EA vs CPA vs Tax Attorney: Which One is Right for You?

Taxes are a scary thing for most people, and the reasons for this are not farfetched. Luckily, the right tax professional in your corner can make all the difference. But with so many titles such as EA, CPA, and Tax Attorney floating around, it’s easy to get confused. Who do you actually need? And when?

An enrolled agent (EA) is a tax professional authorized by the federal government to represent clients before the IRS. They also handle basic tax-related matters like returns filing and tax planning. A Certified Public Accountant, on the other hand, has broader financial expertise, particularly in the area of accounting. CPAs often focus on tax preparation, business valuation, audits, and financial planning. Finally, a tax attorney is a legal expert in tax law. They are the right choice when you’re dealing with complex tax issues like IRS disputes, tax litigation, audits involving potential fraud, or cases headed to court.

Victory Tax Lawyers offer unmatched litigation and representation services. Our team of professional tax lawyers is proficient in the most recent tax regulations, guaranteeing our clients optimum representation and the best possible outcomes. We also offer tax relief services to enable our clients to significantly reduce their tax liabilities and save money in interest and penalties. Take advantage of our free consultation today and speak with an experienced tax lawyer.

This post explores the different roles of the CPA, EA, and tax attorney to enable you to make a sound decision when hiring a tax professional. We also highlighted the cost of hiring each of these tax professionals to give you an idea of how much you’ll pay for their services.

What Is an EA (Enrolled Agent)?

An Enrolled Agent (EA) is a tax professional federally authorized to represent individuals and businesses before the IRS in all tax-related matters, from audits to collections and appeals. Unlike CPAs or tax attorneys, EAs focus primarily on taxes, which essentially makes them tax law specialists.

While the primary role of an EA is representing their clients before the IRS, they can help in many other ways, including tax planning, preparing, signing, filing tax returns, and proferring basic tax advice to help clients navigate the tax code. EAs have unlimited practice rights; this means that they can represent any taxpayer on any tax issue and in any state. This sets them apart from unlicensed tax preparers, who may be restricted in their scope of work.

How to Become an Enrolled Agent

Becoming an EA requires a candidate to follow the steps below:

1. Obtain a Preparer Tax Identification Number (PTIN).
2. Apply and pass the Special Enrollment Examination (SEE). This three-part exam covers individual tax returns, business tax returns, and representation, practice, and procedure.
   Each section has 100 questions and costs approximately $259.
3. Apply for enrollment with the IRS; and
4. Pass a suitability check, which includes a review of tax compliance (this ensures that they have filed all necessary tax returns and have no outstanding liabilities) and a criminal background check.

Another popular option for obtaining an Enrolled Agent certification is if the individual has been an employee with the IRS for five years or more. This means that the individual would only need to prove that they’re IRS former employees to obtain an EA certificate from the IRS.

Generally, to maintain their EA designation, EAs are required to:

• Obtain a minimum of 72 hours of continuing education (CE) every three years and a minimum of 16 hours every year, with at least two hours dedicated to ethics. All continuing education must be completed through an IRS-approved provider.
• Adhere to the code of ethics established by the U.S. Department of Treasury.

Several EAs also maintain membership status with the National Association of Enrolled Agents. They also have to comply with their ethical standards to continue being members.

Key Advantages of Hiring an EA

Here are reasons you should hire an enrolled agent:

1. Ethical Representation

Unlike CPAs or attorneys, whose expertise spans broader financial or legal scopes, the primary responsibility of an enrolled agent is to represent clients before the IRS. Their entire credential hinges on passing a rigorous IRS exam covering audits, collections, and appeals. Plus, they’re also ethically required by law to prioritize your interests before any other thing.

2. Understanding of Tax Rules

Tax laws are constantly changing. There are always adjustments being made to tax brackets, deductions, and other key factors. EAs are able to stay ahead of these changes in tax laws through mandatory continuing education. The implication is that they are always able to handle your tax problems from the standpoint of updated knowledge of legal requirements.

3. Unrestricted Practice

CPAs and tax attorneys are licensed state-by-state. If your tax issue crosses state lines (say, you moved from California to Texas mid-year), your CPA might need to collaborate with another professional. Whereas EAs are federally licensed and, hence, can provide representation in any state and on any matter.

4. Cost-Effective Services

One of the biggest advantages of hiring an Enrolled Agent (EA) is cost savings. EAs are typically more affordable than CPAs or tax attorneys while still offering IRS expertise. One reason for this is that EAs focus solely on tax issues. For instance, if you receive an IRS notice, an EA can often settle it with a single response letter, avoiding hours of billable research.

