Definition and Example of an Enrolled Agent
How an Enrolled Agent Works
Enrolled Agents vs. Certified Public Accountants
Do I Need an Enrolled Agent?
Definition and Example of an Enrolled Agent
An Enrolled Agent (EA) is a tax professional who has passed an examination administered by the Internal Revenue Service (IRS) covering all aspects of tax
ation, and has undergone a thorough background check. The designation “EA” is the highest tax credential recognized by the IRS.
Examples of Enrolled Agents
To earn the designation of “EA,” a tax professional must pass the IRS examination and a background check. Individuals who pass the exam are considered tax experts. Enrolled Agents focus exclusively on tax issues, including audits, appeals, and collections. They are called “Enrolled” because they are licensed specifically by the federal government. An Enrolled Agent is the only type of tax professional who has this kind of relationship with the IRS.
How an Enrolled Agent Works
Similar to Certified Public Accountants and tax attorneys, Enrolled Agents can handle all types of tax issues and represent their clients’ interests before the IRS. The client does not necessarily have to be present. Enrolled Agents have the right to appear on behalf of their clients.
Enrolled Agents have a limited client privilege under the IRS Restructuring and Reform Act of 1998. The law allows for confidentiality between the agent and their client in certain cases involving audits and collections.
Requirements to Become an Enrolled Agent
An Enrolled Agent must pass the Special Enrollment Examination (SEE) administered by the IRS, although a college degree is not required. The exam takes eight hours over two days and covers all aspects of federal tax law, including taxation of individuals, corporations, and partnerships. It also includes various regulations related to tax collection and audit procedures governed by the IRS.
The exam consists of three parts, and Enrolled Agents must achieve passing scaled scores of at least 105 in all three sections: one on individual tax issues, one on business taxes, and one relating to procedural issues and client representation.
Ongoing Requirements for Enrolled Agents
Enrolled Agents must complete 72 hours of continuing education courses every three years. Those who are also members of the National Association of Enrolled Agents (NAEA) must complete 30 hours each year for a total of 90 hours over three years.
Enrolled Agents are bound by the standards of Circular 230 from the Treasury Department, which sets forth regulations for the IRS. NAEA members must also adhere to the ethics and professional conduct rules of the association, or risk losing their membership.
Enrolled Agents vs. Certified Public Accountants
The qualification requirements for Enrolled Agents generally entail more rigor than those that must be met by Certified Public Accountants (CPAs), but each state sets its own requirements for CPAs. The continuing education requirements for CPAs may also vary by state.
Do I Need an Enrolled Agent?
The qualifications of Enrolled Agents are strict and thorough, so Enrolled Agents appropriately announce their status. You should find the designation “EA” after their names in professional directories or online. You can also call 800-424-4339, contact the Enrolled Agent Referral Service, or visit the NAEA website for a complete list of current agents.
When selecting someone from the directory, you should consider the continuing education and ethical requirements. A person who was an Enrolled Agent yesterday may not still be an Enrolled Agent today. Do some research and check with the Enrolled Agent Referral Service or NAEA as well. You can also verify the Enrolled Agent’s status directly with the IRS.
Source: https://www.thebalancemoney.com/enrolled-agents-3193457
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