By Jessica Salerno-Shumaker, OSCPA senior content manager
Retirement is a time of transition, but you should pause before committing to CPA-retired status.
“We call it a final act,” said Donna Oklok, investigations supervisor at the Accountancy Board of Ohio (ABO). “When we talk to people about retirement, we purposefully phrase it that way. We require an affidavit, which limits the work you can do and the activities you can engage in after you’re retired, and it does require a reinstatement hearing if you want to return to practice.”
Once you decide to switch to CPA-retired status, there is no CPE requirement, and you can use that designation for the remainder of your life. But if, in retirement, you’re considering offering your consulting or tax preparation skills, this status would severely limit what you could do.
“The affidavit we have says the person is attesting that they’re voluntarily giving up their right to practice public accounting,” Oklok said. “They can’t perform or offer services in accounting, auditing, financial statements management advisory, financial advisory or consulting services. They are not going to do things like tax return preparation or provide advice on tax matters as a CPA.”
Oklok said the ABO has seen a “gigantic increase” in retirements during the pandemic. That’s led to more questions about what is and isn’t allowed during the retirement transition. Once CPAs learn of the CPA-retired limitations and the reinstatement hearing should they want to switch their status, they usually end up renewing their permit or choosing inactive status.
“The reinstatement process itself is not onerous, but the board sets the conditions to return to practice,” Oklok said. “They will look at CPE requirements, but they can even decide you might need to take the CPA exam again. They have a lot of leverage.”
Oklok said that in the fourth quarter of last year, the ABO started to hear from CPAs that the IRS has been denying PTIN directory listings for retired CPAs and CPAs who don't have valid and current licenses. She said this is something she’s not heard of before.
“I expect that we're going to see more calls from people who ‘retired’ and then just decided they were going to work part-time and keep a few clients from the client list,” she said. “And the IRS has reached out to them and told them ‘You won't be doing that.’”
She said they occasionally run into situations where CPAs who are tired of complying with CPE requirements want to retire their license and mistakenly think they can continue to practice.
Retired status, Oklok said, is meant to prevent CPAs from casually switching from retired to active.
“If you’re putting yourself out to be a CPA and even if you’re saying you’re CPA retired, CPA means something,” she said. “It means something to people, and they take that as gospel that you know exactly what you’re doing and that you are doing things like continuing education.”
And for those thinking of circumventing the rules, knowingly practicing while retaining CPA-retired status is not a wise choice, either.
“While they are CPA-retired, even though it’s a final status, we still retain jurisdiction over them,” Oklok said. “So, we can revoke their status and charge them with unlawful practice, because they’re not licensed to practice as a CPA. We really try to focus on educating people up front. You can’t just retire because you don’t want to do your CPE and keep doing taxes. That’s not going to work out.”