When to Hire an EA

Enrolled Agents are necessary for a wide variety of tax-related challenges, but their expertise has clear boundaries. Knowing when to hire an EA (and when to escalate to a tax attorney) ensures you get the right advocate for your situation. Hire an EA:

• If you need help with individual or business tax returns, as EAs specialize in tax preparation.
• If you require IRS representation for audits, tax disputes, or back taxes.
• If you’re a small business owner or freelancer needing advice on tax deductions and credits.
• If you need help setting up a tax strategy but don’t require broader financial planning.

What Is a CPA (Certified Public Accountant)?

CPAs are state-licensed accounting professionals with a broad skill set covering taxes and accounting. While they offer tax preparation and IRS representation in some cases, their expertise basically covers financial reporting, auditing, tax planning, and consulting. Typically, CPAs can represent their clients before the IRS. However, it ends there. They cannot represent clients before the tax court.

To obtain a CPA license, you’ll need to meet education, exam, and experience requirements. Although these standards vary by state, all jurisdictions in the U.S maintain these three eligibility requirements;

• Education: You must hold at least a bachelor’s degree to qualify for CPA certification as a licensed professional (usually in accounting).
• Experience: Most states require about 1-2 years of full-time work experience that regularly draws on one or more accounting proficiencies.
• Examination: You must pass the Uniform CPA Examination to earn your initial license. This exam demonstrates you have learned the technical skills necessary to offer services for financial reporting, accounting, auditing, regulations, attestation, business environments, and business concepts.

Some states have additional requirements related to citizenship, residency, and/or having a valid Social Security number.

Key Advantages of Hiring a CPA

The main advantages of hiring a CPA include:

1. Comprehensive Financial Expertise

CPAs handle a wide range of financial matters, from tax preparation to financial reporting, making them well-suited for businesses and individuals with complex financial needs.

2. Strict Standards & Qualifications

Unlike general accountants, CPAs must pass the grueling Uniform CPA exam, gain work experience, complete 150+ hours of ongoing education requirements, and adhere to AICPA ethics standards. This keeps them up to date on tax laws, financial regulations, and ethical standards governing their profession.

3. Smart Financial Planning

If you want to reduce tax liabilities, prepare for retirement, or grow your business, a CPA can help you develop a financial strategy tailored to your goals. A CPA, more than an EA or tax attorney, is better suited to help you with the numbers part of your taxes. A CPA can help you compile, review or audit your financial statement and put these records into tax-based statements for the preparation of your tax return.

4. Business Advisory & Investment Support

If you’re applying for a loan, seeking investors, or need audited financials, a CPA can provide the documentation and analysis required to make your case stronger due to their accounting and finance background.

When to Hire a CPA

A CPA is a good choice:

• If you need both tax preparation and general accounting services such as bookkeeping, financial reporting, and cash flow management.
• If you run a business and require financial statements, audits, or cash flow analysis.
• If you need tax planning beyond basic filing (CPAs can help minimize tax liabilities through long-term strategies).
• If you’re applying for a loan or investment and need financial statements or business valuation.
• If you need help with retirement planning, estate planning, or financial forecasting.

When a CPA Might Not Be Enough

CPAs can represent you before the IRS, but if you’re dealing with serious IRS issues like tax fraud allegations, liens, or litigation, you need a tax attorney. Tax attorneys are better suited and trained to handle legal tax disputes and can represent you in court if necessary. Although CPAs offer representation if they qualify as an enrolled agent, complicated tax situations aren’t their strong point. A tax attorney stands a better chance of getting you a favorable outcome with the IRS.

Moreover, unlike tax attorneys, CPAs don’t provide attorney-client privilege. If your CPA discovers potential fraud during an audit, they’re legally obligated to report it. So, if you need to work with a professional who legally prioritizes you first, then an attorney is the best choice. On the flip side, if you just need basic tax filing or IRS representation, an Enrolled Agent (EA) can be a cheaper and more tax-focused option.

What Is a Tax Attorney?

A tax attorney is a lawyer who specializes in tax law. They understand tax codes, accounting rules, and contract law and use this knowledge to provide legal advice and representation in a variety of tax-related matters.

Tax attorneys are licensed lawyers. Before practicing law, they must complete their bachelor’s degree, get a Juris Doctor (J.D.) degree from law school, pass the state bar exam, and pursue a specialization in tax law, often through an LL.M. in Taxation or board certification. Since tax attorneys specialize in the legal side of taxation, they are better suited to handle legal services beyond what the other two professionals can typically provide.

