Discussion:EA vs CPA food for thought

I have been an EA since 1993. I do not belong to any EA societies because I do not think that they can provide me with anything I can't get through the IRS or internet in the way of resourses. But, mostly because I do not think they do a decent job of getting the public familiar with EA means relative to tax prep. I have nothing against CPA'S however, in many instances the use of an EA is just as good if not better in certain circumstances than that of a CPA. It is irritating to hear financial "wizards", the likes of Dave Ramsey, etc, to recommend a CPA rather than a CPA or EA when addressing a tax issue. I would be curious to know the percentage of CPA's that take tax CPE courses rather than accounting CPE courses. EA's are just as, if not more, qualified to handle compliance, IA and OIC issues as well as tax prep. No offense intended. taxea

I agree with Taxea, I save any membership fee because right now I don't see the benefit of NAEA for example, in my situation. The public doesn't generally understand the distinction of an enrolled agent and "mainstream" public discourse doesn't promote it strongly.

I never thought of memberships that way, Taxea. I have a $190 subscription to a glossy magazine, about a quarter of which is devoted to organization business. Come to think of it, I can recall one issue where pages were given over to an alternative tax system being pushed by a learned person, but one not even on the horizon yet.

no offense intended

I guess what I'm saying is that even though I am a CPA, if I'm looking for tax advice, I'm more likely to look for an EA than a CPA because CPA doesn't necessarily mean tax expert. EAs are definitely suffering from a lack of marketing savvy. The AICPA has done a stellar job in that regards. Maybe too good of a job.

just my $0.02.

-jerry

I don't quite see how an accurate (and polite I would say) reply to a client on CPAs' areas of expertise is an attack. The fact is, that it does depends on the individual CPA, whether his or her expertise includes tax law. Jerrykern has it right on.

Doctors can't do taxes either.

Even rocket scientists need a good tax pro.

CPA's, like attorneys, are presumed to be tax saavy.

Experts in big companies or experts in little people: make your choice.

Now there about 1.2 million attorneys and probably something less than 2 million CPAs nationwide. We EAs are a very small group indeed.

I just received a voicemail from a local franchise tax preparer looking for an EA for one of his clients. He got my name from the NAEA locater profile and called me EVEN THOUGH that profile says that I am not in practice. Those who know about us are anxious to send us work. But when I talk to the guy, I'm going to have to send him to a local CPA who is an ex-IRS employee and does representation. There ISN'T anyone else.

As to joining the NAEA? I have yet to receive an issue of the EA Journal that didn't teach me something useful. If you believe that the NAEA isn't doing a good job of promoting EAs, rather than complain, why not join and get involved? I pay NAEA dues because the NAEA is the ONLY national organization that is doing anything towards national publicity.

I also pay ABA dues for somewhat similar reasons...I don't like the American Bar Association very much but it is the SOLE lawyers' organization with the nationwide clout to accomplish some very necessary policy and legal changes which I favor. And let me tell you...the ABA Journal is almost valueless as a practice aid and ABA dues are three times what NAEA charges. Nevertheless, I pay those dues because that's my only real vehicle for change.

Well then, send him a letter, laying out the positive qualifications of EA's etc., and sign it "Rev. John Doe, EA".

In this way, he might think by insulting you, he has insulted your entire congregation of thousands. And, I would imagine when it comes to Ramsey's "money supply", he'll take an interest.

I'd love to see Ramsey and Suze Orman get hooked up, or at least have a torrid affair.

By diluting an already diluted gene stock, they could produce a bevy of even more financially mediocre advice hounds.

Perhaps Dr. Phil will lend them his vacation home for the tryst.

P.S. Of course, I speculate that Orman may be a lesbian, but I know my preacher has had dozens of affairs with every stripe of receptacle imaginable, and I don't think that that would put Ramsey off too much. It shouldn't, he's a Christian.

I have to apologize for being such a curmudgeon today. I think I am anticipating many upcoming re-runs of the Dicken's classic "A Christmas Carol". I sure could use a Tiny Tim to clean out my gutters right now, I wonder if he does chimneys?

