By Traci Rutter, EA
Enrolled Agents (EAs) are federally-licensed tax practitioners who may represent taxpayers before the IRS when it comes to collection, audits and appeals. They are granted unlimited practice rights to represent taxpayers before the IRS and are authorized to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trust and any entities with tax-reporting requirements. Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS.
Enrolled agents are required to complete 72 hours of continuing education every three years in order to maintain their active enrolled agent license and practice rights. Enrolled agents are required to abide by the provisions of the Department of Treasury’s Circular 230, which provides regulations governing the practice of enrolled agents before the IRS.
So, what is the difference between an enrolled agent and a certified public accountant (CPA)? A CPA can provide broad accounting, tax and financial services for businesses whereas an EA focuses specifically on taxes for businesses and individuals. A CPAs qualifications to practice require state education, usually 150 hours of undergraduate education and pass the four-part CPA exam. To become an enrolled agent and earn the privilege of representing taxpayers before the Internal Revenue Service, they have to pass a three-part comprehensive IRS test covering individual and business tax returns or through experience as a former IRS employee.
CPAs are equally qualified to do the work of an EA. The main difference comes in the services each can provide. CPAs do not focus on only one sector of accounting. They can assist as advisors or consultants for all accounting, tax and financial services for individuals and businesses they represent. CPAs help their clients achieve financial goals through financial planning and money management.
Both types of professionals are well-qualified, have minimum continuing education hours that need to be met yearly and have ethical code of conduct to uphold. Which one you should consult depends largely on the issue you are trying to resolve. While a CPA has a much wider scope of services they can provide, if you have an accounting need that needs a micro focus, working with an EA could be the perfect fit for you.