What is an enrolled agent?
Enrolled
agents (EAs) are America’s tax experts. They are the only federally-licensed tax practitioners who both specialize
in taxation and have unlimited rights to represent taxpayers before the Internal Revenue
Service. These tax specialists have earned the privilege of representing taxpayers
before the IRS by either passing a stringent and comprehensive three-part
examination covering individual tax returns, business tax returns and
representation, practice and procedure, or through experience as a former IRS
employee. All candidates are subjected to a suitability check conducted by the
IRS.
What
are the differences between enrolled agents and other tax professionals?
The
enrolled agent is the most expansive license IRS grants a tax professional.
Enrolled agents are generally unrestricted as to which taxpayers they can
represent, what types of tax matters they can handle, and the IRS offices
before which they practice.
Unlike
attorneys and CPAs, who may or may not choose to specialize in taxes, all
enrolled agents specialize in taxation. While CPAs and attorneys are licensed
by the states, enrolled agents and registered tax return preparers are federally
licensed. Registered tax return preparers must pass a basic, one-part exam and
complete a minimal 15 hours of continuing education per year. They do not have
the unlimited representation rights held by enrolled agents, CPAs and
attorneys.
What
is Representation?
Taxpayers
who find themselves in tax trouble are allowed to represent themselves before
the various administrative levels of the IRS. However, most taxpayers facing
IRS collection action, an IRS audit of any sort (whether IRS asks for mounds of
documents by mail or requests an in-person examination), or an appeal of any
collection or examination action would be wise to send in an expert in his or
her place. Taxpayers who are represented have a guide through the process, and
someone authorized to speak on his or her behalf (and in his or her place) and
ensure the matter is settled fairly. Enrolled agents are authorized by IRS to
represent taxpayers before IRS; every enrolled agent has passed testing on
representation.
The
enrolled agent license is the highest credential the IRS issues.
The
advantage of working with an enrolled agent lies not only in the depth of
experience and understanding of how to prepare a tax return, but the knowledge
of tax law that may be used to represent taxpayers before the IRS. If you get a
letter from the IRS, or worse, are audited or are the target of a collection
action, your EA can speak directly to the IRS on your behalf.
Why
should I choose an enrolled agent who is a member of the National Association
of Enrolled Agents?
IRS
recommends using a tax preparer that is a member of a professional organization
that offers continuing education and other resources, and holds members to a
code of ethics. NAEA goes beyond IRS’ recommendations by requiring members to
fulfill continuing education requirements that exceed the IRS’ required
minimum. In addition, NAEA members must adhere to a stringent Code of Ethics
and Rules of Professional Conduct. Members of NAEA 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.
How
can an enrolled agent help me?
Enrolled
agents advise, represent and prepare the tax returns of individuals,
partnerships, corporations, estates, trusts and any other entity with tax
reporting requirements. EAs prepare millions of tax returns each year and
their expertise in the continually changing field of taxation enables them to
effectively represent taxpayers audited by the IRS. In addition to tax
preparation and tax representation, many enrolled agents offer other
business-related services which may include:
• Bookkeeping
• Financial planning or budgeting
• Payroll services
• Financial statement preparation
• Mortgage assistance
Because enrolled agents have such diverse backgrounds and may
offer a variety of services, it is important to talk with your enrolled agent
about how his/her expertise may assist you.
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 education every three years
to maintain their licenses. The National Association of Enrolled Agents (NAEA)
raises the bar even further in that its members are required to complete at
least 90 hours in a three year period.
Are there really that many tax changes each year that
might affect me?
Yes.
Every year there are numerous changes to the tax laws and tax code. The
National Taxpayer Advocate has identified the complexity of the tax code as the
most serious problem facing taxpayers and the IRS alike. A recent review of
the tax code turned up that it includes 3.8 million words and that there had
been approximately 4,428 changes to the code over the preceding ten years, an
average of more than one a day, including an estimated 579 changes in 2010
alone. Frequently, provisions are added and others expire. Some provisions are
indexed for inflation, so they change as well. Some are effective at the beginning
of the year, while others become effective on the date a particular bill or law
is signed. Congress is continually changing the tax laws. EAs take continuing
education courses each year to keep up with the changes and have research tools
at their disposal to constantly monitor updates. Most taxpayers do not have
the time, desire or the research tools necessary to keep up with the tax code
each year. When you choose an enrolled agent, you know your preparer keeps up
with the rules and regulations and will use this expertise to do the best job
possible for you.
What
are the key points to remember when hiring a tax professional?
Your
tax needs are best served by an enrolled agent. However, no matter who you
hire there are certain things to keep in mind.
• Always use a qualified professional to prepare your
return.
• The preparer should always sign the return and include
their Professional Tax Identification Number (PTIN).
• Beware of preparers who encourage you to lie or otherwise
modify your information in order to get a bigger refund.
• The taxpayer is responsible for what’s on a tax return.
Reputable preparers will ask to see receipts and will ask multiple questions to
determine whether expenses, deductions and other items qualify. By doing so,
they are trying to help their clients avoid penalties, interest or additional
taxes that could result from an IRS examination.
Enrolled
agents (EAs) are America’s tax experts.
They
are the only federally-licensed tax practitioners who specialize in taxation
and also have unlimited rights to represent taxpayers before the IRS. Enrolled
agents are required to complete many hours of continuing education each year
to ensure they are up-to-date on the constantly changing tax code and must
abide by a code of ethics. When you need up-to-date tax assistance, see an
enrolled agent.
