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 Many wonder what the differences are between a CPA (Certified Public Accountant) and an EA (Enrolled Agent). [Read the links on CPAs and EAs taken from Wikipedia to get a more in depth discussion.]
That's both an easy question and a hard question to answer. In short, CPAs have to know a great deal about auditing, accounting, tax, business law, valuation, personal finance, planning of various kinds and myriad other things. EAs have to know a great deal about taxes.
Click here for information on how we, as an Enrolled Agent, can help you with your tax issues.
It may also help to know a little bit about how individuals become a CPA or an EA. Let’s start with the CPA first.
In order to become a CPA, an individual must have a degree (BA or BS). It's helpful if it is in Accounting, Finance, Administration or Management. Then, they need to decide where they want to practice. A CPA is licensed on a state level and can only practice in that state. Once they decide where they want to practice, they have to take the exam, which is a pretty standardized exam regardless of the state.
Generally speaking, the exam consists of four sections, 250 questions each section, 1000 questions total: Here are the four general areas of knowledge and testing for the CPA exam:
- Auditing and Attestation (AUD). This section covers knowledge of auditing procedures, generally accepted auditing standards and other standards related to attest engagements, and the skills needed to apply that knowledge.
- Business Environment and Concepts (BEC). This section covers knowledge of general business environment and business concepts that candidates need to know in order to understand the underlying business reasons for and accounting implications of business transactions, and the skills needed to apply that knowledge.
- Financial Accounting and Reporting (FAR). This section covers knowledge of generally accepted accounting principles for business enterprises, not-for-profit organizations, and governmental entities, and the skills needed to apply that knowledge.
- Regulation (REG). This section covers knowledge of federal taxation, ethics, professional and legal responsibilities, and business law, and the skills needed to apply that knowledge.
Click here for a list of the exact topics that are on each part of the CPA exam.
As you can readily see, there is much more to the life and practice of a CPA than taxation. They are expected to know a lot more, but aren't necessarily a tax expert.
Assuming they pass that rigorous, 4-part examination, they then have some practice requirements to meet, such as requirements to work under a practicing CPA for a specific period of time.
When CPAs take continuing professional education (CPE), they are free to choose from any number of general topics that they have an interest in, be that accounting, auditing, consulting services, specialized knowledge and applications, management, taxation and ethics.,
What about an EA?
 There are two ways to become an EA. One is to have worked for the IRS for a minimum of five years. The other is to pass a three-part exam and to undergo a thorough background check.
An EA needs no prior preparer experience in order to take the EA examinations, called the Special Enrollment Examination or SEE. They don't need to even have filled out a return or ever have to once they become an EA. But they do have to have special competance in tax matters.
Click here for information on how we, as an Enrolled Agent, can help you with your tax issues.
The following areas encompass the three exams, which are solely on taxation.
The bottom line is that EAs must know pretty much everything on income taxes for individuals, small businesses, partnerships, C corporations, and S corporations, They also need to know about inheritance taxes, gift taxes, estate taxes, payroll taxes, and retirement plans as well as non-profits.
Click here for information on how we, as an Enrolled Agent, can help you with your tax issues.
For more information on Enrolled Agents, their background and requirements, please view the Enrolled Agent page on our web site. For information about how we can represent you with tax issues, please see our Representation page.
When Enrolled Agents take their required continuing professional education (CPE), which consists of 72 hours every three years (more if they are NAEA members), it must be 100% in taxation and the ethics of taxation.
Summary
When you compare the two designations, CPA or EA, you come to realize that for EAs, tax issues are their only specialty. Their mandatory continuing education is solely on taxation, which means that their focus is on that one topic and very little else, except for mandatory ethics.
The bottom line is: a CPA does not have the tax expertise of an EA and an EA does not have the accounting expertise of a CPA.
Click here for information on how we, as an Enrolled Agent, can help you with your tax issues.
Part of the problem we face as a tax professional is the public’s understanding of what these two designations mean and what expertise each one may possess. Most professionals would not recommend an EA to a client that needed accounting expertise but we can’t figure out why so many professionals recommend a CPA for tax purposes. The reason may simply be that the average taxpayer does not know what an EA is or does. Simply stated, the definition of an EA is: "one who is RECOGNIZED by the IRS as a tax expert."
Enrolled Agents are the only FEDERALLY Authorized Tax Professionals.
Click here for information on how we, as an Enrolled Agent, can help you with your tax issues.
Wouldn’t you rather go to someone who knows taxes for a tax issue and to an accountant for an accounting issue?
Most of the information on this page is taken from the following publicly available sources:
CPAs:
EHow
WiseGeek
California Society of Certified Public Accountants
EAs
Prometric
National Association of Enrolled Agents
Article by Eva Rosenberg, best known as TaxMamma
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