And An EA Is What?

It’s that time of the year for lists about selecting a tax pro and getting ready to have your tax return prepared. The frustrating thing for me is how Enrolled Agents tend to be ignored in many of these articles. You’ll hear the terms CPA or accountants used a lot but the phrase “Enrolled Agent” is used considerably less. It’s not surprising since there are fewer EAs than CPAs so few writers know about them. And when they do now about EAs they tend to just throw out the phrase with all the other tax pros.

What is an Enrolled Agent?  "Recognized to practice before the IRS." That is the official IRS phrase to explain the EA designation.  It is an IRS program which gives tax professionals the same rights and privileges as certified public accountants or lawyers. An enrolled agent can represent their client at all administrative levels of the IRS and negotiate for that client. Since they are nationally registered, an Enrolled Agent can appear before the IRS in any state.

Luckily, most taxpayers will not need the representation ability of an Enrolled Agent. For them, the significance of an Enrolled Agent status is based in the testing and continuing education required to obtain and maintain the EA status. In order to receive the Enrolled Agent designation, a tax preparer must take and pass a 3 part exam covering all types of tax returns and IRS rules and procedures (or be a former IRS agent/officer). Once the exam has been passed, the IRS must approve the Enrolled Agent application. The applicant is subjected to a background check to make sure they are not a felon and they are up to date on all their tax obligations. If they are accepted, the tax professional is enrolled for 3 years (renewable) and is required to take 72 hours of continuing education in taxation during the 3 years and maintain professional standards. If either of these requirements is not met, the tax professional could lose their Enrolled Agent designation. As a comparison, the test for the new Registered Tax Return Preparer designation has only one part covering basic 1040 tax returns and they only need 15 hours of continuing education in tax a year. Accountant, CPA and attorney rules vary by state. While they may be tested and have CPE requirements, taxation is only part of their testing and education.

An Enrolled Agent can be harder to find because there are fewer than CPAs or accountants. And being an EA doesn’t mean that one is your best choice for a preparer. Remember, there are other factors to consider when choosing a new tax pro. But an EA can be a solid choice for a tax preparer and to help you with a notice from the IRS.