Who is an Enrolled Agent (EA)?
WHAT DOES "ENROLLED AGENT" MEAN?
"Enrolled" means to be licensed to operate by the federal government. "Agent" means authorized to appear in place of the taxpayer at the IRS.
WHAT IS AN ENROLLED AGENT?
An Enrolled Agent is a federally-authorized tax professional that can represent their clients (be it individuals, businesses, and any other entity) on any tax-related issues throughout the United States. They are said to have unlimited representation since they can handle all tax-related issues. The Enrolled Agent status is the highest qualification awarded by the IRS.
HOW ARE ENROLLED AGENTS LICENSED?
According to the IRS, Individuals can get an Enrolled Agent license in either two ways:
- If they take and pass the three parts of the Special Enrollment Examination (SEE). This exam covers all aspects of individual and business tax laws, including tax representation, practices, and procedures.
- If they have worked with the IRS for five or more years, they can attain the Enrolled Agent status without taking the Special Enrollment Examination.
HOW CAN AN ENROLLED AGENT HELP ME?
Enrolled agents can help with any tax-related issues, including:
- Tax planning: EAs can reveal legal ways in which you can reduce your tax bill in a given financial year. They can do this by utilizing tax credits, deductions, and other benefits in the best way possible to reduce the tax bill.
- Tax advice: They can guide you when you face major life-changing events (such as birth/adoption of a child, marriage, divorce, death of a spouse, buying a home, and retirement) that could affect your taxes. They can also guide intending business owners on the right business structure that will be best for them and enlighten them on the best time to make purchases and invest.
- EAs can help you in filing your tax returns.
- When you have tax issues (such as audit, appeal, and collection) where you are to appear before the IRS, EA can represent you.
PRIVILEGE AND THE ENROLLED AGENT
The IRS Restructuring and Reform Act of 1998 allow federally authorized practitioners (those bound by U.S. Department of the (Treasury 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. It does not apply 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 THERE DIFFERENCES BETWEEN ENROLLED AGENTS AND OTHER TAX PROFESSIONALS?
Yes!!! There are some differences between Enrolled Agents and other tax professionals. They include:
- Specialty:EAs are core tax specialists. They are focused solely on tax compliance issues. Conversely, CPAs offer a more diverse range of services from corporate financing, estate planning, financial planning, and reporting. However, they could help identify tax credits and deductions to decrease tax burden. In contrast, Attorneys are focused on tax laws. They are more concerned with incorporation, dissolution, evaluation of businesses, and representing clients in court.
- Federally licensed:EAs are the only tax service providers that are federally licensed. Hence they can render their services across the country, unlike CPAs and Attorneys whose practices are state bound.
- Fees: EAs services are less priced compared to CPA and Attorney. CPAs are moderately priced, while the service provided by an Attorney is on the high side.
- Qualification for practice: EAs do not necessarily require a University degree. On the hand, the minimum qualification for practice for CPAs is a Bachelor' degree in Accounting (or related field), while for Attorney is a Law degree.