What are the differences between an CPA and tax professional? Should it be one and the same?
There are several types of Tax Professionals recognized by the IRS:1. RTRP - Registered Tax Return Preparer2. CPA - Certified Public Accountant3. EA - Enrolled Agent4. Tax Attorney (also LLM)RTRP - the "lowest" rung of Tax Professionals. They can help individuals prepare and file tax returns. They are required to pass a competency test with the IRS and maintain good standing with the IRS. RTRPs are generally bookkeepers and those who don't care to invest the time or money to get further credentialed. While they are allowed to prepare and file taxes in all 50 states, RTRPs are generally not allowed to represent individuals, businesses, estates or trusts in disputes or matters before the IRS. They are only not allowed to practice before the Tax Court.CPA - like the other answers say, becoming a CPA requires 150 hours of college credit (equivalent of 5 years, as an undergraduate degree is generally around 120-130 hours). CPAs must also sit for an exam within their state to be fully credentialed. The IRS recognizes a holder of a CPA license as a Tax Professional and gives that individual the authority to advise clients and prepare/file taxes only in states in which they are credentialed with a CPA license. CPAs generally may represent individuals, businesses, estates and trusts in matters before the IRS. They are not allowed to practice before the Tax Court.Enrolled Agent - the highest credential granted by the IRS. Enrolled Agents don't have a college requirement. They must pass a series of 3 tests called Special Enrollment Exams, administered by the IRS. The test material covered is the entire tax code. They can advise and file taxes in all 50 states and have full representation rights for all clients (even those for whom they haven't filed a return in question) in matters before the IRS. They are only not allowed to practice before the Tax Court. Tax Attorney - highest rung on the ladder. Fully credentialed to represent clients before the IRS and Tax Court in all matters for anyone. Frequently very expensive to hire, as they can have a niche practice (Oil tax law, overseas businesses, etc...). I think in terms of "bang for your buck," you want to find a Tax Professional that has experience working in tax circumstances that are similar to your own. I find little difference in knowledge between a CPA and EA who has experience. While the CPA designation is be far more common, I do find that EAs are better prepared for tax-specific concerns. The entire EA designation is focused on one thing and one thing alone - a deep understanding of the US tax code (IRC). CPAs, while they are certainly credentialed and well-prepared to figure out tax issues, have a broader focus that includes best accounting practices, audit, financial reconciliation, etc... In the end, a CPA and EA are similar in many ways. The difference between them will be less with experience. But if you want a CFO or COO who is going to keep the books in order and work to maximize margins, then I think having a licensed CPA on board is the right call. If you are looking for specific tax answers or strategies in setting up a business, or the strategic value in understanding tax consequences of making decisions of how to pay people and stretching each penny furthest, I think EAs will have a slight advantage over CPAs. Tax Attorneys will likely beat both out on many niche and complex tax matters. Unless you are operating a complex scheme, a CPA or EA should do the trick. Just get someone with experience in what you need done. (done on iPhone, sorry for typos)