An Enrolled Agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled Agent status is the highest credential the IRS can award a person. Individuals who obtain this elite status must adhere to ethical standards and complete (72) hours of continuing education courses every (3) years.
Enrolled agents, like tax attorneys and Certified Public Accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
Learn more about Enrolled Agents in Treasury Department Circular 230, which guides the practice of preparing tax returns and representing clients in tax matters, both professionally and ethically: https://www.irs.gov/pub/irs-pdf/pcir230.pdf
Enrolled Agents are the only tax professionals who do not require a state license. This is because the Enrolled Agent licensure is a federal license allowing them to operate and represent a taxpayer in any state.
The Difference between an Enrolled Agent and other tax professionals.
- Unlike other tax professionals such as CPA’s or tax attorneys, Enrolled Agents specialize in taxation where the others may or may not specialize in tax. Enrolled Agents are not employees of the IRS and they cannot use the term “Certified” as part of their title or in any other relation to the IRS.
- Education needed to become and operate as an Enrolled Agent: None – a bachelor’s or master’s degree is not a requirement for becoming an Enrolled Agent, however, it is a requirement for other tax professionals (attorneys and CPAs)
- There are two ways to become an Enrolled Agent:
- By passing a tax comprehensive (3) part exam that covers individual and business taxation, as well as IRS procedures.
- By accumulating 5 years working for the IRS in a tax specialization.
- Continuing Education RequirementsEnrolled Agents are required to maintain a certain amount of continuing education credits throughout the year. Based on the Treasury Department Circular 230, http://www.irs.gov/pub/irs-pdf/pcir230.pdf an agent must take at least (72) hours of continuing education every (3) years with a minimum of (16) hours and a minimum of (2) hours dedicated to ethics.
Why hire an Enrolled Agent?
- Complexity: You have a complex tax situation that needs a specific tax specialist to attend to. Since Enrolled Agents focus on one specialty, taxation (versus business accounting, business law, financial reporting, economics analysis etc…), they tend to have a deeper understanding and application of taxation. Think “master of one” versus “jack of all trades”.
- Price: Since hiring an Enrolled Agent is typically cheaper than hiring a CPA, you may choose to have simple tax matters completed by an EA.
When would you not hire an Enrolled Agent?
If you own a business:
Since EAs focus strictly on tax matters, it is difficult to say the expertise level and knowledge of current accounting rules, business application, budgetary assistance and so on that the EA can provide to a business owner. It may make more sense to go through a CPA firm as CPA firms focus on accounting and taxation, as well as best business practices, which is more comprehensive of your business’s financial situation as a whole. Many CPA firms also employ Enrolled Agents as well.
Enrolled Agents are highly trained, having technical knowledge and experience tax matters. They are able to represent clients before the Internal Revenue Service and are usually a great resource for your taxation needs. The choice of which tax professional to hire depends on the goals and desired results of the individual/business.
Regardless of what route you choose, it is highly recommended to find tax professionals who have a focus in your industry or who work with others who have similar circumstances as you.
For Example, at our company (Green Ledger CPA) we only work with businesses, so if we had an individual approach us for individual tax work we would simply refer them to another tax professional that has more of a focus on individual taxation.
If you are interested in becoming an Enrolled Agent, contact the IRS or go to:
This publication is designed to provide information of federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.