Starting 2011, the IRS requires tax preparers to undergo testing, annual training and meet other requirements to keep their practicing license. However, for CPAs, attorneys, and Enrolled Agents, the IRS does not have such strict requirements, as it believes that these professionals are well trained to handle any tax issues. Most taxpayers know and understand the CPA (accountant) profession and attorneys. However, there are few taxpayers who understand the profession of Enrolled Agent. This article seeks to shed more light on these professionals.
According to the IRS, an Enrolled Agent is a professional who is “recognized to practice before the IRS.” What this means is that an Enrolled Agent is a professional of whom the IRS is satisfied that he or she is trained to handle all tax related issues on behalf of taxpayers. An Enrolled Agent undergoes comprehensive training and testing in U.S. taxes.
Qualifications of an Enrolled Agent
To qualify as an Enrolled Agent, one first needs to pass a professional exam on taxes. The Enrolled Agent test is in three parts. The test examines the candidates’ knowledge of various IRS procedures and rules, tax return forms, and the various deductions, credits, and entries. Former IRS agents and workers are provided various exemptions from this test. Upon passing the test, a candidate applies to the IRS to get an Enrolled Agent’s license. Before approving the application, the IRS performs a background check to confirm that the applicant does not have a felony charge and does not have issues of professional misconduct. The applicant also needs to be updated with their personal taxes.
Once the IRS approves an applicant, the applicant is licensed to operate as an Enrolled Agents for 3 years. Within this time, the agent is also required to undertake a 72 hours continuous training to keep them up to date with all tax issues. Failure to meet these training requirements will have the agent lose his or her license after the 3 year term. The training and examination of Enrolled Tax Agents is much more comprehensive than that of “non professional” tax preparers. Tax preparers who are not attorneys, CPAs, or Enrolled Agents only undertake one exam on 1040 tax returns and are only required to have an annual continuous training of 15 hours to keep their licenses.
What Can an Enrolled Agent Handle?
The training of Enrolled Agents enables them to provide various services including but not limited to the following:
- Representation – An Enrolled Agent can represent a tax preparer before the IRS on any tax issue. Since the agents are nationally registered, they can represent a taxpayer in any of the IRS offices throughout the country.
- Preparation and Filing – Like any other tax preparer, the Enrolled Agents also provide tax preparation and tax filing services.
- Advisory – Since these agents are well vast with knowledge regarding taxes, they are able to provide sound advice as far as taxes are concerned. However, depending of the advice being dealt, attorneys or accountants may be better positioned to provide such required advice.