What Is An Enrolled Agent?
Enrolled Agents are federally authorized tax practitioners, empowered to represent taxpayers before the Internal Revenue Service (IRS) by the U.S. Department of the Treasury. The credential of an EA (Enrolled Agent) is valid across all 50 U.S. States, and he/she can represent taxpayers for audits, collections and appeals regardless of the severity of the tax problem.
What Are The Differences Between Enrolled Agents And Other Tax Preparers?
Enrolled Agents are the only tax professionals who are authorized to represent taxpayers directly by the U.S. Government. While other professionals like CPAs and attorneys may or may not specialize in taxation, Enrolled Agents are specifically licensed to handle tax issues. Furthermore, Enrolled Agents are required to report continuing education every 3 years to maintain their license, which is in addition to the already stringent application and selection process.
Why Should I Choose An Enrolled Agent Who Is A Member Of The National Association of Enrolled Agents (NAEA)?
The NAEA ensures that every member adheres to the strictest professional, moral and ethical guidelines, so as to provide the best representation for taxpayers before the IRS. This extremely strong and well-trained network of tax professionals maintain their knowledge via continuing professional education throughout their careers, and ensure that their taxpayer clients’ problems are solved to a reasonable extent according to the tax code.
How Can An Enrolled Agent Help Me?
IRS Enrolled Agents take care of all your tax related problems, including documentation, auditing, preparing tax returns as well as representation, and do so on a regular basis every day for individuals, corporations, trusts and any other entities with tax reporting needs. They are required to continue learning and adapting to the rapidly changing taxation scene, making them the most qualified and efficient tax professional to represent you before the IRS. Enrolled Agents may work on an appointment basis during tax season or on a full time basis as part of a practice. IRS Enrolled Agents offer the following services in addition to tax preparation and representation:
- Accounting and bookkeeping
- Financial planning or budgeting
- Payroll services
- Financial statement preparation
- Mortgage help
What Does The Term “Enrolled Agent” Mean?
The Enrolled Agent profession was sanctioned way back in 1884 after the Civil War, to settle claims by citizens regarding property used in the war effort. Because of the high number of fraudulent claims, the Government chose to empower individuals with advocacy to prepare claims against them. The term itself is quite self-explanatory, with “Enrolled” meaning granted a license to practice by the federal government, and “Agent” meaning the authorization to represent a taxpayer before the IRS.
How Does One Become An Enrolled Agent?
There are two ways to become an Enrolled Agent. The first is to pass all three parts of a rigorous Special Enrollment Examination, which covers all areas of the Internal Revenue Code. The second is to have five consecutive years of IRS work experience dealing with the application and interpretation of the Internal Revenue Code. Furthermore, a thorough background check is conducted on all candidates to ensure the highest standards. Since the license is national, Enrolled Agents can help taxpayers all over the country.
Privilege And The Enrolled Agent
The IRS Restructuring and Reform Act of 1998 provides a limited client privilege for those bound by the Treasury Department’s Circular 230 rules. This privilege ensures confidentiality between the taxpayer and the Enrolled Agent in cases involving audits or collections. However, this privilege does not extend to the preparation or filing of tax returns. But, the privilege does not apply to state tax matters even though some states have an accountant client privilege. Ask your Enrolled Agent how this privilege might affect you.
Are Enrolled Agents Required To Take Continuing Professional Education?
Enrolled Agents are required to complete 72 hours of continuing professional education spread over three years, which includes 2 hours of ethics and professional conduct every year. To prevent excessive CPEs in one year, the IRS requires a minimum of 16 hours of CPE each year. The NAEA has an even higher standard, and requires its members to complete 90 hours of CPEs during the same year periods. These stringent requirements have kept the number of practicing Enrolled Agents at about 48,000 in the United States.
Are Enrolled Agents Bound By Ethical Standards?
Absolutely. The U.S. Department of the Treasury’s Circular 230 has a set of rules that each Enrolled Agent must follow to practice before the IRS. In addition to this, the NAEA has a strict code of ethical, moral and professional guidelines to be followed.