What is an EA?
EAs: The Taxpayers’ Tax
What does the term Enrolled Agent mean?
“Enrolled” simply means EAs are licensed by the federal government. “Agent” means EAs are authorized to appear in place of the taxpayer at the Internal Revenue Service. Only Enrolled Agents, attorneys and CPAs may do so.
Enrollment dates back to 1884, when Congress acted to regulate persons who represented citizens in their dealings with the Treasury Department, after questionable claims had been presented for Civil War losses.
What exactly do Enrolled Agents do?
Unlike attorneys and CPAs, Enrolled Agents specialize in taxation. Throughout the year, they advise, represent and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax-reporting requirements. Enrolled Agents’ expertise in the constantly changing field of tax law enables them to be effective representatives when
tax payers are audited by the IRS.
How do Enrolled Agents differ from other
EAs are the only practitioners who have demonstrated competence specifically in matters of taxation. Also, they are the only representatives for taxpayers who receive that right from the U.S. Government. Once you become an Enrolled Agent you carry this status with you anywhere in
the US. (CPAs and attorneys are licensed by the states.)
An individual may become an Enrolled Agent in one of two
ways: The primary way is to pass a difficult, two-day examination given
annually by the IRS. The test covers taxation of individuals, corporations,
partnerships, estates and trusts, as well as procedure and ethics. Less than
one-third of individuals taking the examination have passed, allowing them to
apply for enrollment and subject themselves to a background investigation.
The other way is to have been an employee of the Internal
Revenue Service for five years, regularly applying and interpreting the
provisions of the Internal Revenue Code and regulations.
Are there other requirements?
In addition to the stringent testing and application process, Enrolled Agents are required to earn 72 hours of continuing professional education, reported every three
years, to maintain their status.
Advantages to Being an Enrolled Agent
There are several ways that being an Enrolled Agent can increase your earning power. The first advantage of being an EA is your increased knowledge. An Enrolled Agent has not only passed a rigorous 2-day IRS examination, but has also passed under the careful scrutiny of the
IRS itself. The exam is completely centered around tax law and theory as it applies to many areas of taxation, including: individual, small business,farmers, partnerships, corporations, S corporations, estate and gift and fiduciary returns, ethics for tax preparers, penalties involved, as well as the basis of collection and audit procedures.
As an Enrolled Agent you bring a greater degree of knowledge to your tax practice, an added value to your clientele.
As an Enrolled Agent you can handle audits before the IRS, without the presence of your client, (a definite advantage for your client). Since you have probably prepared the returns, you have the knowledge and ability to deal with the audit on both sides, with the client and with the IRS. You can provide the necessary items to complete the audit as quickly as possible, without providing more information than has been requested. As an Enrolled Agent you can represent your client before the IRS through all levels of Appeals, all the way to Tax Court. (You must be a Tax Court Practitioner to represent a client in Tax Court). You can also represent your clients within the Collection Process and the Criminal Division. As an Enrolled Agent you can also be hired by another tax preparer to represent his or her clients in an audit.
As an Enrolled Agent you can become a member of your local Enrolled Agent Society, which offers you the opportunity to share and interact with your peer group, as well as obtain necessary continuing education. You can also become a member of the National Society of Enrolled Agents, which offers numerous benefits to its members, including continuing education, audit education and many other benefits.
Enrolled Agents should consult Circular 230 before beginning an advertising campaign for their practice.