Enrolled agents (EAs), certified public accountants (CPAs), and tax attorneys are all tax professionals who can help you resolve tax debt problems. There are even Attorney-CPAs who can act as both your attorney and CPA. However, there are pros and cons to each role. Their advantages and disadvantages depend on what you need and the severity of your tax issues. When looking to hire a tax professional, understanding these roles will help you make the best decisions possible for your tax needs.
An enrolled agent (EA) is a tax professional licensed and authorized by the U.S. Department of Treasury to represent taxpayers. While an EA is the highest credential status the IRS awards, it is the least educated of all tax professionals. However, many individuals underestimate how helpful an enrolled agent can be, particularly when it comes to knowing IRS tax codes.
An enrolled agent goes through an intensive vetting process. Most enrolled agents must pass a three-part exam. Anyone who wants to become an EA must acquire and maintain the designation.
To maintain an enrolled agent status, an EA must:
An enrolled agent can help you with a variety of tax issues. Enrolled agents can perform many of the functions a CPA can do. In addition to being experienced in dealing with IRS issues, an enrolled agent can perform many tasks, including the following:
There are many benefits to using an enrolled agent. Consider the following when deciding what type of tax professional you need:
You may be dealing with the IRS for a variety of reasons that may range from an error on your tax return to tax evasion. While there are many benefits and reasons to use an EA, you need to think about the issues you are having with the IRS, how severe they are, and the impact they will have on your life. There are some disadvantages to using enrolled agents:
Though an enrolled agent may not have the same education as a CPA or a tax attorney, he or she is well qualified to represent you with your IRS matters. Still, consider the complexity and severity of your tax issues before hiring a CPA. Typically speaking, the more straightforward your case, the more likely you can employ an EA. You may consider hiring an enrolled agent in certain situations, such as if you:
A certified public accountant, or a CPA, is the most coveted designation in the accounting world. CPAs are very well trained and can help keep your business in alignment with tax laws. They can also help you with your taxes and with IRS tax matters.
CPA licensure qualifications vary by state. However, general requirements are as follows:
Some states have a one-tiered qualification system, while others have a two-tiered system. In a one-tier system, you get your certification and license at the same time. In a two-tiered system, you can get the certificate by passing the exam, but you must meet the other requirements before you are licensed to practice. Because all states are different, check with your local state board to find out the certification and licensure requirements.
A CPA can do a wide range of services, including:
There are two distinct roles a CPA can fill that an enrolled agent cannot:
It is hard to dispute that hiring a CPA comes with many advantages, especially when it comes to your taxes. The more complex your situation, the more likely you would want to hire a CPA instead of an enrolled agent.
One cannot dispute the benefits of hiring a CPA when it comes to understanding, resolving, and managing tax and financial matters. However, if you have a limited budget to address your tax concerns, then consider the following before hiring a CPA:
There are certain situations when you want to use a CPA versus an enrolled agent:
Tax attorneys specialize in understanding tax laws and can help you resolve tax problems. They are well vetted in tax laws and stay up to date with IRS regulations and tax laws. They can also help with tax planning.
To become a tax attorney, a person must first receive an undergraduate degree, complete law school, and pass the bar example.
Some tax attorneys also sit for the CPA and can serve as an Attorney-CPA.
Tax attorneys help their clients with a wide variety of financial and tax issues. There are overlaps in the EA, CPA, and tax attorney roles.
Tax attorneys may have a practice or work within a larger firm. They may work with individuals, non-profits, public, private companies, etc.
Tax attorneys are not only knowledgeable in tax law, but they also know how to conduct extensive research that can make a difference when you are dealing with highly sensitive matters.
Tax attorneys are expensive, so you should avoid hiring them for simple tasks you can do through an EA or a CPA. Like CPAs, tax attorneys can only practice in the region where they are licensed to practice law.
There are certain circumstances, including the following where a tax attorney is needed:
Attorney-CPAs are a type of tax professional that is qualified as attorneys and certified public accountants. A dually qualified tax professional can help you through the most complex tax issues. They have the most extensive and comprehensive training because they must meet the rigorous qualification of an attorney and a CPA
Attorney-CPAs are expensive. You may not get the value for your dollar when dealing with routine tax functions or issues. Consider your needs before hiring an Attorney-CPA.
If you are in a serious dispute with the IRS that calls for both understanding the law and interpreting financial data, then you could benefit from hiring a dually qualified tax professional.
There are specific instances where an attorney can nullify attorney-client privileges, so be sure to pick a tax professional with a proven litigation background.
If you need help finding a qualified tax settlement company to fit your needs and budget, let our team help you find the best match. At Solvable, we have done the hard work for you. We use our digital platforms to review the best companies after we have performed an extensive verification. Do not waste your time spending hours searching for a tax settlement company instead of working on settling your IRS tax debt.