licensure practice privileges.
With varying laws across all 54 U.S. states and jurisdictions, there are many legal nuances to consider when it comes to remote work, as well as a CPA’s designated principal place of business (PPB). To touch on these points, we must first understand and define PPB. From my standpoint, the bottom line on PPB is threefold:
- Designation of your PPB requires you to have a CPA license in the state where the PPB is located.
- A licensed CPA being substantially equivalent is the touchstone of mobility.
- Mobility is the reciprocity recognition that allows a CPA to perform services in another state without having to obtain that state’s license unless it’s where their PPB is located.
The Illinois Public Accounting Act defines PPB as the office location designated by the licensee from which the person directs, controls, and coordinates their professional services. This designated PPB is central to obtaining an Illinois CPA license and for determining substantial equivalency and mobility practice privilege.
To help illustrate, consider this hypothetical:
An Illinois-licensed CPA’s designated PPB is Illinois. The CPA remotely performs work in North Carolina for their designated office in Illinois. While one may wonder if this Illinois CPA remotely working in North Carolina for clients serviced by the Illinois PPB would be required to obtain a North Carolina CPA license, the general answer is no. The Illinois Public Accounting Act is substantially equivalent for mobility purposes, and the Illinois CPA benefits from mobility reciprocity in North Carolina. While the CPA’s work is being done remotely in North Carolina, the designated PPB servicing clients is in Illinois.
Due diligence and mobility practice dictates that CPAs should be familiar with state laws where they’re performing services, establishing residency, and being employed. In Illinois, PPB is designated by the licensee as the office location from which the person directs, controls, and coordinates their professional services. Some states, like New Jersey, use residency as the PPB. While others, like Virginia, use the place of business or office location where the licensee is employed as the PPB.
Comparing other state public accounting acts to this situation, let’s consider this hypothetical:
Due to COVID-19, a Virginia-licensed CPA relocates to their parent’s home in New Jersey where they work remotely for their Virginia firm and clients. The Virginia-licensed CPA doesn’t establish residency in New Jersey. Does the Virginia CPA need a New Jersey CPA license? No. The Virginia CPA works for a Virginia CPA firm providing services to their clients in Virginia. The New Jersey Public Accounting Act specifies individuals with an out-of-state PPB shall be presumed to be substantially equivalent and have all privileges of a licensed CPA in New Jersey.
Florida’s Public Accounting Act is even more straightforward. The Florida act states that an individual who doesn’t have an office in this state has the privileges of a Florida CPA and may provide public accounting services in this state without obtaining a license if they’ve obtained a license from a substantially equivalent state.
The CPA profession is fortunate to have well-established mobility practice privileges in place that allow a CPA a no notice, no escape authorization to provide CPA services in another state. However, the mobility practice privilege only extends so far; CPAs should be diligent on situs state licensure laws, particularly in instances where they’ll be remotely working for an extended period and considering factors such as residency. This is even more relevant and important as remote work continues to proliferate and as state regulatory agencies are closely scrutinizing remote work practices.
CPAs working remotely should also be aware of their designated PPB. It’s important to note that various state laws use thresholds for PPB, such as where the CPA lives; where the CPA is employed; and where the CPA’s office is located from which they direct, control, and coordinate professional services. To help stay abreast of these laws, you can access the jurisdictional licensure requirements from the National Association of State Boards of Accountancy website at https://nasba.org/stateboards.
I believe the CPA profession will continue to be at the vanguard of mobility practice privileges and evolving licensure requirements, and our Government Relations team will continue to closely monitor both state and federal regulatory developments on this matter.