What Is an Enrolled Agent (EA)?
Definition and Examples of an Enrolled Agent
"EA" is the professional designation for an enrolled agent. Enrolled agent status is the highest credential the IRS awards. EAs have unlimited practice rights.
They're tax professionals who can help you with your business and personal tax issues, similar to certified public accountants (CPAs) and tax attorneys. They can represent you before the Internal Revenue Service in all matters except for Tax Court, where only a tax attorney can represent you.
What Is an Enrolled Agent?
The role of an enrolled agent began in 1884 after the Civil War ended. Property, such as horses and farm equipment, were commonly confiscated by the government for use during the war, and citizens needed recourse with settling these claims. Enrolled agents were put in place to help them.
The job later evolved to include claims for monetary relief for citizens whose taxes had become inequitable after the income tax was passed in 1913. The role of the EA continued to adapt as income tax, estate tax, gift tax, and other sources of tax collections became more complex. These agents took on additional duties, including the preparation of the numerous returns and forms involved with these filings.
Enrolled agents also had to learn about taxpayer advocacy. This additional skill involved negotiating with the IRS on behalf of their clients.
No restrictions are placed upon which taxpayers EAs can represent, what tax issues they can handle, or in which IRS offices or states they can represent clients.
- Acronym: EA
How Does Being an EA Work?
Although enrolled agents perform accounting tasks and certain kinds of audits, they're limited in that they can't express an "unqualified" type of opinion. For example, they can't advise a public company when it's filing financial statements with the Securities & Exchange Commission.
Having SEC-compliant audited statements is not a requirement for most small non-public businesses.
Enrolled agents are specifically authorized to represent taxpayers before the IRS at all administrative levels, up to but not including Tax Court. Only attorneys and individuals who have passed the "Tax Court Exam For Non-Attorneys" are authorized to argue cases before Tax Court.
CPAs and tax attorneys are licensed by the states in which they work. An EA is certified by the federal government.
Enrolled Agent vs. CPA
Most enrolled agents compete directly with CPAs, bookkeepers, and other accountants. Their enrollment is a federal designation, however, so they can work across state borders. CPAs and tax attorneys must meet the reciprocity requirements of any state other than their own where they're licensed.
The EA test is on tax law, which distinguishes it significantly from the CPA exam, which is almost exclusively focused on accounting and auditing rules and procedures. The CPA exam is specifically designed to facilitate the interpretation of financial statements. Financial statement interpretation generally has no relevance to tax law except as to how tax obligations are presented.
|Enrolled Agents||Certified Public Accountants|
|Must pass a three-part test or have previously worked for the IRS||Must pass a four-section computer-based test|
|Practice exclusively in taxation||Practice predominantly in accounting|
|Credentialed at the federal level by the IRS||Licensed by the state where they practice|
Requirements for Enrolled Agents
The enrolled agent credential isn't a certification, although it's often referred to as such by many practitioners, including the National Association of Enrolled Agents (NAEA). An enrolled agent must pass an IRS test covering individual and business tax returns to become credentialed. An exception to testing exists for those who have certain experience as an IRS employee.
EAs must agree to adhere to ethical standards, and they must complete 72 hours of continuing education every three years. They must have a Preparer Tax Identification Number (PTIN), have timely filed all their own tax returns, and owe no outstanding tax debts to the IRS.
All EA candidates are subject to an IRS background check and they can be disbarred from practicing before the IRS for misdeeds. An EA can also be disbarred for failing to meet their continuing education requirements.
- The EA credential is the highest awarded by the IRS.
- They can practice in any state due to their federal certification.
- Enrolled agents have virtually unlimited practice rights, although they can’t represent clients in tax court. Only attorneys can do so.
- EAs work exclusively in the area of taxation, while CPAs focus more on accounting.
- Enrolled agents are subject to stringent background checks and continuing education requirements.