Why Enrolled Agents and CPAs Should Not Quarrel with One Anotherby
I am a proud enrolled agent, but I am not a CPA. Does that make me any less knowledgeable? Hardly. I simply had two paths that I could have taken.
Over the course of my professional career, I have run into a situation a handful of times where a client needed a compiled, reviewed, or audited statement. The thing with compilations, reviews, and audits is that 1 + 1 will always = 2. There is only one answer. I preferred tax because it is never the same and it challenged me. So, when I finished school, I took the EA exam and then got my master’s certificate in taxation from UCLA.
Initially, my major was English; the plan was to be the next great novel writer. However, my father was a self-employed accountant and my girlfriend at the time told me that she didn’t want to marry a broke writer and suggested I major in accounting. She figured that my dad would hire me.
The first time around, I failed accounting miserably. But the second time, my teacher, Margo Rock, was excellent, and she is the reason that I am here today. Then I continued my education in taxation and away I went.
There are two kinds of tax practices. One focuses on compliance, and while compliance is important, my clients really pay me to do the fun stuff: tax planning. Ninety-eight percent of my job deals with tax law, and 2 percent deals with math. I even caught myself multiplying a number by 100 on my calculator the other day. The point of all this is that even though I’m not a CPA, I am a licensed professional with a vast amount of experience.
There has been a war of sorts between CPAs and EAs for as long as I can remember. The American Institute of CPAs has a lot more money and backing than the National Association of Enrolled Agents. The mere term “CPA” is etched into the brains of clients, and not surprisingly, I am referred to as a CPA of the time. When it comes up, I just mention that a CPA is licensed by the state and I am licensed by the federal government. I also specialize in taxation, whereas not all CPAs do. I have met some very knowledgeable CPAs, and others not so much. The same is true of EAs.
Recently, during open enrollment, we happened to switch our insurance policy. While doing this, I noticed that one of the doctors who I go to is a Doctor of Osteopathic Medicine (DO) and not a Doctor of Medicine (MD). So, I Googled “Doctor of Osteopathic Medicine.” Here is what I found:
Osteopathic medicine is practiced by DOs in the United States. Osteopathic medicine was developed in 1874 by Dr. A.T. Still who stated, “Any variation from health has a cause, and the cause has a location. It is the business of the osteopathic physician to locate and remove it, doing away with the disease and getting healthy instead.” He believed that many medications (at that time) were useless and even harmful. He identified the musculoskeletal system as a key component for good health.
So, what is the difference between an MD and a DO? Again, I Googled it: “DO vs. MD.”
- Both DOs and MDs typically have a four-year undergraduate degree prior to medical training.
- Both DOs and MDs have spent four years in medical education. Both take the Medical College Admission Test and are subject to a rigorous application process. Historically, DO schools are more open to the nontraditional candidate.
- DOs, like MDs, choose to practice in a specialty area of medicine and complete a residency program ranging from three to seven years. Some DOs complete the same residency programs as their MD counterparts.
- MD students take the United States Medical Licensing Examination and DO students take the Comprehensive Osteopathic Medical Licensing Examination. Both must pass a state licensing examination to practice medicine.
- DOs perform surgery, deliver babies, treat patients, prescribe medications, and work in the same settings as MDs. DOs use the same tools, treatments, and technologies of medicine as MDs.
- DOs receive extra training in the musculoskeletal system, which make up the muscles and bones of a person.
I had no idea what the difference was, but it didn’t matter to me before I saw the designation. The doctor who I have now is a DO, and he’s been my trusted doctor for 15 years. He never went into an explanation that he was a DO, and I have yet to hear him try to prove to me that he was the same or better than an MD.
The upshot is that EAs and CPAs aren’t fighting for the same clients – or at least I’m not fighting with the CPAs of the world. My battle is with unlicensed practitioners. It baffles me that anyone can pay $50, get a Preparer Tax Identification Number, and immediately begin preparing tax returns for a fee. The presumption of the client is that this person is licensed. It’s difficult to comprehend – in Florida, we license barbers, so why not tax preparers?
I can’t compete with the prices charged by someone who doesn’t have a license. This hasn’t happened to me a lot, but sometimes I will get the price shopper. They think they are comparing apples to apples, but they are comparing a licensed professional with 23 years of experience with someone who is unlicensed and may have been in practice for a few years. I have to spend a ton of money on continuing education to keep my license active, and I have to renew my license every three years, not to mention the software.
I recently met with a client who presented me with a tax return that a professional did on TurboTax that was marked as self-prepared. The tax preparer collected a fee and didn’t even sign the return!
The average fee to do a 1040 with one state is $273. My 1040s start at $400, then each schedule costs more, with my average fee for a 1040 at about $895. The average fee to do an 1120S is $809, but mine start at $795, with my average being about $1,595. What is the difference? I use the best software and that is pricey, plus you are paying for all those years of cumulative knowledge.
When I am at the grocery store and I am comparing a commodity like shampoo, I know that the cheapest option is mostly water. If I want clean hair, I have to pay more than 99 cents. The same is true of professional services. Some clients won’t see that, so we end up with a TurboTax return that is marked as self-prepared.
I used to be a lot cheaper, but I once saw a bill from a chain tax-preparation firm. Although the client didn’t know what they paid because it came out of their refund, I saw that they were being charged triple what I was charging at the time. I adjusted my fees accordingly, and I raised my base rate about $100 each year. The reason for that is I have another year of professional experience under my belt.
So, can we stop arguing about CPAs and EAs? We both have licenses, and we do different things. Let’s join forces and wage war on unlicensed tax preparers.
Craig W. Smalley, EA is the CEO and Founder of CWSEAPA®, PLLC, located in Orlando, Florida, with clients all over the country in every industry. He has been admitted to practice before the IRS as an Enrolled Agent, and has a Master's Certificate in Taxation from UCLA. He has been in practice since 1994, specializing in individual, partnership...