I think same-sex marriages should be recognized also. For years, the criticism was made by these bigots that gays were unstable and had sex with everyone. Why then do these same bigots deny them the opportunity to settle down into a legally sanctioned marriage; since theoretically that should encourage a less promiscuous lifestyle?

I would have to say I agree that EA's are not well publicized and I would be curious to compare in a survey the different responses you would get from people if you ask them what is an EA vs a CPA and what do they do for a living. Personally, I would refer clients to either but I also realize that no matter if they are a CPA or an EA, there are the good and the bad in each field.

Being an Enrolled Agent also sounds like you work for the IRS and I don't know if that effects anyone's decision on whether or not they want to use an EA to prepare their taxes.

Being as you have just been studying for the (endless) CPA exam, maybe you know the answer to this question.

In another thread, someone posted a link to the CPA Journal stating that a CPA could not offer tax advice or representation except in states where she is licensed even if that CPA does not use the "CPA" title. Leaving aside whether any attempt at professional discipline would hold up in the Courts, would the situation be any different for a CPA practicing under her EA enrollment?

As an aside, I don't believe that any state bar association would attempt to discipline an out-of-state lawyer for undertaking Cir. 230 representation so long as the lawyer was careful not to imply bar membership.

Generally, the client could care less, as long as the professional is sober, and in some way appears to be on the ball.

The vast majority of the public has absolutely no idea how complex the tax law is, and the government does everything it can to hide the fact of it's complexity by blaming all mistakes made on the preparer. At least nowdays they do. And the government does this knowing full well that they have no idea of what most of the law means themselves.

Boy howdy. I started my current LL.M.(Tax) program as a lawyer and an enrolled agent and even I had no idea how complex, murky, and dense the Code is. I am embarrased to admit that I was shocked when my hard copy of the Code and Regulations arrived in a CRATE.

14 - hours - accounting / 57 - hours - tax

All in 2008 and CPA license is not due until 01/2010 so some might think I am a little CPE heavy although I look at CPE differently. One can never have enough!

Will have similiar cpe hours in 2009 including an additional 8 hours in fraud.

To be licensed in CA, one needs 80 hours of CPE every two years with no less than 20 hours in any given year (I think this is an AICPA req but don't quote me on this). If one issues finacial statements (I do), they need 24 hours in accounting every two years along with 8 hours of fraud every two years. One must also have 8 hours of ethics every six years.

Explaining to Joe Citizen that the EA is recognized by the IRS as a tax expert does not equate to that an EA works for the IRS. This I make clear to my clients and anyone else who asks. And, Kevin, I have watched Dave Ramsey daily for several months. He may have recommendations to EA's on his website but I have never heard him recommend to a listener/watcher to consult with an EA. It is always consult with a CPA. I have written to him about this and gotten no response privately nor has he changed his diatribe on-air.

interesting take from the AICPA site:

"5) Are CPAs and accountants the same thing?

Yes and no. All CPAs are accountants but all accountants are not Certified Public Accountants. The principal differences between accountants and CPAs are education, experience, and opportunity. Becoming a CPA is a challenging goal, but one very much within your reach.

In order to become a CPA, there are education and experience requirements you'll need to fulfill, and a uniform exam that you must pass. Receiving your CPA certification distinguishes you from other business professionals - you will benefit from increased trust, opportunities, and financial rewards."

If you take Kevin's latest post and change CPA to EA and accountants to tax preparers...then you have exactly the reason they are being compared. A CPA does not have the tax expertise of an EA...An EA does not have the accounting expertise of a CPA. I would not recommend an EA to a client that needed accounting expertise and I don't understand why so many professionals recommend a CPA for tax purposes. I submit the reason is that Joe Citizen does not know what an EA is or does. The definition of an EA, simply stated, is: "one who is RECOGNIZED by the IRS as a tax expert". Don't see any confusion between that and "one employed by the IRS." taxea

"No, I am an Enrolled Agent."

