Discussion:EA services - limited?

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LJACPA (talk|edits) said:

17 June 2010
I have an acquaintance who has been trying for many years to become a CPA (under very adverse circumstances and at over 50 years old now). He has to attend graduate school in order to do so though I understand his area of interest and experience is mostly tax. I don't understand why he wants to go through the process to become a CPA, if taxes are his focus becoming an EA would be so much better. He sent me the following and I don't know how to respond to this:

"I got the impression [from him] that all an Enrolled Agent can do is tax returns and represent clients before the IRS, if the need arises. They are not permitted to advise clients and do any tax planning or strategy, and a CPA can do both. I look forward to hearing from you."

Is this correct? I am seriously considering taking the exam to become an EA and think this is the direction he should go as well. Thanks.

Tax Writer (talk|edits) said:

17 June 2010
An EA can give tax advice and do any type of tax planning or strategy that a CPA can do. Our license is federal. But a CPA can do audit and attestation work, which an EA cannot. If your friend wants to compile audit reports he will have to become a CPA, but if he plans to do only tax, I feel that the EA designation is great.

By the way, I've worked for three CPA firms and the EA designation has always been sufficient. I never did audit work, which is tedious and something I never wanted to do anyway.

Tax Writer

TheTinCook (talk|edits) said:

18 June 2010
Do both. EA is a much easier and faster designation to obtain. Get it while you work on your CPA.

NoVATaxes (talk|edits) said:

18 June 2010
In my experience, rightly or wrongly, the CPA designation elicits an automatic attribution of tax knowledge, whereas the EA designation mostly elicits a "what's that?" I've encountered clients who insisted on seeing a CPA even when there are other EAs in the office and their tax matters are vanilla enough that really any competent tax pro can handle. CPAs know who EAs are, but the public in general doesn't.

NMexEA (talk|edits) said:

18 June 2010
NoVA's impression matches my own. An EA has the right to "practice before the IRS" anywhere in the country and no state authority can restict that right. Strangely, though, while Cir.230 protects an EA's right to "practice before the IRS" including representation, giving written tax advice, and doing planning and strategy, Cir. 230 does not protect the EA's right to prepare tax returns. States have the power to require EAs to meet state licensing requirements for that function. (Or at least, they think they do and IRS seems to agree.)

The EA is a very broad license to practice tax. What it is not, however, is much of a credential for entry level employment amoung accounting firms. LJA's friend will be selling his new graduate degree to potential employers, not his enrolled agent license.

I'm not saying, "Don't bother with becoming an enrolled agent." Even after graduation, the friend will not be eligible for a CPA license until he racks up enough hours of supervised accounting work. Being an EA will allow him to undertake tax advice and representation matters right away. That could be a useful source of income and experience even while in school or looking for work after graduation. But if the ultimate goal is to work for a national or regional CPA firm, the friend's best course is to pass the CPA exam as quickly as possible. It isn't just the public that doesn't know what an enrolled agent is or does!

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