There are several different certifications and licenses that aspiring accountants can acquire. In a previous article, we discussed the differences between an ACCA and a CPA license. Here, we will be highlighting the differences between an EA and a CPA license.
What is an EA?
EA is short for ‘Enrolled Agent.’ They are federally-licensed Tax Preparers to represent taxpayers before the IRS. They are empowered to do so by the US Department of the Treasury upon being issued a Preparer Tax Identification Number (PTIN) by the IRS. Acquiring an EA license entails passing all three sections of the Special Enrollment Examination (SEE) through a Prometric testing site.
Once acquired, EAs have unlimited practice rights. This means that they can represent any taxpayer they choose. Like CPAs, they must also renew their license and complete continued professional education (CPE) within that time. This involves 72 hours of CE every three years, with a minimum of 16 hours being earned per year. Two of these must be on ethics. Enrolled agents must use an IRS approved CE provider. International students can also apply for licensure. The full exam guidelines can be found here.
What is a CPA?
CPA stands for ‘Certified Public Accountant’, and perform a similar function as ‘Chartered Accountants’ in other countries. They are legally authorized to perform tasks that other accountants are not authorized in. This includes representing businesses for IRS audits, auditing and approving financial documents of businesses, compiling financial statements and preparing and authorizing tax returns, among other tasks. It is a US-based license, provided by the American Institute of Certified Public Accountants (AICPA). The AICPA is the largest accounting body in the world. Although the AICPA acts as a centralized body for the CPA, each state has slightly different rules and requirements for the exam.
Are there other differences between an EA and a CPA?
- Exam results from each section of the SEE carry over for two years, unlike the CPA’s 18-month expiration
- EAs are licensed by the IRS, whereas CPAs are license through NASBA and the AICPA
- EAs work exclusively with the IRS and taxpayers, whereas CPAs can choose to work across many fields of accountancy
- There are few international testing centers available for international applicants for the SEE
- There are no educational or work experience requirements to sit the SEE or to receive your EA
- EAs are usually self-employed, whereas CPAs usually represent specific businesses or corporations
- The US Bureau of Statistics puts the median annual wage of an EA at $44,300 and the median wage of an Industry Tax Preparer at $62,370. The median wage of CPAs in general is around $73,560
- Each part of the EA exam costs $225, whereas each part of the CPA exam costs at least $226.15, excluding possible state fees. The EA enrollment fee is $67, while the CPA application fee varies from state to state
Does a CPA qualify as an EA?
Although CPAs can work in taxation and represent clients, an EA has specialized training in taxation. A CPA can obtain an EA license separately if they want to specialize in taxation and would like the extra license to add to their credentials. But this is not necessary; they can still represent their clients without it.
However, getting an EA is far easier, as you do not need tertiary education, nor do you require work experience. The Regulations (REG) part of the exam is easier than the CPA section, as it is more focused. There are also fewer sections to pass, and there is an extra six months per section of leeway prior to the exam result’s expiration.