Their primary responsibilities include IRS Representation (i.e., handling audits, appeals, and negotiations with the IRS), tax disputes, and litigation (i.e., defending clients in court against IRS claims or lawsuits), tax planning and compliance (i.e., advising businesses and individuals on complex tax strategies), estate and wealth planning (i.e., structuring trusts, inheritances, and tax-efficient wealth transfers), business tax strategy (i.e., assisting companies with tax filings, structuring, and regulatory compliance), etc.

Key Advantages of Hiring a Tax Attorney

Some key benefits of hiring a tax attorney include:

1. Proper Representation in an IRS Dispute

IRS tax attorneys advocate for their clients who are facing tax issues such as audits, court cases, or appeals. They protect your rights, work to reduce your liabilities and provide guidance through the process of settling with the IRS.

2. Negotiation Agreements

A tax attorney can negotiate agreements related to tax issues or audits to secure favorable outcomes. They may also represent companies during negotiations with the IRS.

3. Professional Advice on Legal Tax Matters

When tax issues have little to do with numbers and more to do with laws, a tax attorney can be of great help. They offer guidance from a professional outlook, helping you navigate smoothly while preventing recurrence.

4. Offers Attorney-Client Privilege

Lawyer-client confidentiality is a pillar of legal protection for individuals, and most tax attorneys offer that. This means you can freely discuss sensitive matters with your tax attorney, as all communication is confidential and protected by law. 

When to Hire a Tax Attorney

If you’re unsure about when to hire a tax attorney, these examples will help.

• If you are being audited by the IRS and suspect potential legal consequences. The guidance and expertise of a tax attorney are invaluable during this process, and your attorney can protect your interest.
• If you are facing tax fraud allegations, penalties, or lawsuits. A tax attorney can build a strong defense and represent you before the IRS.
• You need help negotiating a tax settlement, such as an Offer in Compromise (OIC) or installment agreement. The negotiating skill of a tax attorney is especially helpful when you want to use an offer in compromise to offset your back taxes.
• If you are involved in a business tax dispute or corporate tax litigation. A tax lawyer can help business owners avoid payroll tax issues and address them if they arise.
• If you require legal tax planning for complex estate planning, trusts, or international tax issues.

Key Differences Between EA, CPA, and Tax Attorney

EA vs. CPA vs. Tax Attorney: Cost Differences

Hiring tax help isn’t one-size-fits-all. When it comes to choosing an EA or CPA, it’s important to understand that each has different roles, and this greatly influences cost. Moreover, each professional brings unique value, and their fees reflect their expertise, geographic demand, and the stakes of your case. Below, we’ve broken down the costs of hiring an Enrolled Agent (EA), CPA, or Tax Attorney across different states.

How Much Does It Cost to Hire an Enrolled Agent?

Enrolled Agents are often the most budget-friendly option for taxpayers needing specialized IRS help without legal intricacies. Their hourly rates typically range from $100 to $300 per hour, with simple individual tax returns costing between $200 and $500, while business tax returns range from $500 to $1,200.

In high-cost states like California and New York, EAs may charge between $250 and $400 per hour, whereas in Texas and Florida, the rates are more moderate at $150 to $250 per hour. In Midwest and rural areas, costs are lower, averaging $100 to $200 per hour. EAs have clear boundaries, though. They can’t defend you in court, give advice on non-tax legal matters, or handle criminal litigation. These limitations keep their fees lower than CPAs or attorneys.

How Much Does It Cost to Hire a CPA?

Certified Public Accountants occupy a middle ground between EAs and tax attorneys, both in expertise and pricing. Their hourly rates generally fall between $150 to $500, with individual tax returns costing between $300 and $1,000 and business tax returns ranging from $800 to $2,500.

In California and New York, where the cost of living is higher, CPAs typically charge between $250 and $500 per hour, while in Texas and Florida, attorneys offer a competitive rate ranging from $200 to $400 per hour. In Midwest and rural areas, CPAs charge between $150 and $300 per hour due to lower demand.

How Much Does It Cost to Hire a Tax Attorney?

Tax attorneys command the highest fees among the three professionals. The cost of hiring a tax attorney varies based on factors like experience, location, and the specifics of the case involved. For example, IRS dispute representation usually costs a flat fee of between $2,000 and $10,000+, while tax fraud defense cases range from $5,000 to $20,000+. If you’re looking to negotiate an Offer in Compromise (OIC), you can expect to pay a flat fee of between $3,000 and $6,000.

