Have you ever seen the title EA next to a tax professional’s name and wonder what it means? Or maybe you’re familiar with the title and you’re curious about the differences between an EA and CPA? Either way, in this blog I will be answering these frequently asked questions, as well as a few additional ones, in the hopes of illustrating why enlisting an EA could be beneficial to you when seeking a tax professional.
What is an EA?
The best place to start and the most important question is probably, “What is an EA’? EA simply designates someone as an Enrolled Agent. An enrolled agent is someone who specializes in taxation and is federally licensed to prepare tax returns and represent clients nationwide before the IRS. This makes EAs a useful resource for taxpayers when dealing with the IRS in any capacity.
What is the difference between an EA and other tax professionals?
One of the major differences between an EA and other tax professionals is the certification process. To become an EA, you can follow two different paths. One is to work for the IRS in a position that requires you to interpret the tax code. The other is to pass the Special Enrollment Exam (SEE) and a background check. The SEE is a three-part exam that the IRS administers. It covers tax concerns for individuals and businesses as well as other practices and procedures. For more info on the process to become an EA here is a link to visit: Smartassets.com.
Also, though accountants are qualified to prepare tax returns, enrolled agents specialize in taxation. Enrolled agents are federal tax professionals while professionals like CPAs are accounting professionals with taxation training. These professionals have passed the Uniform CPA Exam and met other state requirements to receive their state licenses. Enrolled agents must pass three different exams all centered around taxation and IRS representation.
Another distinction is that professionals like CPAs are licensed by the state in which they practice. This means that CPAs must adhere to specific accounting laws and regulations set forth by their respective states, while enrolled agents follow a federal tax code which allows them to practice nationally.
Lastly, since EA is an IRS designation, EAs have greater authority when it comes to assisting taxpayers with IRS issues. As federally licensed professionals, they can represent taxpayers before the IRS even if the taxpayer isn’t represented by an attorney unlike some other forms of tax professionals.
Is an EA higher than a CPA?
This is a tricky question and honestly it depends. When it comes to who has a higher designation the answer is fairly clear. Enrolled agents are tax practitioners who are licensed at the federal level by the Internal Revenue Service. Certified public accountants are licensed by their applicable state boards of accountancy. So, in regard to taxation, EA is a “higher” designation than CPA. In fact, the enrolled agent status is the highest credential awarded by the IRS for a tax professional. However, this does not mean that all EAs are better than CPAs or vice versa. Generally, EAs specialize in taxation and CPAs specialize in accounting, so they normally have different areas of expertise. But there are also CPAs that specialize in tax preparation instead of public accounting.
What do enrolled agents do?
Enrolled agents have passed a comprehensive exam that covers all aspects of taxation which authorizes them to prepare, sign and file tax returns for individuals, partnerships, corporations, trust, and estates. Furthermore, since they are appointed by the United States Department of the Treasury, they have unlimited client representation rights before the IRS, including audits, collection proceedings and appeals. For more information on audits and when to seek professional help, here is another great blog post to check out.
Why do I need an enrolled agent to do my taxes?
EAs are federally licensed tax practitioners who specialize in tax preparation and have unlimited rights to represent taxpayers before the Internal Revenue Service. If you get a letter from the IRS, are audited or are the target of a collection action, your EA can speak directly to the IRS on your behalf.
EAs are trained in a wide variety of common and unusual tax situations. With the tax laws changing yearly, it’s more critical than ever to have a qualified tax specialist on your side when preparing your taxes and creating financial strategy. Again, the enrolled agent license is the highest credential the IRS issues. They are licensed to practice nationwide and unlike attorneys or CPAs, enrolled agents specialize in taxes, which allows them to stay up to date with ever-changing IRS regulations. Here is another blog post to help with some last-minute things you can do to get prepare for tax season.
Conclusion
Whether you’re going through a tax audit, need someone to represent you in tax court or you’re behind on tax filings and need a professional to give you proper guidance and prepare your federal returns, an EA can be a great resource for you.
Molen and Associates was founded by Ward Molen, EA back in 1980 and we also have a few additional enrolled agents on our staff as well. So, if you need tax preparation or IRS representation, please feel free to call Molen & Associates today at (281) 440-6279!
