Hiring the right tax professional can be a bit confusing if you’re not sure what to look for. For single adults at the beginning of their careers, income and expenses are relatively small and filing taxes can seem pretty straight forward. However, as life becomes more complicated – getting married, having children, starting your own business, buying a home, or making investments – tax preparation becomes increasingly more complex. Regardless of how simple you think your tax situation may be, seeking the help of a professional who knows how to navigate the overwhelming IRS tax code is always a smart decision.
Most people or businesses looking for tax assistance generally fall into two categories: those who need help with tax planning (planning transactions before they happen) and those who need help with tax compliance (filling out forms, applying credits, calculating deductions, etc.). In either case, finding someone who specializes in taxes and tax planning offers the best chance of saving you time, money and an unpleasant letter from the IRS! Two of the most qualified and frequently used tax professionals are IRS Enrolled Agents (EA) and Certified Public Accountants (CPA).
Certified Public Accountant (CPA)
A Certified Public Accountant, commonly referred to as a CPA, offers advice and financial services primarily to businesses, nonprofits or government agencies – although they do work with individuals as well. These services often include preparation of financial statements, reporting, financial audits, investment advice, planning, and tax preparation.
While some CPAs are tax experts, most tax experts are not CPAs. In fact, a majority of what you need to know to become a CPA is not even related to taxes. The IRS does not require CPAs to specialize in tax law or complete tax-related continuing education credits (CPE), although some state licensing offices have added additional tax CPE requirements in recent years. An IRS Enrolled Agent (EA), on the other hand, specializes exclusively in taxes and is authorized at the federal level to advise and prepare tax returns for individuals, companies of all sizes, estates, trusts, or any tax-paying entity.
IRS Enrolled Agent (EA)
An EA is a licensed financial practitioner who focuses exclusively on tax matters and is authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS. The EA designation is the highest credential awarded by the IRS and recognized across all 50 U.S. states. Individuals obtaining this elite status must adhere to scrupulous ethical standards while completing continuing education requirements on an ongoing basis.
Only EAs are required by the IRS to demonstrate competency in areas of taxation, representation, and ethics before they are permitted to represent taxpayers. Unlike CPAs who are state licensed and may or may not specialize in taxes, all EAs specialize in taxation. In addition, EAs are protected by limited client privilege under federal law, which means they offer confidentiality for certain conditions including audits and collections (there is currently no federal law protecting accountant-client privilege with regard to tax matters).
The Right Choice
Ultimately, selecting the right tax preparer is like choosing a doctor, lawyer, dentist, or any other professional. It really comes down to an ideal combination of education, experience, ability, and the personality of the individual you’ll be working with. Of course, it also depends on your specific individual or business needs. If you’re seeking the advice of a certified financial expert in tax compliance and planning, a federally licensed Enrolled Agent offers the best combination of credentials, experience, and knowledge.
William D. Truax and his friendly team of EAs and licensed tax preparers have been representing individuals and businesses across the country for over 30 years. They understand how important finding the right tax professional is and offer a full spectrum of financial services to help make the decision a little easier including:
- Tax Planning and Preparation
- IRS and state Representation
- Accounting Services
- Payroll and Business Management
- Financial Statements
- Trust & Estate Taxes
In addition, Mr. Truax is a member of the Bar of the United States Tax Court – a privilege very few EAs are granted. He is also a fellow and Accredited Tax Advisor of the National Association of Tax Professionals and a member of the National Association of Enrolled Agents.
For more information, please visit www.truax.net or click below to schedule a free consultation today!