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Broadly speaking there are five kinds of Tax Professionals. There are Unenrolled Preparers, Enrolled Agents, Accountants, Certified Public Accountants, and Tax Attorneys. Certainly there are very competent and ethical individuals as well as incompetent and unethical individuals in all of these categories.

 

An Unenrolled Preparer is one who does tax returns without qualifying for any other title. Not all states allow these individuals to sign returns as paid preparers but most including North Carolina do. If you know one of these individuals or have a recommendation of one from someone you know and trust, you may be very happy with the individual. Generally they charge the lowest fees of any Tax Professionals. The only problem is that their designation tells you nothing about the individual’s training, experience, or ethics.

 

In North Carolina, the same things I said about the Unenrolled Preparer apply to Accountants because in this state anyone who pays the Secretary of State $50 per year may use this title. In many other states there are educational or other requirements to be met before claiming this label, but not in NC.

 

Unenrolled Preparers and Accountants can represent you in an audit if they prepared your return. They cannot represent you if your case moves to Collections or Appeals or to the Courts.

 

Certified Public Accountants have received graduate degrees in accounting, passed a rigorous examination covering both taxes and other accounting matters, and done a period of satisfactory work under the direct or indirect supervision of a CPA. They can prepare your return and represent you in front of the taxing agencies. If a case goes to the US Tax Court as a “Small Matter” they can represent you there as well but they cannot otherwise represent you in Court. They are generally the most expensive of the Tax Professionals we have discussed so far.

 

Tax Attorneys have done Bachelor’s degrees of one sort or another, followed by JD Degrees and usually an LLM in taxation. They have passed the bar examination, usually in the state where they practice. They possess great knowledge. Not only can they prepare your returns and represent you in front of the taxing agencies, they can represent you in court. They are the most expensive Tax Professionals around.

 

Enrolled Agents have demonstrated their knowledge of the tax code and they are required to do continuing education so that their skills and knowledge remain current. They can prepare your returns, represent you in front of the taxing agencies, and handle a US Tax Court “Small Claim”. Let’s face it,  most taxpayers who are not in the top one or two percent of all incomes do not find court fights with the IRS to be in their best interests. I would argue that for most taxpayers, an Enrolled Agent can prepare your returns and give you all the representation you will ever need and do it for a very fair price.

 

 

 

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