What if you don’t manage to complete all your CPE by the time you need to renew your CPA license? Or do you need to step away from accounting for a little while to focus on other personal or professional goals? Inactive CPA license status might be the right call for you. Active CPA vs inactive CPA licenses have different requirements, but both are issued by your State Board of Accountancy.
Not all states permit an inactive status. In Texas, for example, you must either keep your license active, let it completely expire, or voluntarily surrender it. However, most jurisdictions have some type of inactive designation. Here, we’ll compare active CPA vs inactive status and outline the process of a CPA active to inactive conversion. Finally, we’ll show you how to activate an expired CPA license in several jurisdictions.
As with most things CPA-related, the difference between an active and inactive CPA depends on the state or jurisdiction where you practice. While most of the 55 U.S. Boards of Accountancy offer an inactive status, not all of them do. Typically, inactive CPAs have to pay a fee to maintain a license year after year, but they don’t need to complete continuing professional education (CPE) to remain in good standing.
If your license is inactive, you can’t practice as a CPA or advertise yourself as such. However, if you wish to resume work as a CPA, you can do so more easily than you could if you had to earn your license all over again. You won’t need to take the CPA Exam again, though you will need to catch up on your CPE. Once again, the rules vary by state, and we’ll go over some of them in a minute.
If you bill yourself as a CPA and work full-time in accounting, you need an active CPA license. The penalties for lying about having an active CPA license can include steep fines. Your license may also be revoked.
Maintaining an inactive license long-term is only appropriate if you wish to work in a different field, either temporarily or permanently. Some jurisdictions, like Minnesota, will allow you to prepare a few tax returns each year with an inactive license. However, be sure to check with your state’s Board of Accountancy for specifics.
In many states, if you have an active license but fail to complete the required CPE in a given reporting period, you can apply for inactive status until you’re able to finish it. You’ll likely have to pay extra fees. However, you also won’t be in danger of violating your licensing obligations, which usually come with even more substantial fines. Unfortunately, you also won’t be able to work as a CPA during this time. Thus, you’ll probably want to apply for reinstatement as soon as possible.
Obviously, an active CPA license allows you to fully practice public accounting. You can do all the things your profession requires, including preparing tax returns for public firms, issue compilation reports, and work for a state auditor’s office.
On the other hand, an inactive CPA license allows much less freedom. Most states allow you to keep the physical certificate you earned. Sometimes, you can still do the following:
Of course, these rules will vary by state or jurisdiction. In some locations, you may not be able to do any accounting work at all.
Only active CPAs may use the unmodified title of CPA. Some states still allow you to use the CPA designation with an inactive license as long as you also declare you’re inactive. For example, here’s the state of Ohio’s ruling on the matter:
A licensee who obtains a non-practicing registration must use the term “Inactive” after the CPA designation in print at least as prominent as the “CPA.”
In other words, if your business cards say “CPA” in 12-point font, the word “Inactive” needs to also be in 12-point font or larger. This is fairly typical, but make sure you check with your state Board to ensure that you don’t violate their rules. Otherwise, you might risk your eligibility to reactivate by titling yourself unlawfully.
It would take too long to fully explain the transition process in every jurisdiction. However, here are examples from several states of how to convert an active to an inactive license or vice versa. You’ll see that the process is similar in most states that allow an inactive status. Some jurisdictions refer to this as “reinstatement,” but in others, reinstatement applies to an expired or suspended license.
In AR, as in most states, you can apply for inactive status when you go to renew your license. However, to transition from inactive to active CPA status in Arkansas, you’ll need to directly contact the State Board’s licensing specialist.
If you don’t want to practice as a CPA or you didn’t complete enough CPE in a given reporting period, you can request inactive status when you renew. A California CPA inactive to active conversion requires you to show that you’ve completed 80 CPE hours in the previous two years, including a number of specific topic requirements. Additionally, you must submit a Peer Review Reporting Form and a criminal background check. Moreover, once your license is restored, you must complete at least 20 CPE hours every six months until the next renewal period.
For renewal of a CPA license from active to inactive in Florida, you must complete a form. However, you only need to pay $50 if it’s outside of the normal renewal period. Only those with a Florida active CPA license can practice public accounting in the state. The requirements to activate a Florida CPA license include a printed application, a $250 fee, and proof of 120 CPE hours over the past three years.
Louisiana does have an inactive status for CPAs, but if you want to switch, you’ll need to email the State Accountancy Board to request it specifically. To regain an active CPA license in Louisiana, you’ll need to contact the Board again. You must also show that you’ve completed 120 CPE hours in the past year. Additionally, you’ll need a licensed CPA to certify that you’ve performed at least one full year of work in the past four.
If you’re asking, “How can I go from inactive to active CPA status in NJ?” you should know that there are two variants of inactive status. If you choose paid inactive status, you’ll have to pay a reduced renewal fee each triennial period. However, you can reactivate at any time. If you choose unpaid inactive status, you won’t be subject to regular fees. However, you’ll have to wait to renew until the end of the triennial. Either way, to reactivate, you’ll pay a $135 fee, show proof of your CPE, and fill out a form that includes a summary of your employment since you were active.
In North Carolina, you may apply for inactive status online. To go from inactive to active status as an NC CPA, you must complete a reinstatement form, pay a $100 fee, submit three letters of recommendation, and document that you’ve completed at least 2,000 minutes (the equivalent of 40 hours) of CPE in the past year.
As a CPA, active vs inactive status usually means the difference between employment in public accounting and unemployment. Under most circumstances, you’ll want to do whatever you can to retain active status. However, if the unexpected should arise, it pays to know whether inactive status is an option in your state or jurisdiction.