Enrolled Agent (EA)
A tax expert who has earned the right to represent people before the IRS
What is an Enrolled Agent (EA)?
An Enrolled Agent is a tax expert who has earned the right to represent people before the Internal Revenue Service (IRS). To become an EA, they need to pass a three-part comprehensive IRS exam covering individual and company tax returns or have experience working for the IRS.
Enrolled agent status is the highest honor granted by the IRS. Achievers of this top status must uphold moral principles and finish 72 hours of retraining every three years.
EAs are authorized by the Department of Treasury's Circular 230 regulations to represent taxpayers before the IRS and to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any other entity having tax-reporting responsibilities.
The only tax professionals with a federal license who are experts in tax law and have unrestricted authority to represent taxpayers before the IRS are EA.
The following is a detailed overview of the responsibilities and qualifications of an EA and additional resources for those interested in becoming one.
Key Takeaways
- An Enrolled Agent (EA) is a tax professional authorized by the IRS to represent individuals and entities before the Internal Revenue Service.
- EAs must pass a comprehensive three-part IRS exam or have relevant IRS work experience to earn their status.
- EAs are experts in tax law and can provide tax advice, represent clients in IRS matters, and prepare tax returns for various entities.
- They are authorized under section 7433 of the Internal Revenue Code and can assist with tax planning and small-business taxation.
- EAs are required to uphold ethical standards and complete 72 hours of retraining every three years to maintain their status.
Understanding an Enrolled Agent
An Enrolled Agent is authorized under section 7433 of the Internal Revenue Code to represent taxpayers before the Internal Revenue Service.
Taxpayers can commission an EA, corporations, or other entities requesting it for tax advice and/or representation in a lawsuit.
EAs may also provide technical assistance to their clients and prepare tax returns for their clients. The following is a detailed overview of the responsibilities and qualifications of an enrolled agent (EA) and additional resources for those interested in becoming one.
One way an enrolled agent can represent taxpayers before the IRS is by preparing tax returns. They need to be licensed to perform this service and may charge fees up to $100 per return they prepare depending upon experience, expertise, time spent on the return, and other factors.
Enrolled agents can help taxpayers with small-business planning because they are knowledgeable about tax laws that affect business owners who do not have employees. However, some tax law areas are restricted from being discussed with individual taxpayers outside of an attorney-client setting.
Most enrolled agents work out of offices in their home states, charging a fee for each return prepared. However, some offer remote services without charging fees.
Enrolled Agent Qualifications
Unlike the Certified Public Accountant (CPA) certification and most other professional designations, you don't need a college degree to become an EA. Additionally, once you earn your EA credential, it is recognized in all 50 states.
You are qualified to take the Enrolled Agent Examination regardless of whether you have years of tax expertise or were just recently inspired to switch careers from a field that has nothing to do with taxes (referred to as the Special Enrollment Examination, or SEE, by the Internal Revenue Service).
Although having prior tax experience makes the process simpler, several students have studied and passed the EA Exam on their first try despite having no prior tax knowledge. The requirements to become an EA are as follows:
- An enrolled agent must be a United States citizen.
- In addition, an EA must be at least 18 years old and have graduated from high school or an equivalent degree.
- An EA must not have been convicted of a felony or misdemeanor for which he was sentenced to more than one-year imprisonment.
- An EA should have completed either the CPA Exam or another qualifying examination.
- The EA must have been licensed as a CPA in any state or territory of the United States, Canada, Europe, or any other country (or territory) recognized by the IRS.
The EA is not required to complete these requirements if appointed as an Internal Revenue Service tax collector. An EA that serves as a tax collector is exempt from all of these requirements except for being an American citizen and graduating from high school or having an equivalent degree.
Steps to becoming an Enrolled Agent (EA)
Professionals and accountants who want to specialize in taxation can advance their careers by earning an Enrolled Agent designation.
