Key Takeaways
- Only Federally Authorized Tax Practitioners (FATPs) can represent you before the IRS on tax matters.
- CPAs can analyze accounting matters, prepare both individual and business tax returns, sign your return, and represent you before the IRS on all tax matters.
- Enrolled Agents are tax professionals who can prepare and sign tax returns and represent both individuals and businesses before the IRS on any tax matter.
- Tax attorneys are licensed to practice law and they specialize in tax matters. They can represent you in court, negotiate with the IRS, and handle tax audits.
- While many people like to meet with tax professionals in person, most tax information can now be exchanged electronically, and face-to-face meetings can be conducted online.
What are Tax Professionals?
Anyone who prepares income taxes for a fee can be considered a professional tax preparer, but not all professional tax preparers can represent you before the IRS on tax matters. Only Federally Authorized Tax Practitioners (FATPs) are granted that privilege by the IRS.
There are three main types of FATPs: CPAs, EAs, and tax attorneys. They are equipped with the knowledge, credentials, and hands-on experience to assist you with your tax preparation. These tax professionals stay up to date on tax laws, rules, and regulations, which can change every year and have a big impact on how much you owe or get back in your tax refund. Only those tax professionals that are authorized by the IRS to represent you on tax and payment matters can be considered FATPs.
Kinds of FATPs
There are three main types of FATPs recognized by the IRS related to tax return preparation:
- Certified Public Accountants (CPAs)
- Enrolled Agents (EAs)
- Tax attorneys
Certified Public Accountants (CPAs)
CPAs are accountants who have met significant education requirements, passed the American Institute of Certified Public Accountants' Uniform Certified Public Accountant Examination, completed certain minimum work requirements under another licensed CPA, and are licensed by the state that they practice in. Many states require that CPAs also have additional classes that often lead to a master's degree.
CPAs can prepare tax returns and represent their clients before the IRS on all tax matters. Many are specially trained to prepare both business and individual tax returns, so they are experts at identifying ways to save clients money at tax time. They also provide advice for reducing tax liabilities on future returns by taking advantage of tax-advantaged opportunities such as Health Savings Plans, college and school tuition savings accounts, and retirement accounts.
Enrolled Agents (EAs)
EAs are tax professionals who have passed the Special Enrollment Examination given by the IRS. Passing the exam qualifies EAs to represent both individuals and businesses before the IRS on any tax matter. EAs can prepare and sign tax returns and offer advice on how to reduce future tax liability. Many former IRS employees become EAs and have worked with tax returns for many years.
Tax attorneys
Tax attorneys are individuals licensed to practice law who specialize in tax matters. They are especially helpful if you have a dispute with the IRS and are looking to have it resolved in court. Tax attorneys are experts at handling audits and appeals and in negotiating with the IRS over payment and collection issues especially when you need to go to court. Tax attorneys can also help clients evaluate and minimize their tax liability and manage their assets by drawing up the appropriate legal documents.
TurboTax Tip:
Using a local tax professional can be beneficial as they're familiar with state and local tax laws, making it easier for you to file both state and federal returns.
Which tax professional is right for me?
Finding the right tax preparer for your needs begins with a self-assessment. Will you be filing your taxes as an individual, a business, or both? Do you have mortgage interest and other deductible expenses that you will itemize, or will you take the Standard Deduction? Do you derive your income from one job, or do you have several revenue streams? Do you need someone only to prepare a return during tax season, or do you need financial guidance throughout the year? The more complicated your situation, the more credentialed and experienced your tax preparer should be.
Based on your self-assessment, decide if you need a tax preparer who:
- Is able to sign a return and file electronically on your behalf (has an IRS Preparer Tax Identification Number [PTIN])
- Is authorized to represent you before the IRS on tax matters (Federally Authorized Tax Practitioner)
- Can analyze accounting matters and advise you on best practices throughout the year (Certified Public Accountant)
- Can advise you on fine points of tax law and represent you in court to resolve a dispute with the IRS (tax attorney)
Once you have determined the type of tax preparer you need, you can search the IRS database to find a tax preparer in your area. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications lets you choose from among credentialed attorneys, CPAs, enrolled agents, enrolled actuaries, retirement plan agents, and annual filing season program participants. You can search by country, zip code, and distance. All persons in the database are FATPs.
Should I choose a local tax professional to do my taxes?
There are several good reasons to use a nearby tax professional. Most importantly, a local tax preparer is likely to be familiar with state and local tax laws that apply to you. They can file state tax returns along with your federal returns. In addition, having a tax preparer nearby makes it easy to drop off documents, sign papers, or have face-to-face meetings. This can simplify the tax filing process.
Fortunately, most tax information can now be exchanged electronically, and face-to-face meetings can take place online via video conferencing. For example, TurboTax Live Assisted and Live Full Service plans let you consult with a nearby tax professional–including CPAs and tax attorneys–online, giving you the local tax information and advice you need without having to leave your home or place of business.
Whether you want an expert to do your taxes from start to finish, or expert help while you file on your own, TurboTax has expert-backed offerings to meet your needs. With TurboTax Live Assisted, our tax experts help you complete your taxes, fix any mistakes, and explain what's next.
Or, with TurboTax Live Full Service, a local tax expert matched to your unique situation will get your taxes done 100% right - as soon as today.
Whichever plan you choose, you'll get you taxes done with 100% accuracy and your maximum refund, guaranteed.
