What is an Enrolled Agent (EA)?
An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers before any office of the Internal Revenue Service. An enrolled agent can negotiate with the IRS during examinations and appeals, and act in place of a taxpayer signing consents and executing agreements on their behalf. An enrolled agent is the only professional granted a right to practice directly from the U.S. government. Attorneys and certified public accountants (CPA) have state licenses, which limits their practice only to the states where they are licensed. Unlike a CPA or Attorney, an enrolled agent holds a federal license and has the right to represent any taxpayer in any state regarding federal tax matters. An enrolled agent is considered a tax specialist, which sets them apart from attorneys or CPAs who do not always specialize in taxes. The practice of enrolled agents before the IRS is not limited and they may represent taxpayers before the IRS, performing the same tasks as an Attorney or CPA. The capabilities of an enrolled agent extend beyond just preparing returns to areas such as representing clients in cases involving audits, collections, and appeals.
Separate yourself from the crowd
An un-enrolled return preparer may not sign documents for a taxpayer and may only represent taxpayers in limited situations before revenue agents and customer service representatives. An un-enrolled preparer’s ability to practice before the IRS is very limited. Generally, it is limited to the examination function of the Service, and only with respect to a return he or she prepared. Consequently, an un-enrolled preparer cannot practice before appeals officers, revenue officers, and Counsel. In addition, an un-enrolled preparer cannot execute claims for refund, receive refund checks, execute consents to extend the statutory period for assessment or collection, execute closing agreements, or execute waivers of restriction on assessment or collection of a deficiency in tax.
Why Become an Enrolled Agent?
• IRS Examinations are up over 100% – According to enforcement results published by the IRS in 2009, examinations of individual returns increased over 100% since year 2000. Throughout this period, the number of examinations rose every year through 2009. Current plans are for a substantial increase in examinations from present levels.
• Growing need for representation – Given the state of our economy, many people now find themselves in a difficult position financially. As you might imagine, many are delinquent on their tax obligations. With IRS enforcement activities on the rise, there is a growing need for enrolled agents who can assist taxpayers in dealing with IRS collection activities.
• Unlimited Earning Potential, Enrolled Agent Salary – You control your career. Why wait for someone to hire you? You can start your own business with unlimited earning potential. As a business owner, you may work full or part time, it is up to you to control your enrolled agent salary.
• Recession proof career – Income taxes are not going away anytime soon. Competent representation is hard to find, and the enrolled agent designation can help you reach the pinnacle of your profession by allowing you to offer a wide range of services beyond just tax preparation.
• Industry Rules are Changing – IRS registration is mandatory for all paid preparers. A preparer who is not an attorney, certified public accountant, or enrolled agent, must satisfy a competency test and continuing education requirements. The practice of the new category of preparers will be limited to preparing tax returns for compensation and representing taxpayers in an examination only on a return they prepared. If you plan on preparing returns, you might as well get a designation
• Expand your financial practice – If you are a financial planner already in the business of advising clients, an enrolled agent designation can provide you with an opportunity to offer additional services.
• Expand your reach – If you are a CPA or Attorney, your ability to practice is limited to states where you hold a license. The enrolled agent designation is a federal authorization that can provide you with the ability to represent clients in other states.
• Credibility – The credibility you gain as an enrolled agent can help you command higher fees than others who have not demonstrated their competence.
• Increased Expertise – Becoming an enrolled agent will improve your knowledge about the various rules and regulations can help make you a better tax practitioner.
Requirements for Enrolled Agents
An enrolled agent (EA) does not need a college degree; rather they must demonstrate special competence in tax matters by passing all three parts of the IRS Special Enrollment Examination. An individual with 5 years of relevant employment with the IRS may apply for enrollment to become tax agent (EA) without taking the exam.
How to Become an Enrolled Agent?
You must file Form 23, Application for Enrollment to Practice before the Internal Revenue Service, within one year of the date you passed all parts of the examination. Form 23 is available online at www.irs.gov. The IRS may take approximately 60 days to process your request. During that time, a background check is performed to ensure that you have not engaged in any conduct that would justify the suspension or disbarment of an attorney, CPA, or enrolled agent from practice before the IRS.