Certified Public Accountant: What a CPA is & How They Help With Taxes

Each year millions of taxpayers find themselves asking whether or not they need the help of a tax professional. When the answer is yes, it becomes important to understand who is the best person to handle different types of tax issues. The answer is not the same for everyone and each individual must carefully consider their own personal tax situation as well as the type of person best trained to handle those situations. Here we look more closely at Certified Public Accountants (CPAs) and the type of tax situations best handled by this tax professional.

What is a CPA?

In the world of tax professionals, certain individuals are permitted to perform specific tasks based on their experience and training. An accountant is an individual trained in maintaining and auditing reports for a business. Accountants prepare financial reports and provide much-needed documentation regarding a business's financial background. While not all accountants can be a CPA, all CPAs are considered an accountant. In order to be titled a CPA, an individual must take and pass tests administered by the American Institute of Certified Public Accountants. Depending on the state in which a CPA wishes to conduct business, there may be additional state exams that must be passed in order to work in that state as a CPA. Accountants who have not received the additional training required to be a CPA may not be permitted to handle some of the tasks a CPA is authorized to perform. As a CPA, an individual can perform all accounting tasks in addition to the preparation and filing of tax returns for individuals, businesses, and corporations.

How can a CPA help you?

As a licensed professional, a CPA must take continuing education courses to equal 120 hours every three years to maintain their license. This ensures each licensed CPA is receiving the training and education necessary to remain abreast of changes in the industry. For this reason, a CPA is best qualified to handle tax issues for both businesses and individuals. The following are some of the tax issues for which a CPA can provide assistance.

• Provide advice in the handling of income tax and estate tax in the case of divorce or separation.
• Determine the tax consequences resulting from certain investment opportunities.
• Help individuals improve tax management and save money.
• Advice business owners of tax consequences associated with most business decisions.
• Design and manage the compensation and retirement plans of a business, with the proper attention to tax liabilities and savings.
• Represent a business or individual in relation to IRS issues.  This may involve preparing documents or presenting oral and written arguments to appeal an IRS decision.
• For most of the tax services listed here, many CPAs have experience performing

Any person or business can benefit greatly by seeking the counsel of a CPA with regard to most tax issues. As highly trained professionals, these individuals have a greater understanding of the complex tax codes that govern how much we pay in or receive back from the IRS. Additionally, CPAs, like all tax professionals who represent clients in front of the IRS, must follow the guidelines laid out in Circular 230, and they may also have to follow even more stringent ethical guidelines created by their state licensing boards. This US Treasury doc outlines ethical considerations for tax pros, and it's important to note that many big tax relief firms get around these guidelines by having unlicensed salespeople communicate with clients, instead of tax pros.

Other Types of Tax Professionals

While CPAs are generally the most common type of tax professional, there are other professionals that can help with various tax problems. Below are the details on other types of tax professionals.

• Tax Attorney - A tax attorney offers other benefits that other professionals do not offer. They can help with a variety of tax problems and one thing they offer that others don't is that they have an attorney-client privilege. 
• Enrolled Agent - An enrolled is a licensed tax professional who can represent taxpayers in matters relating to the IRS tax laws. Unlike an attorney or CPA, they obtain their authority from the federal government rather than state governments. 
• Certified Tax Representation Consultant - CPAs, tax attorneys, and EAs can all earn this certification. To become a CTRC, tax pros must take five tests on tax resolution topics including audits, offers in compromise, innocent spouse relief, IRS collection processes, and payroll tax issues.
• Certified Tax Resolution Specialist - These are specialized licensed tax professionals that are certified by the American Society of Tax Problem Solvers. This certification can be obtained by enrolled agents, CPAs, and tax attorneys who meet educational and experience requirements after passing an exam. 
• Former IRS Agents - People who worked for the IRS for at least five years as an officer or agent can become enrolled agents. They may also pursue additional education and testing to become CPAs or tax attorneys. Former IRS employees can help you deal with tax problems, and they often have unique insights due to their professional experience. 

What is the Difference Between CPAs and Tax Preparers?

Certified public accountants (CPAs) and tax preparers are both responsible for preparing tax returns, but there are some key differences between the two professions. CPAs are licensed by the state in which they work and are held to a high standard of ethics. They are also required to complete continuing education courses to maintain their certification. Tax preparers, on the other hand, are not necessarily licensed or certified and may not have to meet the same requirements.

What Is the Difference Between a CPA and an EA?

Both CPAs and enrolled agents can represent you in front of the IRS or your state revenue agency. Both have extensive knowledge of the tax code. However, a CPA can also deal with business accounting, audits, financial planning, and a broader range of issues. If you're trying to choose between a CPA and an enrolled agent, you should look for someone who has experience with your tax problem and/or the tax agency you're dealing with. 

What Are the Differences Between CPAs, Tax Attorneys, and Enrolled Agents?

As explained above, CPAs complete rigorous degree work, pass a state licensure test, and complete continuing education every year. They can focus on a broad range of accounting specialties, and they don't necessarily do tax resolution work. Tax attorneys are attorneys focused on the tax realm. They could have used their legal degrees to pursue another aspect of the legal field, but they have chosen to focus on tax resolution. Enrolled agents earn their credentials directly from the IRS, and they always focus on tax prep or tax resolution work. 

If you want someone to represent you in front of the IRS, any of these tax pros can do the job, but you need to make sure they have experience. Armed with the right experience, any of these pros can help you deal with unpaid taxes, tax audits, IRS collection actions, and appeals. To ensure you make the best choice between a CPA, EA, or tax attorney, talk with them about your problem and ask about their history of helping clients with similar concerns. 

If you are looking for a CPA who can help with IRS taxes, you can visit this link here and then filter further by tax type, tax problem, and more. Otherwise, if you do not have an IRS problem, start your search below with the specific tax agency you have a problem with and filter later by selecting CPA only using the filters. Our network is made up of top tax professionals from around the country and our algorithm ranks them based upon their top skills that you can filter by, which ensures you can find the best professional for your unique situation.

You can also see user reviews on TaxCure. It's always a good idea to look at reviews before hiring a tax professional, but when doing so, make sure you understand how to evaluate the reviews as effectively as possible.