Based on location, tax attorneys typically charge between $500 and $1,000 per hour in states like California and New York, where demand for tax attorneys is high. In Texas and Florida, rates tend to fall in the $300 to $600 per hour range, while Midwest and rural areas generally offer lower pricing at $250 to $500 per hour.

While the costs are higher compared to other tax professionals, tax attorneys offer distinct advantages, especially in legal representation and confidentiality. Their services are particularly valuable when facing serious IRS legal issues, such as tax fraud accusations or disputes requiring litigation. In such scenarios, the investment in a tax attorney proves their worth, potentially saving clients from more significant financial and legal repercussions.

How to Choose the Right Tax Professional for Your Needs

Choosing the right tax professional can be overwhelming, especially since their roles often overlap. Whether you need help with tax preparation, IRS disputes, or business financial planning, the right choice depends on your specific situation. Here’s how to decide:

1. Complexity of Your Tax Situation

The first thing you want to do is determine the details of your tax needs. If you’re facing an IRS audit or tax dispute, a tax attorney is often the best choice because they specialize in representation and legal negotiations. You may not need to take on the cost of hiring a tax attorney if all you need is help in filing your tax returns. An EA will do in such cases. For other generic tax-related matters, an EA can also be very beneficial. On the other hand, if you’re a small business owner, a CPA might be more beneficial due to their expertise in financial reporting, budgeting, and strategic tax planning.

2. Budget

It’s always advisable to have a budget when choosing a tax professional to work with. The cost of hiring a tax professional usually varies depending on several factors. Having a budget helps narrow your search so that you can arrive at the most suitable options that fit your budget.

3. IRS Representation

When dealing with the IRS, the quality of your representation can significantly affect the outcome. Tax attorneys and EAs both specialize in IRS representation, but tax attorneys are a better choice for legal disputes and litigation. If your case involves, perhaps, serious penalties, fraud allegations, or complex negotiations, your best bet is hiring a tax attorney to stand in for you.

4. Tax Planning & Business Advice

For business owners, a CPA is often the most valuable professional to have on your team. Beyond tax filing, a CPA will provide you with help in the areas of financial strategy, budgeting, and tax-saving recommendations. Their role covers creating budget reports, tracking expenses and profits, and making recommendations that can save you money. They also help you plan your taxes to avoid tax liabilities. Most of the time, CPAs serve as a primary financial consultant for their clients.

5. Legal Issues

We can’t overemphasize this. If you have a case of tax fraud accusations, lawsuits, or any criminal tax charge in general, do not risk handling it alone. Routine IRS issues like missed deadlines may not have dire consequences beyond fines and penalties, but serious offenses like tax evasion or criminal misconduct can lead to huge fines, asset seizures, or even imprisonment. A tax attorney is your best defense in such cases. They can help you with legal representation before the IRS and help you negotiate better settlements if need be.

6. Availability & Credentials

Another important thing you want to do is verify that the professional you want to work with is licensed and has the right qualifications to undertake the job. Ask about their experience, credentials, and success with cases similar to yours. A quick consultation can help determine if they’re the right fit. You can check if your EA is licensed by verifying their status through the IRS Directory of Federal Tax Return Preparers. You can do the same for a tax attorney through your state bar association. Finally, you can ascertain the credentials of a CPA by checking with the state board of accountancy where they are licensed.

7. State-Specific Regulations

Tax laws and professional licensing vary by state. Ensure that your tax professional is licensed to operate in your state and is familiar with state-specific tax laws and pricing structures. Rates can also differ by location, so it’s a good idea to ask about their pricing model and whether they offer free consultations before committing.

Looking for Expert Tax Attorney Assistance?

Choosing the right tax professional can save you money, protect your assets, and keep you compliant with tax laws. If you need a tax attorney, don’t hire an enrolled agent or a CPA and vice-versa. A CPA or an enrolled agent is great if what you’re looking for is help in the areas of tax planning and filing of returns. However, if you need legal tax representation or have an IRS dispute or tax fraud allegation case on your hands, a tax attorney is who you should turn to.

If you’re up against the IRS and need the best tax lawyer to stand up for you, our team is here to help. At Victory Tax Lawyers, we specialize in handling complex tax issues, including IRS audits, back taxes, and litigation. We uphold strict confidentiality standards when we take up any case, protecting our clients’ private information. Schedule a free consultation today and let our tax attorneys help you take control of your tax situation.

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Parham Khorsandi

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10 months ago · 19 min read