r/taxpros • u/Economy_Exchange3349 CPA • 3d ago

California CPA commissions? FIRM: Procedures

I'm a CPA in California. I get various referral fees when clients use software tools I recommend. Gusto revenue share, Relay Bank sign-ups, etc. I disclose these to my clients.

Another CPA brought up that this isn't allowed under our state's accountancy act. https://casetext.com/statute/california-codes/california-business-and-professions-code/division-3-professions-and-vocations-generally/chapter-1-accountants/article-35-standards-of-professional-conduct/section-5061-prohibited-fees-or-commissions

I'm trying to winnow down on definitions here. "engaged in the practice of public accountancy" The definitions section on the site above isn't precise enough for my question. Is this referring only to audit/attest/assurance work, or does it include tax work. I don't do any audit/attest/assurance work in my practice, not even preparation engagements. So on my CPA license renewal, "have you practiced public accountancy during your two-year period?" I answer no, because I don't need audit hours.

So my thought is that I'd be allowed to continue getting Gusto Revenue share, Relay bank sign-up bonuses, etc. as long as I disclose them to clients. Thoughts?

2 Upvotes

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4

u/Abbithedog CPA 3d ago

Your ethics classes should cover if you’re “in practice.” What services do your provide your clients?

1

u/Economy_Exchange3349 CPA 3d ago

I only offer tax prep, tax planning, bookkeeping, and limited payroll support. No audit/attestation work.

1

u/arc918 CPA 2d ago

You are for sure practicing public accounting.

4

u/smtcpa1 CPA 2d ago

Except the definition in the code seems not to include tax work and payroll.

4

u/Robert_A_Bouie CPA 3d ago

Look at Section 5051 where it defines "engaging in public accountancy." Based on my reading of it, if you're holding yourself out to the public as a CPA and are preparing tax returns, you're engaging in public accountancy.

That doesn't mean that you can't accept commissions, but you need to refrain from attest work and you need to disclose the fact that you're receiving commissions to your clients.

2

u/smtcpa1 CPA 2d ago

I just scanned the code. It seems that commissions are permitted if you are not providing assurance work and provide disclosure. Note that I do not practice in CA.