1. A personal tax identification number (PTIN)
You will need your social security number, personal and business information, and your prior year's tax return. In addition, you need to explain any prior felony convictions, if there are any, an explanation of any tax-related problems, and any US-based certifications you may have been required to obtain a PTIN.
Once you have collected your information, you can create an account on the IRS website. You can then apply for a PTIN. If your application is approved, you will receive your PTIN.
2. Special Enrollment Examination (SEE)
The exam consists of three parts:
Part 1: Individuals
Part 2: Businesses
Part 3: Representation, Practices, and Procedures
The IRS website makes all exam-related information available to the general public. However, it is quite challenging to sort through all of the information on the website and determine what is pertinent to the exam because there is no predetermined study plan.
Instead, consider enrolling in an EA Review course to expedite and improve your exam preparation.
3. Register for the SEE
You can register for this exam through Prometric's Special Enrollment Examination official website; you can enroll in the exam. You need to book early because slots sometimes fill up. Reviewing the Candidate Information Bulletin is another smart move.
On their website you can book an appointment, if you need any accommodation, you can request that too. In addition, you will receive a document outlining all the accommodations accessible to people under the Americans with Disabilities Act from a Prometric representative (ADA).
Note
For test takers with impairments, accommodations include sign language interpreters, adapted technology, and other equitable access tools. After this, you can select the city, date, and time.
In the final steps to register, you need to complete the payment. The fee for each section is $203, and you will be registered to take the test.
4. Take the SEE
Candidates must pass each of the SEE's three parts within two years. Each exam has 100 multiple-choice questions and lasts for 3.5 hours. Passing requires a minimum score of 105.
To become an enrolled agent, you must pass all three exam sections with a passing grade.
5. Enrollment
After passing all three sections of the EA Exam, you can submit Form 23 to request enrollment to represent yourself before the IRS. The application fee is $30.
6. Clear the sustainability test
Candidates seeking enrollment must complete a suitability assessment, background check, and tax compliance assessment.
7. Your new career as an EA starts from here.
Jobs for enrolled agents are available in a wide range of enterprises, including big public accounting firms and local accounting firms. In addition, enrolled Agents can launch their tax practice.
Note
Candidates will discover that job avenues open up with the certification and that the opportunities for tax preparers grow more varied with Enrolled Agent status.
Why to enroll for EA and what to expect in your first year
For many reasons, you should think about becoming an enrolled agent. First, EAs are in greater demand. Second, more taxpayer help is required due to increased IRS enforcement in recent years.
Third, your earning potential is limitless. Fourth, this is a recession-proof vocation since you can establish your own business and take on as many clients as you can manage without needing to be hired by a company. Lastly, taxes must always be paid, and people will always require assistance.
In your first year as an EA, you'll be the only person in your firm that handles taxes. It will feel like a lot of work if you don't have clients yet. But you will gain experience and knowledge that you can use to help future clients.
You'll learn how to prepare federal tax returns, how to communicate with the IRS on behalf of your client, and what resources are available.
In return for this valuable experience, you'll be paid just over $30,000 per year. So on average, EAs make about $50,000 after 10 years of experience (it depends on location).
Although you are not necessarily required to have a degree or diploma, you must demonstrate your expertise in tax-related subjects. You can get this in one of two ways: passing the special enrollment exam (also known as the EA exam) or having prior IRS experience.
Qualifications for becoming an EA also vary depending on the state in which one chooses to practice:
- Some states require fewer qualifications than others;
- Some have requirements that are lower or more stringent than the national standard established by the IRS and
- Some states have their requirements for attorneys who want to become EA.
Though qualifications vary by state, a few general types of qualifications include
- Passing a bar exam or being admitted to practice before the state's highest court;
- Obtaining a license from the state's board of law examiners or similar agency and
- Passing courses required by the state board of law.
Benefits of hiring an EA
Choosing an EA has many advantages for you and your company. When you work with an EA, you'll work with a qualified representative in case of any IRS-related concerns, a certified tax advisor, and a qualified tax preparer.
