When looking for expert help in handling your taxes, it can get pretty confusing trying to navigate all of the tax professionals out there. From certified public accountants (CPA) to enrolled agents, similarities in the tax practitioner profession can further alter that first step in distinguishing who is going to help you and your specific situation most. Before you can decide on the best fit for you, you must first look at the specifics of the two most commonly confused job titles in the industry: the enrolled agent and the CPA. While both can be licensed tax practitioners, each position comes at it from a different perspective.
Certified Public Accountants
When looking at the broad picture, CPAs are trained in a broad range of topics related to accounting. Those topics can include auditing, business law, finance, and taxes, to name a few. CPAs are certified after successfully passing the four-part, standardized CPA exam, made up of Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation, which covers taxation. Licensed at the state level, CPAs can only practice in the state in which they were licensed, reflecting one of the biggest differences from an enrolled agent.
An IRS enrolled agent is a federally licensed tax specialist. In this role, they have unlimited rights to represent taxpayers before the IRS in any situation. As a solely-focused tax practitioner, the average enrolled agent will have knowledge of anything that revolves around income tax, inheritance tax, gift tax, estate, payroll, retirement, and non-profit taxation. Certification is tested through a three-part Enrolled Agent Exam, also known as the Special Enrollment Examination, that covers all parts of the tax code. An enrolled agent can also bypass the exam after having worked for the IRS for five years, during which he or she would have encountered comprehensive engagement with all aspects of the tax code as part of his or her job.
Another difference between the two titles deals with their preparer tax identification number (PTIN). All federally-licensed tax practitioners, such as enrolled agents, have to maintain a valid PTIN. CPAs, on the other hand, are only required to maintain a valid PTIN if they are preparing for compensation all or most of a federal tax return or claim for refund.
But who should I deal with for my taxes?
Depending on your tax case, you will want to choose the professional who will know the most about your needs and be able to handle your specific situation. When choosing to work with an enrolled agent, your case may revolve around out-of-state returns or if you need to file in more than one state. You may also retain the services of an enrolled agent if you are attempting to resolve an IRS dispute through a civil resolution case, as enrolled agents have the necessary tax law expertise and knowledge of the IRS system to represent clients in tax proceedings, appeals, and audit hearings. They help ensure that their clients are getting treated fairly by the IRS, and work out payment plans on the best possible terms.
Choosing a CPA is usually most beneficial when the IRS needs an audit of your business deductions, expenses, and income. Their strongest ability against an enrolled agent is their ability to attest an IRS audit, making sure that it was handled fairly and truthfully. It is also helpful to work with a CPA when you need some accounting guidance for situations such as owning a small business. They can help you get organized and stay on track for the coming year. CPAs are certified after successfully passing the four-part, standardized CPA exam, made up of Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation, which covers taxation. Licensed at the state level, CPAs can only practice in the state in which they were licensed, reflecting one of the biggest differences from an enrolled agent.
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