Enrolled Agents, abbreviated as EA, also known as America’s Tax Experts ®, specialize in U.S. tax law and the tax code. The most common services provided by EA’s are preparing tax returns for individuals and businesses, advising clients of tax consequences to specific life events and/or situations, and representing clients before all administrative levels of the IRS and state taxing authority. EA’s are equipped with the education, knowledge, and experience of all levels of taxation from the very basic scenarios to the most complex issues.
The first step in becoming an EA is to take a 3-part exam administered by the IRS called the Special Enrollment Examination (SEE). Once the exam is successfully completed, an Application for Enrollment to Practice Before the Internal Revenue Service (Form 23) is submitted to the IRS. At this time, the IRS performs background checks, may request fingerprints if not already obtained (usually by this stage, the IRS already has our fingerprints in their database), and determines suitability of the individual to Practice Before the IRS. Once an individual is accepted and awarded the EA designation by the IRS, the individual must consent and adhere to U.S. Treasury Department Circular No. 230 Title 31 Code of Federal Regulations which is a set of regulations governing Practice Before the IRS. Circular 230 states duties and restrictions, as well as violations to the regulations and disciplinary proceedings. EA’s are also held to a higher standard of ethics which is also detailed in Circular 230. In addition, EA’s must take continuing education that is approved by the IRS. Therefore, all continuing education of an EA is related to tax matters. Following are frequently asked Q&A about EA’s.
Q: What does the term Enrolled Agent (EA) mean?”
A: Enrolled” means to be licensed to practice by the federal government. “Agent” means authorized to appear in place of the taxpayer before the IRS. Only Enrolled Agents, attorneys, and CPA’s have unlimited rights to represent taxpayers before the IRS.
Q: What is an Enrolled Agent (EA)?
A: EA’s are America’s Tax Experts ® that have earned the privilege of representing taxpayers before the IRS. Enrolled Agent status is the highest credential the IRS awards. There are currently less than 50,000 EA’s practicing in the US.
Q: What is the history of Enrolled Agents?
A: The Enrolled Agent status was created as a reaction to fraudulent war loss claims in the wake of the American Civil War with roots tracing back to the Enabling Act of 1884, or General Deficiency Appropriation Bill (H.R. 2735), also known as the “Horse Act of 1884,” which was signed into law by President Chester A. Arthur on July 7, 1884. After the Civil War, many citizens faced difficulties in settling claims with the government for property confiscated for use in the war effort. As a result, Congress endowed enrolled agents with the power of advocacy to prepare claims against the government. From 1884 through the early 20th century, this statute remained largely unchanged.
When the Revenue Act of 1913 was passed, signed into law by President Woodrow Wilson on October 3, 1913, the scope of the enrolled agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable. As income, estate, gift and other sources of tax collections became more complex, the role of the enrolled agent increased to include the preparation of the many tax forms that were required. As a result of this complexity, audits became more prevalent and the enrolled agent role evolved into taxpayer representation, promulgating a series of statutes which were combined into a single Treasury Department Circular in February 19, 1921, known as Circular 230, to address “the laws and regulations governing the recognition of agents, attorneys, and other persons representing claimants before the Treasury Department and offices thereof.”
Q: How can an Enrolled Agent help me?
A: Enrolled Agents specialize in taxation unlike attorneys and CPA;s. Throughout the year, EA’s advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax reporting requirements. The EA’s expertise in the field of taxation enables them to represent taxpayer’s at all administrative levels within the IRS.
Q: How do Enrolled Agents differ from other tax experts?
A: EA’s are the only practitioners who have demonstrated technical competence to the IRS specifically in matters of taxation. Also, they are the only representatives for taxpayers who receive that credential directly from the U.S. government (CPA’s 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 three-part Exam known as the Special Enrollment Exam administered 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 by the FBI.
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.
Q: Are there any other requirements?
A: 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.
Because of the difficulty in becoming enrolled and maintaining that enrollment, there are fewer than 50,000 Enrolled Agents in the United States.
Enrolled Agents are the only professional tax practitioners who specialize in tax.
An applicant must pass a three-part IRS Special Enrollment Exam which covers many aspects of the Internal Revenue Code.
An applicant must pass a criminal and civil background check including a review of the applicants personal and business tax compliance.
Q: How can I find an Enrolled Agent?
Specific questions can be emailed to firstname.lastname@example.org.
Friday, Sept. 29 ~ I will post some commonly asked Q&A from clients or emails I have received.
Monday, Oct. 2 ~ I will answer the question “Why should my tax preparer be an EA?” In today’s ever-changing world of tax and identity fraud, it is more important than ever that you, the taxpayer, know who is handling your personal information. Your tax preparer knows everything the identity thieves want to know about you – your Social Security Number, Date of Birth, Bank Account Number, and much, much more.