Enrolled Agents vs. CPAs: What You Need to Know for Your Tax Needs

Looking for a new local tax professional? Whether your old accountant is retiring, or your business needs have evolved, finding the right tax professional is crucial. With various options available, it’s essential to understand the differences between them and choose the one that best suits your needs.

The Pros

When selecting a tax professional, consider your specific needs—whether it’s simple tax preparation, representation before the IRS, or comprehensive financial advice.

There are a few types of  professionals that you may turn to for help. Depending on your needs you may select a tax preparer, enrolled agent, certified public accountant or tax attorney. Keep in mind you can check the IRS Preparer Directory to check the status of your credentialed tax professional.

Tax Preparer

A tax preparer is someone who can prepare and e-file your tax return but does not hold a nationally recognized credential. Some states, like California, Maryland and Oregon require tax preparers to be licensed/credentialed. Being registered with a state agency as a tax preparer usually means the individual must take a test ensuring understanding of local tax laws and keep up with continuing education requirements.

Certified Public Accountant 

A Certified Public Accountant (CPA) is a state licensed professional who can provide a range of tax and financial management services. CPAs have a broad knowledge of accounting principles, auditing, tax, and financial planning. They must pass the Uniform CPA Examination and meet education and experience requirements to earn their license. Keep in mind that a CPA may specialize in tax but not always. 

While CPAs may not always specialize in tax, their broad expertise in accounting and financial management can be invaluable for businesses needing audits, financial statements, or extensive financial planning.

Tax Attorney

A tax attorney is a lawyer who helps clients navigate legal issues as it relates to taxes. Like EAs they stay up to date on the latest tax law issues and act as a resource for their clients. To become a tax attorney an individual must hold a bachelors degree and also go to law school, pass the bar and obtain certification as a tax law specialist. 

What Does a Tax Attorney Do? 

A tax attorney can specialize in a number of areas, but typically they will do the following: 

  • Conduct legal research and apply knowledge of tax law and policy to complex tax situations 

  • Draft documents including wills, employment agreements, court briefs and tax forms

  • Handle tax disputes

  • Represent clients in court 

  • Advise Clients on legal matters 

At Forest Financial, we often recommend our clients work with a lawyer when forming an entity, putting an operating agreement in place and when looking to under legal ramifications of their business decisions. 

IRS Enrolled Agent

An Enrolled Agent (EA) is a tax professional licensed by the Internal Revenue Service (IRS) to represent taxpayers in all matters related to tax. EAs are experts in tax law and are authorized to represent individuals, businesses, and organizations before the IRS in audits, collections, and appeals. To become an EA, one must pass a rigorous exam or have experience as a former IRS employee.

What Can an EA Help With?

An EA can assist with a wide range of tax-related matters, including:

  • Prepare and file individual and business tax returns

  • Represent clients in IRS audits and negotiations

  • Advise on tax planning strategies to minimize liabilities

  • Assist with tax debt resolution and payment plans

  • Handle appeals and collections cases with the IRS

Benefit of Choosing an EA

One of the key benefits of choosing an EA is their specialized knowledge in tax law and regulations, which ensures they are up-to-date with the latest tax code changes. Additionally, because EAs are federally licensed, they can represent you in any state, offering flexibility and consistency in your tax representation. Their focused expertise can be particularly valuable for complex tax situations, IRS disputes, and ongoing tax planning.

Working With a Tax Pro Offers Protection

Each type of tax professional offers a unique set of skills and it's important to note that each type of tax pro has specialized tax knowledge and an ability to assist with complicated tax matters. Keep in mind that CPAs, EAs and tax attorneys are required to get ongoing education as it relates to changing tax law and procedures. Additionally, they are all held to codes of conduct by the authorizing agency and there is public record of their licensing. This can offer clients peace of mind in knowing there are rules governing their practice and conduct. And, in the event of negligence or questionable practices, clients may report such incidents.

In conclusion, the choice between an CPA, EA or other tax professionals should be based on your unique tax and financial needs. It’s always a good idea to ask potential tax professionals about their experience and how they can meet your specific requirements.

Forest Financial is an Oregon licensed tax business serving clients with US tax and reporting obligations globally. Our team of enrolled agents are experienced at working with solopreneurs, freelancers and business owners. We also offer bookkeeping, tax planning and tax resolution services.

Serina G