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CPA versus EA (Enrolled Agent)

Many people do not understand the differences between a Certified Public Accountant (CPA) and an Enrolled Agent (EA). While both may work in the field of taxation, they are really quite different. It is wise to enlist services from a professional that is focused on your need. (You would not confuse your Internal Medicine doctor with your Dentist!) The following is intended to be helpful in understanding the difference. 

CategoryCPAEA

LicensorGenerally a CPA license is issued by the Board of Accountancy in that state. Each state is different, and the history of the license will vary from state to state.The Enrolled Agent license was established by Congress in 1884 as part of the reparation from the Civil War. These individuals were the only ones allowed to represent a citizen before the US Department of Treasury for compensations related to the war effort. The license was and is still issued by the US Department of Treasury.

RequirementsRequirements are set by the Board of Accountancy in each state, so they can vary. Generally it is the following:
  1. Degree in Accounting (usually one but occasionally two classes on taxation)
  2. Experience working under an existing CPA (historically that was usually 2 years)
  3. Pass the CPA exam
Historically the CPA exam included 10% to 12% on basic tax issues.
Pass the IRS Special Enrollment Exam (SEE)
- or -

Retire from the IRS with a minimum of 5 years experience interpreting tax law.

Exam ContentThe following parts are included:
  • Auditing and attestation
  • Business environment and concepts
  • Financial accounting and reporting
  • Regulation
The SEE requires demonstrated proficiency in:
  • Individual taxation
  • Small business taxation (i.e., sole proprietors, farms)
  • Subchapter S Corporation taxation (aka S-Corps)
  • Corporation taxation
  • Trust taxation
  • Estate taxation
  • Payroll taxation
  • Representation procedures before the IRS (i.e., how to represent a taxpayer before the IRS)
  • Ethics

Continuing Education RequirementsWill vary by state, but generally 30 hours each year. Classes may be taken on using Microsoft Office applications, accounting software, tax software, updated accounting principles, tax issues, or almost any other topic. Ethics is required each year, usually 4 hours.Education requirement is 72 hours every three years (average 24 hours/year) and are limited to Tax Law, Tax Updates (i.e., new laws or review of court cases affecting interpretation of tax law), plus 2 hours of Ethics.

Note that an accounting degree provides a great foundation upon which to build tax knowledge. There are many colleges that offer a Masters in Taxation which can be an avenue to pursue tax knowledge that was not in a practitioner's prior education.