The Difference between an Enrolled Agent and a CPA:
An EA is authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS for audits, collections, and appeals, according to the National Association of Enrolled Agents (NAEA). EAs advise, represent and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax-reporting requirements.
EA’s only tend to focus on preparing taxes, and many specialize in tax resolution. In addition to an IRS-administered testing and application process, enrolled agents must complete at least 72 hours of continuing education every three years.
A CPA’s bread and butter tends to be performing tax, accounting and financial services to businesses. Not all specialize in taxation, and some specialize in more than one service. Most states/jurisdictions require at least a bachelor’s degree, two years public accounting experience and a passing score on the CPA exam to obtain a license. The IRS does not require attorneys and certified public accountants to complete continuing education, but some state licensing offices have added additional requirements. In Massachussetts, for example, CPAs need 80 hours of continuing education every two years.
You Should Choose an EA:
- When you have out-of-state returns. Enrolled agents are the only taxpayer representatives who receive their unlimited right to practice from the federal government (CPAs and attorneys are licensed by the states). That means if you need to file in more than one state and eventually need representation before that state in an audit or resolution case, the same EA can do it.
- When you need help resolving an IRS dispute or expect to owe. People who don’t have the resources to pursue a taxation attorney often hire EAs instead for civil resolution cases. Not only do EAs rates tend to be more affordable, they can their tax law expertise to represent clients in tax proceedings, audit hearings and appeals.
- EAs help ensure that clients are treated appropriately by the IRS, work out payment plans on the best possible terms, and ensure the IRS follows laws that protect taxpayers.