I DO NOT WORK FOR THE IRS! Also, if my mother has talked to you, I am not an Enforcement Agent either….(thank you mom for trying to get more clients for me but we really need to work on the terminology!)
When I tell people I’m an EA I get a lot of (understandably) blank looks. In fact, I did not know what an EA was even a few years ago.
EA is short for Enrolled Agent. In terms of what an Enrolled Agent does, think of a CPA. While you can become a paid tax preparer without being a CPA or an EA, many people study and take extensive tests to get these designations. Why? Well, so they can demonstrate to their clients that they have an understanding of business and tax issues. CPAs and EAs have to take ongoing education classes every year in order to keep their designation.
To get a little more into detail….an Enrolled Agent is licensed by the IRS to represent any individual or business before the IRS for any tax matter in any state. Enrolled Agents have to take three exams issued by the IRS on individual taxation, business taxation, and representation. That’s where EAs differ a little from CPAs. EAs are purely tax based. CPAs are tested on accounting, auditing, and business concepts. EAs, CPAs and attorneys are all able to represent people for tax matters before the IRS. Someone without these designations can only represent you for tax returns that they prepared for you.
Your CPA might have extensive tax knowledge, or they might not. It really depends on what their focus and their experience is. Just like an EA might not have the business environment experience. When it comes to hiring someone for tax time, it’s up to you to ask the right questions to make sure your professional is a good fit for you.
I chose to become an Enrolled Agent because I’ve had extensive experience in the business world already. I’m comfortable with changing business scenarios, new ventures, the financial and accounting aspects of different industries, and human resource management. The Enrolled Agent designation filled a more specific niche in my skill set.
So when you think of getting your taxes done, don’t limit your search to CPAs. There might be a great EA close to you with excellent tax knowledge!