Comparing The Tax Professionals: CPA, Tax Attorney, Tax Preparation Pro, and Enrolled Agent

compare tax professionalsAre you thinking about hiring a tax professional? On the surface, this is something that appears to be simple enough. But once you dig deeper, you will find that you have many decisions to make. Most importantly, you need to decide which type of tax professional is best for your situation, what you are trying to accomplish, and the type of help that you need.

Here are four types of tax professionals, as well as details on their areas of expertise:

1. Tax preparation professional. Have you thought about hiring a professional from a “chain” such as H&R Block? If so, you should know that most of the people working in these offices are nothing more than tax preparation professionals.

If you just need somebody who can help you prepare a return, there is nothing wrong with choosing this type of professional. In fact, it is probably your best choice due to their experience as well as the overall cost.

2. Certified Public Accountant (CPA). To become a CPA, an individual must pass a number of tests which are administered by the American Institute of Certified Public Accountants. Along with this, many states require that CPA’s pass exams on a local level.

While some CPA’s offer income tax preparation services, many focus on more complex situations such as business returns, auditing projects, and business record keeping. If you own a business, it is a good idea to hire a CPA to keep accurate records and file timely returns. They can also help with maximizing your tax return.

Many people get a basic tax preparation professional confused with a CPA. But as you can see, there are many key differences and CPA’s offer more expertise in more complex areas.

3. Tax attorney. Do you have a problem with your local or state tax agency or the IRS? Some issues can be solved on your own, but others require professional help. With the tax code being so complex, hiring an attorney is something you may want to consider. An attorney can help with everything from criminal charges to an audit to lien removal.

If you are facing a serious issue, such as being accused of tax fraud, or you are facing a large penalty, it is essential to hire an experienced attorney.

4. Enrolled agent. These professionals are licensed by the federal government in the field of taxation. The United States Department of Treasury gives these professionals the ability to represent taxpayers in front of the IRS for collections, appeals, audits, and much more.

Some people believe that enrolled agents only take on cases in which they will represent a client before the IRS. This is not true. It is common to find enrolled agents who are willing to help with many other areas as well, including the basic preparation of tax returns.

The biggest benefit of hiring an enrolled agent is that you know they are experienced. To become an enrolled agent, an individual must be licensed. Agents can earn a license by working for the IRS for five years in a position that regularly interprets tax code, or by passing an exam. Along with this, enrolled agents must pass a comprehensive background check.

As you can see, there are major differences between the many types of tax professionals? The next time you need to hire somebody to assist with your tax situation, consider the four professionals detailed above and choose the best fit for your specific situation.

(photo credit: radiotrofa)


1 nick November 29, 2010 at 11:07 am

I think regardless of credentials you have to find a savvy person who has gone above and beyond the tests and certifications required to gain their title.

2 Jeff Turner December 29, 2010 at 12:58 pm

The problem today with taxes is the tax code is so convoluted. Even Einstein said the tax code was hard to understand back in his day, I couldn’t imagine what he would say now?

3 ross May 16, 2011 at 6:22 pm

i think that finding a good, knowledgeable tax guy is so important. It will save you money and keep you safe. I will never do my taxes again (not just because i hate it:), because i have seen such a better return when you hire someone that is really experienced.
Not to mention, keeping on top of changing tax law as a laymen is pretty impossible.

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