Short answer
All three can prepare your return for pay if they have an IRS preparer number. CPAs and enrolled agents, like attorneys, can also represent you in audits, collections and appeals. In California, most other paid preparers must register with the California Tax Education Council.
People often use “accountant,” “tax person” and “CPA” as if they meant the same thing. They do not. The differences decide who may prepare your return, who may speak for you if the IRS writes, and who is checked by which agency. Here is how the credentials compare, based on the IRS’s own guide to preparer credentials and California’s registration rules.
What everyone who prepares returns for pay needs
According to the IRS, anyone with a preparer tax identification number, or PTIN, may prepare federal returns for pay. Every paid preparer must have one and must enter it on the return filed with the IRS. The IRS adds that preparers have differing levels of skills, education and expertise, which is why the credentials below matter.
The three credentials with unlimited representation
Certified public accountants
CPAs are licensed by state boards of accountancy, in California by the California Board of Accountancy. They have passed the Uniform CPA Examination, completed accounting education and met experience and character requirements, and they must keep up continuing education. CPAs offer a range of services beyond tax, such as bookkeeping, financial statements and audits; some specialize in tax.
Enrolled agents
Enrolled agents are licensed by the IRS itself. They pass a three-part Special Enrollment Examination covering individual and business returns, tax planning and representation, pass a suitability check and complete 72 hours of continuing education every three years. Their work centers on tax.
Attorneys
Attorneys are licensed by state courts or bars. Some specialize in tax, often in disputes, estates or business structure.
The IRS says all three have unlimited representation rights: they may represent clients on any matter, including audits, payment and collection issues and appeals.
Preparers with limited or no representation rights
Preparers without those credentials who complete the IRS’s voluntary Annual Filing Season Program may represent clients only for returns they prepared and signed, and only before certain IRS employees, not in appeals or collection matters. Preparers who have only a PTIN may prepare returns but cannot represent clients before the IRS.
The California layer: CTEC
California adds its own rule. If you prepare returns for a fee in California and you are not a CPA, an enrolled agent or an attorney with the State Bar of California, you must register with the California Tax Education Council. Registration requires 60 hours of qualifying education, a $5,000 tax preparer bond and a PTIN. The CTEC website has a tool to find or verify a registered preparer.
Side by side
| CPA | Enrolled agent | CTEC-registered preparer | |
|---|---|---|---|
| Licensed or registered by | California Board of Accountancy | IRS | California Tax Education Council |
| Represent you in audits, collections, appeals | Yes | Yes | Limited at most |
| Services beyond tax | Often: books, financial statements, audits | Mainly tax | Tax preparation |
| Where to verify | CBA License Lookup | IRS preparer directory | CTEC find or verify tool |
Which one fits you?
- If you need financial statements for a lender, or an audit or review, you need a CPA; see How Do I Check a CPA’s License in California? for the attest authority indicator.
- If your needs are tax-only but complex, such as a farm with employees or an open IRS notice, a CPA or an enrolled agent can both prepare and represent.
- If your return is simple and you are comfortable without representation, a registered preparer may be enough; check their CTEC registration.
- If there is a legal dispute, a tax attorney may be the right first call.
What about bookkeepers and payroll services?
Many small businesses and farms work with a bookkeeper or a payroll service during the year and a CPA or enrolled agent at tax time. That split can work well and cost less than having a CPA do everything. Bookkeepers keep the ledger, reconcile bank accounts and track bills; payroll services calculate pay, withhold taxes and file employment returns. Neither is a tax return credential. If a bookkeeper also prepares your return for a fee and is not a CPA, enrolled agent or attorney, California requires them to be registered with CTEC.
When several people touch your finances, ask each of them who is responsible for what, and make sure the person preparing your return receives the year-end reports from the others. The CPA’s engagement letter should name what they rely on from your bookkeeper or payroll provider.
Red flags with any preparer
- A refund promise before they have seen your documents.
- A fee based on the size of your refund.
- A refusal to sign the return or enter their PTIN.
- A request to send your refund into their account.
Whatever you choose, the IRS runs a public directory of preparers with credentials and select qualifications, and it recommends asking about education and training even for preparers who are not listed. The steps for choosing among CPAs are in How Do I Choose a CPA in Los Banos?.