What is an Enrolled Agent?

Enrolled Agents (EAs) are the only tax professionals tested by IRS on their knowledge of tax law and regulations and, because they are federally-licensed, the only tax professionals that may represent clients in any part of the country. They provide tax preparation, representation, tax planning and other financial services to millions of individual and business taxpayers. EAs adhere to a code of ethics and professional conduct and are required by the IRS to complete annual continuing professional education. Like attorneys and certified public accountants (CPAs), EAs are governed by Treasury Circular 230 in their practice before the IRS.

I have been in the accounting and income tax business specializing in tax problems for twenty six years.  Most of those years I have been an Enrolled Agent. I have had people ask me what is an enrolled agent?

The National Association of Enrolled Agents which I am a member of has on there website questions that people ask about Enrolled Agents and I am republishing them here to help you get more information about me.

What is an Enrolled Agent?

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 CPAs may represent taxpayers before the IRS.  The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.

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 give tax 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 (tax problems).  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 CPAs, 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 (CPAs and attorneys 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 Enrolled Agent who is a member of the National Association of Enrolled Agents (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’ 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.