If you've ever sought assistance with your taxes, you've likely come across the terms "Enrolled Agent (EA)" and "Certified Public Accountant (CPA)".
Both professionals have significant expertise in tax matters, but they have different qualifications, and each can offer distinct services. Knowing these differences can help you choose the right professional for your needs.
What is an Enrolled Agent (EA)?
An Enrolled Agent is a tax professional authorized by the IRS to represent taxpayers in certain situations. These situations include, but are not limited to; audits, collections, and appeals. EAs earn their title by extensive experience with the IRS or passing a very rigid exam which is focused exclusively on tax law. Nationally recognized, Enrolled Agents are required to complete continuing education to stay up to date on tax regulations. EAs work with individuals, small businesses, and corporations. Because of their deep knowledge of tax matters, EAs specialize in tax issues.
What is a Certified Public Accountant (CPA)?
A Certified Public Accountant is a licensed accountant with expertise in areas such as auditing, financial reporting, business consulting, and taxes. Education requirements, passing a four-part CPA exam, and obtaining a state license are all prerequisites when becoming a Certified Public Accountant. CPAs work with a broader financial aspect of a business, as well as taxes.
Essential Distinctions Between EAs and CPAs
Scope of Expertise
EAs focus specifically on tax matters. CPAs have a more broad focus that includes accounting, financial planning, and auditing. Both can assist with tax filing and tax representation.
Licensing and Regulation
CPAs are licensed by state boards, while EAs are licensed by the IRS. Depending upon the state, this means CPAs may have more variation in their requirements. Enrolled Agents qualifications are nationally consistent.
Representation
CPAs can provide internal audits or third-party verificaion for loans and/or investors. EAs are available for tax representation only. Enrolled Agents and Certified Public Accountants can both represent clients before the IRS.
What Can a CPA Do That an EA Cannot?
CPAs are able to conduct audits and also attest to financial statements.
Bottom Line!
Enrolled Agents are your best bet when it comes to tax-related services. They're federally licensed and able to represent you in any state for business or personal taxes, they're typically more cost-effective, and they have the same rights as CPAs when it comes to representing a taxpayer before the IRS.
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