I should now recite Taxea's wonderful description, but I am curious so I listen. I keep hoping against hope that we have educated the public.

"You mean you work for IRS?"

It's that word "Agent" that grabs them everytime, so I go on and explain the IRS-given examination, the CPE I take every year and the fact that taxes are my speciality.

IRSfixer hit it on the head! In any field there are incompetent people. I am not a CPA/EA (started studying for the EA exam) and I have seen tax returns prepared by CPA firms in a FUBAR condition. The public is already conditioned and associates "tax" with "CPA". Ask them about an Enrolled Agent and you will get, "huh?"

I can suggest one: LRP - Large Refund Provider. That'll get consumers' attention. :)

I agree, EA is a bad name for PR purposes -- because it has only two letters and because it contains "Agent". The only way IRS could have made it worse, would have been to call it "Enrolled Informer". For the life of me, I can't understand why they stuck the "Agent" in there. The reasoning that Agent signifies client representation is weak.

I know as less as the next guy but more than the other guy (humor)

TexCPA 12:17, 13 December 2008 (CST)

I am still learning all the nuances of the tax field. I haven't joined the NAEA yet but I believe it's a good thing to be a member of a community since we are such a small group. I just wish that the IRS would make some kind of rule so there would be more restrictions on people becoming qualified as non-enrolled paid tax preparers....

Another, easier word for "attorney in fact" is agent.

The CPA Exam consists of four sections:

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.

--And about the SEE (www.irs.gov):

 The SEE contains three (3) parts as follows:

Part 1 - Individual Part 2 - Business Part 3 - Representation, Practice and Procedures

It's a hard life sure, but so is the life of a coal miner or a brick layer, and I've never seen the latter two dead drunk on the Monday morning.

My most trusted CPA I had to step over last week on the way to the water fountain. An EA stooped down to help him up, and damn if she didn't fall over herself in a drunken stupor. Twenty percent (20%) of the tax knowledge of the 16th floor was sitting pickled on the floor (the other 80% was drinking from the water fountain).

It was enough to embarass even a chiropractor (another licensed professional).

If you want your taxes done right, get a lawyer. :)

Snowbird 21:25, 13 December 2008 (CST)

No, I mean that the IRS recognizes EA's as tax experts, just as they recognize CPA's as accounting experts.

"Should the businessperson go to 2 professionals or just 1?"

Two unless he can find a CPA that has opted to educate himself in tax issues as much as Riley has. taxea

When it comes to other accounting work, such as hiring a controller, I can understand how hiring a CPA who has experiance in a public accounting firm is a benefit. The experiance is the reason there though. Somewhere that key point has been lost and now everyone sees a CPA as somehow better even if they are a fresh graduate who just happens to have passed the test compared to someone with several years of actual experiance.

When all is said and done, EA or CPA, it is just a title. The person may or may not be an expert in the field. So, you have to ask yourself, what does the credential actually give a person. The tax firm I will be working at starting this season does returns from 18 states. I don't think a CPA would fit in well at this firm due to the multiple states, but, there are three EA's that work there.

Also, I do not have a chip on my shoulder. I just think there are far too many people who get a CPA just to be able to tell people they have it. I would even go so far as to say that the EA is more pure. Who would become an EA if they didn't want to become a tax preparer?

The results were stunning, with the chickens easily achieving a less than 5% error rate on the 1040 by essentially a random walk, compared to 45% of the practitioners producing error ridden returns. For political and national security reasons, the test was kept secret by agreement between the government and the KFC Corporation (yes, it was kept under lock and key along with the Secret Recipe devised by the Colonel). I only know about it because I was dating the same woman as the Commissioner at that time (a 22 year old Brazilian knockout, and rumored by some to have actually been the The Girl from Ipanema of considerable lore).

So, this should be a lesson to us all.

Re: CPAs and tax practice...I am in the midst of my first Corp Tax class from Taft. I would KILL for a decent understanding of hard core accounting. There is a level of sophistication in the corporate finance world that is confounding and astonishing. These people are very, very smart. And since SarBox, things have gotten even worse.

