Enrolled Agent vs CPA vs unlicensed preparer: who should do your taxes?

Anyone paid to prepare your return falls into one of four buckets

The IRS sorts paid preparers by what they are allowed to do when something goes wrong. That is the useful way to think about it.

Enrolled Agent (EA)

Licensed federally by the Treasury Department. Passed a three-part tax-only exam or qualified through IRS employment, plus a background and tax-compliance check. 72 hours of continuing education every three years. Unlimited representation rights before the IRS. Not tied to any state. Full detail in what is an Enrolled Agent.

Certified Public Accountant (CPA)

Licensed by a state board of accountancy. Passed the Uniform CPA Examination, which covers auditing and attestation, financial accounting and reporting, taxation and regulation, and a chosen discipline, plus an education requirement (typically 150 credit hours) and an experience requirement. Unlimited representation rights before the IRS. The credential is broader than tax: many CPAs do audit, assurance, or controller work and touch very little tax.

Attorney

Licensed by a state bar. Unlimited representation rights before the IRS. The only one of the three who brings attorney-client privilege in the full sense, and the one you want if a matter is criminal or headed for litigation.

Everyone else

Anyone paid to prepare a federal return must have a PTIN, and that is the only universal requirement. There is no federal exam or education requirement to be a paid preparer without a credential. Preparers who complete the IRS Annual Filing Season Program get a record of completion and limited representation rights. Preparers with only a PTIN have no representation rights at all.

The comparison that actually matters

When a CPA is the better call

• Your bank, investor, or franchisor requires audited or reviewed financial statements. Only a CPA firm can issue those.
• You need assurance work, an attestation, or an agreed-upon procedures engagement.
• You are running a company large enough to need formal GAAP financial reporting rather than tax-basis books.

When you want a tax attorney

• The matter is or might become criminal. Unreported foreign accounts, allegations of fraud, anything where the word "investigation" comes up.
• You are heading to Tax Court or another court.
• You need legal documents drafted: operating agreements, trusts, buy-sell agreements, estate plans.

Good practitioners refer these out rather than stretching. I do.

When an Enrolled Agent is the right fit

Which is to say, most of the time, for most people:

• A personal return, simple or complicated, including rentals, investments, multiple states, or equity compensation.
• A small business: sole proprietor, single-member LLC, partnership, or S corporation, with the personal return that goes with it.
• Anything involving an IRS letter. This is where the EA credential earns its keep, because representation is literally what the license is for.
• Tax planning during the year rather than a post-mortem in April.

The question that beats "EA or CPA?"

Credential is a floor, not a ceiling. Once someone clears the credentialed bar, ask these instead:

• Do you actually do tax all year? Plenty of CPAs have not touched a 1040 since their audit rotation. Plenty of EAs do nothing but tax.
• Have you handled my situation before? Rental portfolio, S corp reasonable compensation, multi-state, crypto, clergy, whatever yours is.
• Will you represent me if a notice comes? And is that included or billed separately?
• Can I reach you in July? Tax problems do not respect the filing season.
• Who signs the return? If the answer is "nobody," walk. See the red flags.

Bottom line

If you need audited financials, hire a CPA. If you are in legal jeopardy, hire an attorney. For preparing, planning, and defending a personal or small-business tax return, an Enrolled Agent is a specialist whose entire license is that one job. What you should not do is hand your return to someone who cannot follow it into an audit.