I want to discuss the difference between a CPA and an EA. Most people refer to any accountant, tax preparer, bookkeeper, etc as a CPA. However there are differences between a CPA, an EA and a tax attorney. All 3 are regulated by the IRS’ circular 230.
The distinction between the two designations is very important, since my specialty is federal taxation and tax accounting. I have chosen to earn the Enrolled Agent license from the US Department of the Treasury because it does not limit the geographic area in which I may practice. In other words, I can work with clients in any of the 50 United States (or its territories), unlike a CPA (certified public accountant), or a tax attorney, who has a license that is state specific.
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In this article I have included some information for your review that explains what an enrolled agent is. A CPA is tested by the state in which he/she resides and has been found to be proficient in a broad range of accounting areas. However, every enrolled agent has passed a stringent three-part exam covering individual taxes, business taxes and representation of taxpayers before the IRS. This is why EAs are referred to as “America’s tax experts.”
The federal government regulates enrolled agents, while CPAs and attorneys are regulated by the states. To maintain their IRS accreditation, EAs must stay up-to-date on the latest changes to the tax code by completing annual continuing professional education. They are unique in that they are the only group of tax professionals who report their continuing professional education hours directly to the IRS.
If you have any further questions or need additional information concerning the professional designation of an enrolled agent, please do not hesitate to call. I will be more than happy to discuss this topic with you at any time.
We serve clients locally in Los Angeles, Whittier, Orange County, Riverside and San Bernardino. We also serve clients out of state and in all 50 states.
Mike Habib, EA NTPI Fellow
Enrolled Agents: America’s Tax Experts
What is an Enrolled Agent?
Enrolled agents (EAs) are federally-authorized tax practitioners who have demonstrated technical competence in tax law and are the only taxpayer representatives licensed to practice by the United States government. Only EAs, attorneys and CPAs may represent taxpayers without limitation before the IRS. EAs advise and represent taxpayers who are being examined by IRS, taxpayers who are unable to pay, and taxpayers who wish to avoid or recover penalties. EAs prepare tax returns for individuals, partnerships, corporations, estates, trusts and any other entities with tax-reporting requirements. Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all EAs specialize in taxation and are required by the federal government to maintain their professional skills with continuing professional education.
History of Enrolled Agents
After the Civil War, many citizens had problems settling claims with the government for horses and other property confiscated for use in the war effort. After many petitions and much pleading, Congress, in 1884, endowed enrolled agents with the power of advocacy to prepare claims against the government and to seek equitable justice for the citizenry. For many years, the purpose of the enrolled agent was to act in this capacity.
In 1913, when the income tax was passed, the job of the enrolled agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable. As the income tax, estate, gift and other sources of tax collections became more complex, the role of the enrolled agent increased to include the preparation of the many tax forms that were required. Additionally, as audits became more prevalent, their role evolved into taxpayer advocacy and negotiating with the Internal Revenue Service on behalf of their clients.
In 1972, EAs united to form a national association to represent the needs and interests of EAs and the rights of taxpayers. That association is today called the National Association of Enrolled Agents (NAEA). Through their national association and state affiliates, enrolled agents have successfully defended their rights to practice and furthered the passage of legislation and administrative rules that benefit both tax practitioners and ordinary citizens.