Enrolled Agent vs CPA vs Tax Advisor for IRS Audit

It’s much easier to navigate an IRS audit when you have the right professional to support you. Enrolled agents (EAs), certified public accounts, and tax advisors provide various levels and types of support for individuals and businesses facing a tax audit. Understanding the similarities and differences between these roles and what they offer will help you choose the right person for the job and ensure the best possible outcome.

What Are Enrolled Agents and What Do They Do?

Enrolled agents are federally authorized tax professionals who represent taxpayers before the IRS. Enrolled agents provide a range of tax services including tax preparation, tax filing, and tax audit services, and can handle tax appeals and collections. They may also advise individuals and businesses on tax planning strategies. An EA can appear before any IRS office, and there are very few limits on who they can represent.

The IRS describes the enrolled agent status as “elite” due to the rigorous training and ethical standards to which they must adhere. “Enrolled agent” is the highest credential awarded by the IRS.

Requirements to Become an EA

There are two entry routes into becoming an EA: through experience as an IRS employee or passing a three-part professional test that covers individual and business tax returns. EAs must also pass a background check and show a record of their own past tax compliance. 

Registered EAs must:

• Complete 72 hours of continuing education every three years, including annual ethics training

• Comply with ethical standards established by the U.S. Department of the Treasury

What Is a CPA (Certified Public Accountant)?

A CPA is a state-licensed tax professional who provides accounting, tax, financial planning, and consulting services for businesses, organizations, or individuals. A CPA can also represent their clients before the IRS in the event of an audit.

Certified public accountants support their clients in a range of ways. For example, CPAs may offer any or all of the following services:

• Auditing and assurance services

• Financial advisory services

• Tax preparation and planning services

• Management consulting services

• Bookkeeping services

• Payroll services

• Fraud examination

• Business valuation services

• Forensic accounting services

Due to their broad skill set, CPAs may work in contexts other than accounting firms. For example, CPAs can work as auditors at public accounting firms, as in-house accountants in businesses, or as government accountants.

Requirements to Become a CPA

Candidates must pass a four-part exam and meet other education and experience requirements to become a CPA. While each state sets its own requirements for candidates' education and experience, the exam is the same across the country. It includes four sections:

• Auditing and attestation

• Financial accounting and reporting

• Regulation

• Business environment and concepts

Candidates who meet all the requirements to become a CPA are licensed by their corresponding state accountancy board. 

CPAs must meet certain criteria to maintain their license. This includes completing a minimum number of hours of ongoing education per year. A number of these hours typically have to cover ethics.

What Are Tax Advisors?

Tax advisors are experts in tax law. Clients typically hire a tax advisor to optimize their tax bill while staying compliant with IRS regulations in complex financial situations. “Tax advisors”—or “tax consultants”—is an umbrella term that can include EAs, CPAs, tax attorneys, some financial advisors, tax preparers, and others who provide advice about tax-related issues within the guidelines laid out by the IRS. 

Tax advisors offer a range of services both to individuals and businesses. These may include: 

• Income tax planning

• Estate and succession planning

• Retirement planning

• Corporate tax planning

• International tax planning

• Audit support (but not representation before the IRS)

• Tax dispute resolution

Tax advisors can prepare clients for a tax audit and advise on matters like how to apply the Cohan Rule. However, tax advisors without an eligible credential (like EA or CPA) can't represent their clients before the IRS. 

Requirements to Become a Tax Advisor

Tax advisors don’t require a specific professional or educational credential to offer tax advice. However, they must abide by the duties and ethical standards outlined in Treasury Department Circular No. 230, Reg. 10.33(a). If they don’t, they may face disciplinary action.

To work as a tax preparer on behalf of clients, tax advisors need to obtain a PTIN from the IRS, which involves passing a suitability test. Tax advisors who don’t have another credential (such as EA, CPA, or tax attorney) may also choose to obtain an accredited tax advisor (ATA) credential from the Accreditation Council for Accountancy and Taxation (ACAT). This involves accumulating three years of tax-related experience, passing a three-hour exam, and completing 30 hours of continuing education every year (28 hours in taxation and 2 hours in ethics).

EA vs CPA Main Differences

EAs and CPAs both offer a range of experience and knowledge and are bound by high professional and ethical standards. Either an EA or CPA can prepare tax returns, identify tax credits or deductions for which you are eligible, and help you minimize your tax liability.

The main difference between an EA and a CPA is the scope of their specialization and services. EAs specialize almost exclusively in taxation whereas CPAs do “a little bit of everything.” This makes EAs particularly valuable when facing an IRS audit.

EA vs CPA for an IRS Audit

An EA is a stronger choice when facing an IRS audit because many EAs are highly experienced at working with the IRS. Some EAs were previously IRS agents, so they can provide unique insights into how the system works.

An EA is also a good option for individuals or businesses looking for tax preparation or tax planning services. An EA can perform bookkeeping work, compiling your business’s records into tax-basis statements that can later be used to prepare a tax return. Keep in mind that an EA cannot offer compiled, reviewed, or audited financial statements. Turn to a CPA for help with these matters.

CPA vs Tax Advisor Main Differences

CPAs offer a wide range of financial services including financial planning and business consulting whereas tax advisors by definition are experts in tax planning and compliance. Some CPAs work as tax advisors, but not all tax advisors are CPAs. 

The other main difference between a CPA and a tax advisor is that CPAs are certified professionals who are qualified to represent clients before the IRS. In contrast, tax advisors’ primary role is to provide guidance on tax-related matters. 

Tax Advisor vs EA or CPA for an IRS audit

A tax advisor can provide advice and support during an IRS audit. However, they cannot represent you before the IRS. An EA or CPA can provide both support and representation. A reputable tax advisor may be enough if your tax records are flawless and you are unlikely to be found owing money at the end of the audit. However, if it’s likely that the audit will result in a hefty tax bill plus penalties and interest, go with an EA or CPA.

EAs, CPAs, and Tax Advisors Compared 

	EA	CPA	TAX ADVISOR
Professional Duties	Tax-related matters including IRS audits	Taxes, accounting, and other financial matters	Tax planning and preparation
Tax Planning	✅	✅	✅
Tax Return Preparation	✅	✅	✅
Prepare audited financial statements	❌	✅	❌
Qualified to represent before the IRS	✅	✅	❌
College Degree Required	❌	✅	❌
Professional exam required	✅	✅	❌
Ongoing education required	✅	✅	❌
Must abide by ethical standards	✅	✅	✅
Official licensing authority	The IRS	States	None

The Bottom Line: Enrolled Agent, CPA, or Tax Advisor for an IRS Audit?

When it comes to an IRS audit, you don’t want just anyone by your side—you need an IRS enrolled agent (EA). EAs are the ultimate tax experts as they are rigorously trained in the ins and outs of IRS rules. 

Unlike general accountants, enrolled agents are licensed by the IRS and specialize in representing taxpayers. They've passed comprehensive exams on tax laws and are required to stay updated on the latest IRS regulations. This means they know exactly how to protect you during an audit and fight for the best possible outcome. 

Tax audits are grueling experiences and the consequences can be serious. Don’t leave your audit and the outcome to chance—hire an enrolled agent and get the expert defense you deserve.