Tax Preparer, Enrolled Agent, CPA or Tax Attorney?

When you need a tax professional who should you turn to?  Well, it depends on how complicated your taxes are and how much money is at stake.  Here is some information to guide you in your decision.

There are four different types of tax professionals 1) general preparer 2) enrolled agent 3) certified public accountant 4) tax attorney.   Some including myself might be more than one type for example I am a tax preparer, CPA and Tax Attorney.

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General Tax Preparer:

Anyone can open a business and prepare taxes for others.  All they have to do is apply for and receive a tax identification number from the IRS.  A preparer can have no experience and no education and still be preparing businesses for others.  HR Block, Liberty and other chain tax preparation firms fit into this category.  Often their staff only has a tax course taught by the firm before they are preparing taxes for clients.  The general tax preparers are best for simple returns because they are the least expensive and often competent enough to handle a simple return.   Common prices for a simple return prepared by a general tax preparer are $50-100 for a simple Federal Return.

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Enrolled Agent:

An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers, before the Internal Revenue Service. Enrolled agents, like attorneys and certified public accountants (CPAs), are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can practice before.

An enrolled agent has taken a test with the IRS and completed continuing education classes on tax preparation.  Enrolled agents are not required to have an accounting degree.  Enrolled agents are generally less expensive than CPAs and Tax Attorneys.  A typical price for a simple return prepared by an enrolled agent is $75-150 for a simple Federal Return.

For more information on enrolled agents see the following IRS website:  http://www.irs.gov/taxpros/agents/article/0,,id=123388,00.html

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Certified Public Accountant (CPA):

CPAs have both an accounting degree and at least 2 years of work experience.  Certified public accountants are often chosen to prepare business tax returns because they can also perform financial statement reviews and compilations. Often businesses will see their CPA throughout the year for tax planning and financial statement reviews.  CPAs are more expensive than enrolled agents and general tax preparers because they have their licenses to maintain and also have demanding continuing education requirements.  People with complex returns or business returns often chose CPAs because their tax expertise makes up for their more expensive prices.  A typical CPA will charge $100-300 for a simple Federal Return.

The American Instititute of Certified Public Accountants is the largest CPA professional group for more information see the following AICPA website:

http://www.aicpa.org/Pages/Default.aspx

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Tax Attorney:

Tax Attorneys are the most expensive tax professionals.  They have graduated from law school and have passed a state bar exam.  A lot of the tax attorneys are also certified public accountants.  They rarely prepare individual tax returns.  Tax attorneys are used for IRS audits and complex tax transactions.  A typical tax attorney will bill by the hour and on average charges $200-400 per hour.

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Conclusion:

If you need the help of a tax professional use the one that can proficiently accomplish your needs with the lowest price.  If you have a simple tax return any experienced tax preparer should be able to prepare your return.   However, if you have more than a simple return or a business you should consider using a CPA.

Also, if you are paying more than the average prices listed above you might want to chose a different professional.  Well, I hope you found this post beneficial if you would like more information give me a call at 702-216-1011.  For other posts and tax related videos check out my blog at http://www.arlintlaw.com/blog.

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