What is an Enrolled Agent?
With tax regulations becoming more convoluted and confusing every time they’re “simplified”, and with the puzzling differences between state and federal tax laws, now is the time to review your tax situation. There are federally licensed tax professionals who can help you.
An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections and appeals.
What does the term “Enrolled Agent” mean?
“Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only Enrolled Agents, attorneys and CPA’s may represent taxpayers before the IRS.
The Enrolled Agent (EA) designation originated in 1884 to regulate agents who represented U.S. citizens with claims for Civil War losses.
Today, EA’s represent taxpayers before the Internal Revenue Service and help prepare returns for individuals, partnerships, corporations, estates, trusts, and other tax entities. EA’s are also experts in tax planning, and can help you ensure that you don’t pay too much or risk an audit.
How does one become an Enrolled Agent?
The license is earned in one of two ways, by passing a comprehensive examination which covers all aspects of the tax code, or having worked at the IRS for five years in a position which regularly interpreted and applied the tax code and its regulations. All candidates are subjected to a rigorous background check conducted by the IRS.
How can Enrolled Agent help me?
Enrolled Agents advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements.
Enrolled Agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers audited by the IRS.
Privilege and the Enrolled Agent
The IRS Restructuring and Reform Act of 1998 allow federally authorized practitioners (those bound by the Department of Treasury’s Circular 230 regulations) a limited client privilege. This privilege allows confidentiality between the taxpayer and the Enrolled Agent under certain conditions.
The privilege applies to situations in which the taxpayer is being represented in cases involving audits and collection matters. It is not applicable to the preparation and filing of a tax return. This privilege does not apply to state tax matters, although a number of states have an accountant-client privilege.
Are Enrolled Agents required to take continuing professional education?
In addition to the stringent testing and application process, the IRS requires Enrolled Agents to complete 72 hours of continuing professional education, reported every three years, to maintain their Enrolled Agent status.
NAEA members are obligated to complete 90 hours per three year reporting period. Because of the knowledge necessary to become an Enrolled Agent and the requirements to maintain the license, there are only about 46,000 practicing Enrolled Agents.
What are the differences between Enrolled Agents and other tax professionals?
Only Enrolled Agents are required to demonstrate to the IRS their competence in matters of taxation before they may represent a taxpayer before the IRS. Unlike attorneys and CPA’s, who may or may not choose to specialize in taxes, all Enrolled Agents specialize in taxation.
Enrolled Agents are the only taxpayer representatives who receive their right to practice from the U.S. government (CPA’s and attorney’s are licensed by the states).
Are Enrolled Agents bound by any ethical standards?
Enrolled Agents are required to abide by the provisions of the Department of Treasury’s Circular 230, which provides the regulations governing the practice of Enrolled Agents before the IRS. NAEA members are also bound by a Code of Ethics and Rules of Professional Conduct of the Association.
Why should I choose an EA who is a member of the NAEA?
The principal concern of the National Association of Enrolled Agents and its members is honest, intelligent and ethical representation of the financial position of taxpayers before the governmental agencies.
Members of NAEA must fulfill continuing professional education requirements that exceed the IRS’s required minimum. In addition, NAEA members adhere to a stringent Code of Ethics and Rules of Professional Conduct of the Association, as well as the Treasury Department’s Circular 230 regulations.
NAEA members belong to a strong network of experienced, well-trained tax professionals who effectively represent their clients and work to make the tax code fair and reasonably enforced.