Can a Pennsylvania CPA accept a referral fee? Rules, sources and disclosure steps

The short answer for Pennsylvania licensees

A Pennsylvania CPA can accept a referral fee or commission only if two sets of rules both allow it: the state's own law and regulations, which come with your license, and the AICPA Code, which comes with membership. In practice the answer usually turns on one fact, whether your firm performs attest work for the company, and one habit, whether you disclose the payment in writing before you make the introduction.

This guide explains where each rule lives, which client relationships rule out a commission and how to build a disclosure your file can defend. It points you to the Pennsylvania text rather than quoting it, so read the current version before you act.

Who writes the rule: the State Board of Accountancy, not PICPA

The Pennsylvania State Board of Accountancy licenses and disciplines CPAs under the CPA Law and the board's regulations in the Pennsylvania Code. The Pennsylvania Institute of CPAs (PICPA) is a membership society: its ethics material helps you spot issues, but the board's text is what your license depends on. If you went looking for a PICPA commissions rule, the binding text is the board's regulations, plus the AICPA Code for members.

States take different routes to the same subject. Florida, for example, regulates CPA commissions and referral fees directly in statute, including limits on accepting or paying a referral fee in connection with certain public accounting services and a written disclosure requirement for commissions; see Fla. Stat. 473.3205 (2017 text). When you read the Pennsylvania materials, look for the same three things: which services bar a payment, whether disclosure must be written and whether the rule covers paying a fee as well as receiving one.

What the AICPA Code adds for members

The AICPA Code groups these rules under Fees and Other Types of Remuneration: section 1.520 on commissions and referral fees and section 1.510 on contingent fees (see the PDF of the Code hosted by the Minnesota Society of CPAs; the AICPA's online Code is authoritative). Under 1.520, a member in public practice may not take a commission for recommending a third party's product or service to a client if the member or firm also does any of the following for that client: audits or reviews its financial statements, issues certain compilation reports, or examines its prospective financial information. Commissions that are allowed, and referral fees, must be disclosed to the client.

Because SourceX pays the reward in return for bringing a company to its platform, treat the reward as a possible commission until your counsel or the board tells you otherwise.

Which client relationships rule out a commission

Run the check for the whole firm, not just your office or service line. The rule refers to services performed by the member or the member's firm.

The three-moment disclosure plan

Disclosure is easiest to defend when it happens at three fixed points.

The written disclosure itself should cover six points:

1. Who pays: SourceX, not the client.
2. The basis: a share of what SourceX earns in eligible platform fees on the company's licensing deals, up to a per-company cap.
3. The trigger: payable only after the buyer pays and SourceX receives its fee.
4. The effect on the client: none on price, because the reward comes from SourceX's fee.
5. The client's freedom: they may decline SourceX, and your advice does not depend on their choice.
6. What the firm will do with the payment, if anything is received.

When the firm talks about SourceX in public

Some firms mention useful services in client newsletters, webinars or LinkedIn posts. If you do that while registered as a partner, the FTC staff's Endorsement Guides FAQ says a material connection that readers would not expect should be disclosed clearly and close to the recommendation, on each platform. A plain statement such as we are paid for referrals reads better than a bare label like affiliate link, and no particular wording is mandated. Never include client names or anything drawn from client records.

How a SourceX reward is calculated and paid

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company; rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The guide on working out an illustrative referral commission from a platform fee walks through the formula so you can describe it without quoting a number.

Your role ends at the introduction. From there SourceX confirms the company meets its bar for headcount, operating history, breadth of records and rights; the company maps its systems and records; the company and SourceX settle price and terms; buyers look at the opportunity; and only after the deal closes, delivery happens and the company receives its payment does any partner reward follow. A company earns a place on your list when it is US-based, reached 50+ full-time employees at peak (contractors excluded), has kept records of its work for several years, owns the rights to them and has a sponsor at owner, CEO or CFO level who will engage.

Illustrative: one firm, two clients

Illustrative and fictional. A Pittsburgh firm reviews the financial statements of a regional freight broker for its bank and also prepares its returns. Because of the review engagement, the AICPA rule bars a commission, so the partner introduces the broker's CEO to SourceX with no reward and says so in writing. The same firm's advisory group works with an engineering company that receives no attest services. There, after reading the board's current text, the firm gives a written disclosure, gets the CFO's acknowledgment and registers the introduction.

Questions for the board or your counsel

• Do the CPA Law or the board's regulations address commissions or referral fees paid by a non-client third party?
• Does Pennsylvania follow the AICPA's list of attest services, or define its own?
• Is a written, signed disclosure required, or is written notice enough?
• Does an audit of a benefit plan the company sponsors restrict commissions from the company itself?
• If the firm practises in neighboring states, which state's rule governs a client headquartered elsewhere?

Compare how other states approach the same question in the guides to Illinois CPA commission rules and New Jersey CPA commission and contingent fee rules.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Run the company through the company fit checker, read the program terms, and once the disclosure is settled, register as a partner. The overview of referral opportunities for accountants helps you decide which clients to screen first.