Who is Better at Dealing with Tax Problems? EAs or CPAs

by in Tax Issues

Someone recently invited me and my EA Exam Review graduates to answer tax questions on their new site for pay. The affiliate marketing mini-article he gave me talked about CPAs answering the questions; but never mentioned enrolled agents at all.

Since he was inviting me and my graduates to answer questions, I sent him a suggestion that he modify the text to include enrolled agents in the description of those who answer. When he agrees, I'll tell you the URL of the site.

What’s the big deal?

First of all, let me make this clear, I am not CPA-bashing. But…and there is a big BUT.  

CPAs are very well known as accountants. And some of them do perform certified audits.

But when it comes to tax problems, don’t take for granted that all CPAs are up-to-date. Especially when it comes things like IRS audits and large balances due.

While CPAs must take continuing education (CE) courses (usually around 20 hours per year), their CE can be in certified audits, practice management, consulting, financial planning, as well as taxes, and a couple of hours of ethics.

Enrolled agents report to the IRS. EAs must complete 24 hours of CE per year – ALL of it in taxation, including 2 hours of tax-related ethics. Members of the National Association of Enrolled Agents (NAEA), complete 30 years of tax-related education per year.

When some years bring hundreds of changes to the tax laws, it’s impossible to keep up without a strong, concerted focus on tax education. The tax code is so big, bulky and complicated, it’s impossible to understand, unless you’re constantly keeping up.

Let me describe a recent problem:

One CPA recently cost a radio personality his right to bring his case to Tax Court. He didn't think it was important to file a response after his client got a 90-day letter (Notice of Deficiency) during an IRS audit.

I helped these folks try to salvage their case by walking through all the document requests from IRS and specifying what to provide. But their response is months too late! If the IRS auditor isn’t willing to plow through the 500 pages they just sent it, these
folks will be forced to pay the $40,000 taxes, penalties and interest. After paying, they might be able to file their case in the U.S. District Court or the Court of Claims to get their money back…which may tax years.

If the CPA had understood how IRS audits work, he would have understood the importance of that 90-day letter. When you cannot get an IRS to accept your deductions, you can file your claim in the U.S. Tax Court – without having to pay the taxes first. That’s a very valuable benefit to brush aside.

Recently, at a Tax Tweet event, I had a CPA argue with me about how skilled CPAs are in taxation. In the end, he admitted that other people in his firm specialize in taxes. He really didn’t know much about representation.

So if you owe the IRS a lot of money, or if you are facing a tax audit, turn to an Enrolled Agent for help. You can find an EA at the National Association of Enrolled Agents website (NAEA) – at their Find an EA page. On the Search by Profession line, there's
a drop-down menu. Select either “representation” or “NTPI Fellow” or look at both sets of results to find someone in your area.

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About the Author - Eva Rosenberg

Eva Rosenberg, EA, founder of the popular tax advice site, TaxMama.com, is a nationally syndicated Dow Jones columnist at MarketWatch.com, an author and popular speaker and instructor. Please join the TaxMama family and get answers to your own tax questions.


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{ 1 comment… read it below or add one }

Joe Mastriano,CPA August 3, 2012 at 2:55 pm

Actually CPA’s must complete 120 hours every 3 yrs, so it’s 40 hours a year. But I agree with you that you shouldn’t make assumptions about any ones IRS representation knowledge. Nothing with take the place of proper due diligence before hiring someone. For valuable free info on dealing with the IRS visit our site.


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