When pursuing a career in taxation, many college students are faced with an alphabet soup of choices because they are unaware of the major difference between Enrolled Agent and CPA professional paths. At face value, Enrolled Agents and Certified Public Accountants may seem to have the same job simply because both are tax professionals with qualifications to represent taxpayers. After all, Enrolled Agents and CPAs are often responsible for preparing complex tax returns, dealing with tax appeals, and working in tax collection for individuals or organizations. However, the overall scope of their job descriptions is typically very different from one another, according to Fox Business. Below we have provided a comprehensive look at each of these tax professions to help you determine if an Enrolled Agent or CPA is right for you.
What is an Enrolled Agent?
In a profession that has been regulated by Congress since 1884, Enrolled Agents are tax professionals who are specifically authorized by the U.S. federal government to offer representation to taxpayers in affairs with our nation’s Internal Revenue Service (IRS). Enrolled Agents are generally involved in representing citizens for any tax appeals, audits, or collections, especially in cases where fraudulent claims are being investigated. Enrolled Agents utilize their expertise in the ever-evolving area of taxation to represent individuals, corporations, partnerships, trusts, and estates that are in the process of being audited by the IRS. The majority of Enrolled Agents only focus on preparing taxes and advising entities on resolving any tax-reporting issues.
What is a Certified Public Accountant?
On the other hand, Certified Public Accountants are extremely knowledge in a breadth of accounting practices that can be applied to performing accounting, taxation, and financial services to businesses. CPAs may work in various financial fields, including corporate finance, estate planning, government affairs, financial planning, income taxation, information systems, and even management. For CPAs who specialize in tax preparation, they will work on preparing individual and business tax returns as well as attest to the truthfulness of tax forms for the IRS. In some cases, CPAs are employed in large corporations as Chief Financial Officers to represent their business’ financial needs and will not offer service directly to the public.
Key Differences between EAs and CPAs
One of the major differences between Enrolled Agents and Certified Public Accountants is their method of licensure. While Enrolled Agents are required to pass a Special Enrollment Examination that covers all facets of tax code to receive licensure through the federal government, CPAs must pass a licensing exam in broad accounting practices with at least 150 hours of higher education to receive a CPA license through their state’s board of accountancy. Enrolled Agents utilize their federal license to work strictly on tax resolution for the IRS, but CPAs have a vast array of career opportunities that expand well beyond tax preparation into other financial services. Another important difference to consider is salary potential. On average, Enrolled Agents earn nearly 27% less than CPAs at just $56,120, whereas Certified Public Accountants can bring home around $71,040 each year, according to the Bureau of Labor Statistics.
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Although it may be a little confusing with all of the accounting acronyms floating around and the similarities present in these roles, you should always remember that Enrolled Agents are tax specialists focused on everything pertaining to taxation and CPAs are broad-base tax professionals who are well-versed in all things accounting. Now that you understand the difference between Enrolled Agent and CPA careers, you can make a well-informed decision on which of these professional paths is best suited to your professional aspirations.