By Dawn J. Hryshko, CPA
Although there are several professionals that may prepare tax returns, there are varying levels of expertise and differences in capabilities that should be considered. Before you pay for tax advice and services, ask the advisor about their credentials and abilities as it relates to potential tax benefits and penalties to meet your specific goals.
Who do you currently work with?
- A tax preparer
- An enrolled agent
- A certified public accountant (CPA)
- A tax attorney
A tax preparer can be anyone you know. Yes, even you can be a tax preparer! There is no formal education required and no federal governance to ensure a tax preparer has the qualifications to prepare tax returns for others. Most big box tax preparation firms fall into this category.
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service with no minimum education requirements. Enrolled agent status is the highest credential the IRS awards to a person who either passes a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee.
Individuals who obtain this status must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Enrolled agents, like attorneys and CPAs, have unlimited practice rights; which means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
A Certified Public Accountant (CPA) is required to obtain a bachelor’s degree in accounting (which equates to 5 years of college) and pass the CPA exam. Each state governs the requirements for passage of the CPA exam; however, a CPA may work in every state with one license, which helps the taxpayer since the CPA should be well versed in that state’s tax laws as well. Once the CPA certificate is obtained, the CPA must obtain 40 hours of continuing education every year thereafter in order to maintain their license. Many CPAs obtain a Masters in Taxation which enhances their knowledge of tax laws and regulations.
A CPA will not only prepare and file tax returns directly with the IRS, but will also implement tax planning strategies to minimize future taxes, including retirement planning, estate planning, education planning, and business planning. CPAs can be well versed in several areas of taxation and tax law, or may focus on a specialty.
Like CPAs, a tax attorney requires a stringent amount of minimum education requirements and ongoing tax law education, where some even obtain the CPA. They must earn a bachelor’s degree, plus complete law school to obtain a JD, and pass the bar exam. Passing the bar exam means the candidate can practice law in that state only. While some states have transfer agreements, lawyers may need to pass the bar exam for every state in which they intend to practice. An attorney must obtain continuing education in order to maintain their license, which is determined by the state in which they hold their license. Law school graduates may consider enrolling in a 1-year (Masters of Law) LL.M. program in taxation in which they focus on a more specialized area of taxation, such as estate planning, rather than being a tax generalist.
While tax attorneys do not typically file tax returns, they can file lawsuits on behalf of their clients, including cases with the IRS and can represent clients on legal issues including collections, audits, appeals, and payment plans.
Each tax situation is unique. Interview your advisor and ask questions about their experience and credentials. Choosing the right professional will save you time, money and headaches while keeping you on track for your financial future.
Hryshko & Associates was established as a full service boutique CPA firm catering to the sophisticated needs of our clients. We strive to strike the perfect balance between small, local, attentive service and professional experience and expertise.
Dawn Hryshko, owner, has over 25 years of tax and business consulting experience with both public, privately held, and family-owned entities. She was the Tax Director of a multi-billion dollar real estate company based in Cleveland, Ohio. Dawn spent 19 years in Public Accounting, starting at a Big 8 firm in Cleveland, where she specialized in tax consulting for businesses in the real estate and construction industries. Dawn also served on many boards and committees throughout her career while being a dedicated mother of four children.
Dawn J. Hryshko, CPA
Hryshko & Associates