Basics and Beyond helps to outline some of the key factors when it comes to understanding the difference between enrolled agents and CPAs: it’s important to understand the difference between a Certified Public Accountant (CPA) and an Enrolled Agent (EA). While they have a number of things in common, there are some important differences between the two as well. On the one hand, many people may be completely unfamiliar with what an Enrolled Agent is, or what they do when it comes to preparing a tax return for an individual filer. And, similarly, you might be unsure of what exactly a tax CPA’s scope is: do you really need a CPA just to file your income taxes, or is there a better alternative?
If you’re a budding tax or accounting professional, you may also be unclear on the differences between these two options. Maybe you’re trying to decide which career to pursue. If so, it’s important to understand the functions that CPAs and EAs serve, and what the career potential for each role might be. With all of this in mind, we’ve put together this quick guide to answer all of your questions about the difference between a tax CPA and EA. Keep reading to learn more.
What exactly are CPAs and EAs?
Before we go into detail about the similarities and differences between a CPA and an EA, it’s worth explaining exactly what these terms refer to.
A Certified Public Accountant (or CPA) is someone who has met specific education requirements. These requirements vary by state, but generally involve completing up to 150 undergraduate course hours and passing a comprehensive exam. This four-part exam is administered by the Association of International Certified Professional Accountants, or AICPA. The four sections of the exam cover a wide range of topics related to accounting: reporting and regulation; financial accounting; business environment and concepts; and auditing and attestation. Tax law and the procedures associated with filing income taxes fall primarily under the “reporting and regulation” section of this exam.
An Enrolled Agent (or EA) is someone who focuses specifically on the preparation of taxes. There are two ways to become an enrolled agent: one can either work for the IRS for five years in a position that involves the interpretation of the tax code, or one can pass the Special Enrollment Exam for Enrolled Agents. The Special Enrollment Exam (or SEE) includes three separate test sections: individuals; businesses; and representation, practices, and procedures. In order to become an EA, an applicant has to achieve a passing score on each of these individual sections.
How are CPAs and EAs similar?
We’ll dive into some of the major differences between CPAs and EAs in the next section. First, though, we should ask an important question: are CPAs and EAs similar in some ways?
Without a doubt, CPAs and EAs have some things in common. For one thing, the awarding of both professional titles involves the completion of some form of training: whether it’s an undergraduate program for a CPA, the studying necessary to pass the SEE, or five years spent working in a tax code-related position for the IRS.
Additionally, both CPAs and EAs are generally well-versed when it comes to tax preparation. They both have an understanding of the tax code, filing procedures, and so on.
The IRS explains:
Unlimited Representation Rights: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals.
- Enrolled Agents – Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation. They must complete 72 hours of continuing education every 3 years.
- Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants have passed the Uniform CPA Examination. They have completed a study in accounting at a college or university and also met experience and good character requirements established by their respective boards of accountancy. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license. CPAs may offer a range of services; some CPAs specialize in tax preparation and planning.
Don’t get lost in the paperwork that comes along with running a business, instead reach out to King Financial Services. Our team of financial professionals understand how overwhelming it can be to you and your staff to keep up with additional tasks and record keeping. This is why we help eliminate the workload that comes with bookkeeping in house by managing all of the additional responsibilities, such as payroll and bookkeeping.
Contact us today to learn more about the tax and financial services we offer. Sandra King is an enrolled agent, empowered by The United States Treasury to prepare your personal or business tax filing. While her services are offered nationwide, Sandra King locally serves the greater Dallas-Fort Worth area, including but not limited to Arlington, Bedford, Colleyville, Euless, Fort Worth, Grand Prairie, Hurst, Mansfield, North Richland Hills, and Richland Hills.