Accounting

Advantages of Using an Enrolled Agent for Your Taxes

Most businesses and individuals have, at some point, looked for professional help when filing their tax returns. Usually, the decision boils down to using a CPA or hiring an EA to prepare and file tax returns.

However, what most people don’t realize, is these tax return preparers are not equal! It’s no surprise that only a few people understand the advantage of hiring an Enrolled Agent (EA) over a CPA to manage their tax matters. We look at some of the benefits of hiring an EA to assist you with your tax preparation.

But first…

EAs vs. CPAs: What Are The Qualifications?

CPAs are some of the most widely used tax preparers since their services, and technical skills are well known. Businesses and individuals hire CPAs to prepare returns, compile financial audits, and offer other attestation and advisory services.

CPAs are accountants who’ve been granted a license to practice the profession of accountancy and taxation to protect the public interest in the USA. This license is given at the state level upon completion of statutory education and experience requirements. The requirements obtain a CPA license vary from one state to another.

Unlike CPAs, the Enrolled Agent license is granted by the federal government through the US Department of Treasury. It is the highest title awarded by the Internal Revenue Service to tax experts, granting them an unlimited privilege to represent taxpayers before the IRS.

EAs must pass a three-part Special Enrollment Examination (SEE) that covers every aspect of individual taxes, business tax law, and professional ethics. Alternatively, an individual can be granted the EA license if they’ve formerly worked with the IRS for more than five years.

Besides the stringent testing, background checks, and application process, the IRS requires that all EAs must complete a mandatory 72 hours of continuing professional education every three years to maintain their license. This ensures that these elite tax experts are always on top of any tax changes in the country.

Should You Choose An Enrolled Agent Or CPA?

Well, when it comes to filing taxes, you want to deal with someone who understands taxation inside out. While CPAs are just as qualified, most of them do not specialize and practice in tax. But all EAs have an in-depth knowledge of taxation and understand the ins and outs of dealing with the IRS at all administrative levels.

They also have the authority to prepare more complex returns than a simple tax preparer might. They work with matters of tax law every day and stay abreast of new developments; hence can meet the government’s strict tax standards.

Furthermore, since the EA license is granted by the federal government, EAs can practice in just about any state without jurisdiction issues. But what makes EAs invaluable is their unlimited privilege to represent individuals before IRS for any tax issues, including audit, collections, and appeals.

Enrolled Agents can assist you with various tax issues. Specifically, they can:

  • Help with tax planning
  • Prepare, sign, and file tax return
  • Provide professional tax advice and help navigate complicated federal tax codes
  • Assist with any other tax matters in any state in the country
  • Provide representation before the IRS

Key Advantages of Hiring An EA For All Your Tax Needs

The following are the key advantages to hiring an enrolled agent over an CPA.

1. EAs Are Not Bound By Geography

This is one of the key benefits of hiring an EA to file your returns – they can practice in any state. This means that you can use one EA to file your returns in more than one state. CPAs, on the other hand, only have jurisdiction in the state where they are licensed to operate in.

Besides being able to file returns in different states, EAs can also represent you for audit in any state within the US. You’ll, therefore, have someone in your corner to take care of your tax needs wherever you’re located in the US.

2. Specialized Knowledge Of The Federal Tax Code

For an individual to get the EA license, they must have either worked with the IRS for a couple of years or have passed a rigorous 3-part exam covering individual and corporate taxes and ethics.

This means that EAs are super-knowledgeable in the complicated federal tax codes that often get businesses and individuals under IRS lenses. EAs also understand the technical requirements, ensuring that your returns have lower risks of getting audited, fined, or worse.

3. EAs understand all taxation requirements to keep you covered

EAs are the most elite tax experts in the country with extensive knowledge of the tax code, how it applies to the client, and how any change can affect the client’s liability. They are always learning about changes in the tax code, ensuring that you and your business are covered. A CPA, on the other hand, could only be dealing with general tax issues and overlook tax changes that could lead to massive losses and liabilities.

4. Highly Competitive Costs And Fees

Often, EAs are more competitively priced than CPAs. EAs have lower overhead and more extensive tax-specific expertise that allow them to deliver more to the client at better prices than other tax professionals.

For instance, while a CPA has to worry about the various state fees associated with CPA licensing, EAs don’t have such costs. Their extensive services, and super-competitive rates, will save you time, money, and resources dealing with tax returns and IRS.

5. Highly Versatile and Functional

Besides being able to deliver a host of tax-related services for business and individuals, EAs are also the only federally licensed tax preparers that have unlimited rights to represent a client before the IRS. This is a huge advantage because it means you can have a professional tax expert on your team who can represent you before the IRS in case of an audit, collections or appeals.

As a client, you’ll not only have a professional tax preparer in your corner but will also have a federally recognized tax expert representing you before the IRS. Interestingly, most EAs are former IRS employees, hence have the right tools and experience to get you off in the event an audit gets triggered.

Why You Should Hire An EA To Handle All Your Tax Needs

Choosing an EA over a CPA offers various benefits to you and your business. When you work with an EA, you’ll be working with a professional tax preparer, a competent tax advisor, and a qualified representative in case of any IRS related issues.

Enlisting the help of an EA is not only practical but also cost-efficient. Indeed, a trustworthy EA can be a one-stop-shop for you and your business, helping you stay tax compliant without hurting your bottom line.

Janet Behm
Janet has over 25 years of experience as an Entrepreneur, Business Broker, and CFO; with specialties in Accounting, Tax, Systems Development, Internal Auditing, Management, Consulting, Contract Review, and Training. She has worked more...
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