It is not only logical but also economical to enlist the aid of an EA. A reliable EA can serve as your company's one-stop shop, assisting you in maintaining tax compliance without sacrificing your bottom line.
1. One EA in all states
The fact that an EA may work in any state is one of the advantages of employing them to file taxes. This implies that you can file taxes in many states using a single EA.
EAs can represent you for audit in any state in the US, in addition to being able to submit returns in many states. Therefore, no matter where you are in the US, you will have someone on your side to handle your tax concerns.
2. They are very versatile
EAs are the sole federally licensed tax preparers with limitless rights to represent clients before the IRS and provide a wide range of tax-related services for businesses and individuals.
A professional tax expert can now defend you before the IRS in case of an audit, collection activity, or an appeal, which is a major advantage. You will have a federally recognized tax expert defending you before the IRS and a qualified tax preparer working for you as a client.
Note
Most EAs were once employed by the IRS and had the skills and knowledge necessary to protect you if an audit is initiated.
3. EAs are extremely affordable prices
EAs can provide their clients with more services at lower costs than other tax professionals because they have reduced overhead and greater tax-specific expertise.
EAs are also exempt from a variety of state levies. Thanks to their wide services and fiercely competitive prices, your time, money, and resources will be saved while dealing with tax returns and the IRS.
4. EAs are aware of all tax regulations to keep you protected
EAs are among the top tax specialists in the nation, with an in-depth understanding of the tax code, how it applies to the client, and how any changes may modify the customer's responsibility.
In addition, they stay informed about tax code updates to protect you and your company.
To obtain the EA license, an individual must have either worked for the IRS for a few years or completed a tough three-part exam covering individual and corporate taxes and ethics.
This indicates that EAs are extremely informed about the intricate federal tax laws that frequently bring firms and individuals under the IRS's scrutiny.
EAs are also knowledgeable about the technical specifications, reducing the likelihood that your returns may be audited, penalized, or worse.
Enrolled Agents (EA) vs. Certified Public Accountants (CPA)
The responsibilities of an EA differ from those of a certified public accountant (CPA). While EAs and CPAs must prepare tax returns, CPAs are also required to do audits and review the financial statements of corporations.
Additionally, EAs are authorized to represent taxpayers before the Internal Revenue Service, provide technical assistance to their clients, and represent their clients in court proceedings.
This means that EAs cannot offer CPA services such as doing audits or preparing financial statements.
You will see that EAs and CPAs are well qualified when choosing between them. Both can provide you with the financial advice you may require for your taxes. However, which one you should contact mostly depends on the problem you're trying to address.
Example
EAs can assist you with a collection issue or an IRS audit and provide bookkeeping services that may be helpful to firms filing tax returns. However, CPAs are better equipped to handle your accounting and financial planning needs.
When it comes to tax preparation, they can also support you in locating tax credits and deductions to reduce your tax bill. Although the variety of services the two categories of professionals provide varies, they are equally equipped to carry out comparable jobs.
CPAs can offer a significantly larger range of tax services than an EA. Additionally, there is a higher demand for CPAs than EAs among the general public. Working with an EA can be the best option for you if you have accounting requirements with a micro focus.
The CPA choice, on the other hand, might be the best if you're interested in accounting procedures that have nothing to do with taxes, like auditing.
Enrolled Agent (EA) FAQs
Throughout your three-year enrollment cycle, you must obtain 72 hours of CE. In addition, your social security number's last digit determines the enrollment cycle.
You can register to retake a failed EA exam part in just 24 hours, which makes the EA Exam rather unique. Although you can attempt the Exam four times during one testing window, you will need to wait until the following testing window if you fail to pass the first time.
You are not required to take all three exams at once. However, you have two years to finish all three sections and receive a passing grade as long as you schedule one within a year of the date of registration.
When making an appointment, a non-refundable and non-transferable charge of $182.00 per portion is paid.
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