I throw no rocks at CPAs.

That being said, anyone who hires a tax "expert" should rely on much more than whether the tax preparer has a CPA license - mainly referrals and impressions at interviewing the professional. If I didn't know anything about the credentials and a well recommended candidate told me they were an EA, I'd look it up (so easy on the internet) and use the information in my hiring decision.

I wonder if changing the name "Enrolled Agent" to something clearer to the public is doable - perhaps something like "Licensed Tax Expert". Good luck with that one, EA's!

Another great new credential would be the KHAMAR - Knows Half as Much as Riley. I don't know whether I could come close to passing that test.

We are here to share our knowledge with each other. It's absolutely impossible to know everything about our complicated tax code (okay, Riley2 might just be the exception), but the main point is we are here to work with each other.

We have to look at this forum as a virtual office/workplace. I work alone as do some of you. We bounce ideas off each other like you would at an office, because (big surprise coming) NO ONE PERSON KNOWS EVERYTHING! Some think they do, but they don't. The best thing we can do is help each other, encourage each other and stop smacking each other around, regardless of credentials.

I am also tired of "credentials don't mean a thing." They do mean something. You have achieved some level of expertise, whether it be EA or CPA, but it doesn't mean you are the smartest person in the room Get that through your head (again Riley2 is the exception)! My youngest sister, who has a Phd and is an assistant professor at a major university you have all heard of (I am proud of her) will tell you that and $3 gets her a tall mocha at Starbucks like everyone else. In other words, keep yourself grounded. You would never know what she does for a living. She never talks about it. I do more than she does.

David (Death & Taxes) asked for and I seconded his point on respecting our individual credentials, CPA's, EA's, professional tax preparer's alike. We should do so. It's absolutely pointless to continue to pull this garbage "I am an EA and I know more about tax law than a CPA" stuff (and vice versa). I can attest to the fact that I have seen some tax returns by EA's, CPA's and PTP's that were no better prepared than the chickens CrowJD refers to above in his post.

My late father-in-law, armed only with a high school diploma had a great quote, "I learn something new every day..." He's right, we do.

Tom

As far as the chickens, maybe the didn't get paid a whole lot. They get paid like we do, "chicken feed" compared to my wife's eye surgeon.

Tom

And David, Philly is down there for a reason. . ..........!

Unfortunately, I have learned something in this post and that the concept which this post was started on does not seem like it is going to go away anytime soon. That is a shame because in the big picture it really has not much to do with why yourself, myself and many others are in this business or why we all come here to either find or provide others with knowledge.

Good luck with your wife's recovery.

Thanks for the good wishes.

I get frustrated with people and their sensitivity. I'm pretty sensitive myself, but I have learned to finally adopt a thicker skin.

I also stopped trying to be a "know-it-all" some time ago. I do the best I can, learn from my mistakes, learn as much as I can from people here. I also cherish the relationships here, because we are a community.

NewMexEA makes a good observation in his post about corporate taxes. I've seen JR1 get abused unfairly by CPA's here and he's very knowledgeable about S Corps. As I said, we all learn from each other. I've reviwwed a corporate return or two prepared by EA's who shouldn't go near a corporate tax return. I am sure plenty of CPA's shouldn't go near tax returns like some lawyers.

I have a friend who is the head of a high-powered CPA firm's tax department. It's the firm where I got started. His Rolodex of clients would be the envy of most tax practitioners. When I worked there, we had some really high-powered clients. It's probably grown since then. I called him one day as I had a situation out-of-my-league. I asked him if his firm could handle it. I gave him the background and he said to me, "What? I don't know what that is Tom!" We laughed and he turned me over to his non-profit expert who took it from there. Point is, we all can't know-it-all. That didn't change my opinion of him. It just points out he knows more about individuals than not-for-profits.

It is best to focus on our strengths rather than our weaknesses and build from there.

Tom

My letter head and some other things says:

Enrolled Agents – The First Tax Professionals, established by an Act of Congress, 1884