Frequent changes and increasing complexity in tax law mean there is a growing demand for Enrolled Agents (EAs). For accountants and finance professionals who excel in tax matters and are seeking a career that offers both growth opportunities and flexibility, this may be the right credential for you. If you're asking, "What is an Enrolled Agent, and how do I become one," we're sharing everything you need to know.
What is an Enrolled Agent?
An Enrolled Agent is a competent and knowledgeable tax professional who is authorized by the U.S. Department of the Treasury to represent taxpayers before the Internal Revenue Service (IRS). This is the highest credential awarded by the IRS, and those who hold it have proven they have the specialized experience and knowledge, plus the broad scope of practice necessary to handle a wide variety of tax matters, including representing individuals, businesses and organizations in dealings with the IRS.
An EA's role typically includes the following:
- Providing expert tax advice
- Preparing tax returns
- Representing clients during audits
- Representing clients in appeals and collections
While other tax professionals, including CPAs, obtain their designation through a state agency, EAs hold a national designation and can practice anywhere in the United States.
How to become an Enrolled Agent
Enrolled Agents are essential to making sure that individuals and businesses have an advocate in issues with the IRS and can successfully navigate complex federal taxes. Thus, the IRS has strict requirements in place to guarantee that anyone with the designation has the in-depth knowledge to act as a trusted expert to their clients.
Education
The IRS does not have specific educational prerequisites in place, so EAs may not have a college degree or formal secondary education. However, candidates are expected to show a strong and comprehensive understanding of tax concepts, laws and regulations.
So, while a degree may not be required, most Enrolled Agents do have a formal background in finance or accounting to gain the foundational knowledge to fulfill the role.
Experience
The IRS requires a minimum of two years of relevant, tax-focused work experience, which can include preparing tax returns, advising clients on tax-related issues, assisting with tax planning or representing clients in tax matters.
Passing the Special Enrollment Examination
In addition to education and experience, you will need to pass the Special Enrollment Examination (SEE). The IRS EA Exam is divided into three separate sections, and each section covers specific topics called "domains."
- Section 1 is related to individual tax matters and is broken down into the following domains:
- Preliminary work and taxpayer data
- Income and assets
- Deductions and credits
- Taxation
- Advising the individual taxpayer
- Specialized returns for individuals
- Section 2 relates to business tax matters and includes:
- Business entities and considerations
- Business tax preparation
- Specialized returns and taxpayers
- Section 3 relates to applying the domains above and working with clients. Specifically, the domains are:
- Practices and procedures
- Representation before the IRS
- Specific areas of representation
- Filing process
Each section consists of three multiple-choice questions over a 3.5-hour testing time, and once you pass the first section, your credit is valid for two years, so you'll have two years to complete the other two sections before the first credit expires.
Background check
Any EA candidate must also receive a background check. In addition to looking at criminal history, such as the presence of felony convictions, the IRS also considers your tax compliance history when reviewing your candidacy.
Benefits of becoming an Enrolled Agent
Now that you know what it is and how to become one, let's look at some of the benefits of becoming an EA.
Unrestricted practice
As an Enrolled Agent, you can practice before the IRS without any restrictions, including representing clients in issues like audits and appeals, so you can provide a more comprehensive service than other tax professionals.
Prestige
Becoming an EA is challenging, so obtaining this designation proves that you have a deep and comprehensive understanding of federal taxation, can navigate difficult scenarios and offer valuable guidance and representation to your clients.
Career versatility
Earning your Enrolled Agent designation opens the doors to wider career opportunities than you would otherwise have. In addition to opening your own tax firm or consultation company, you can also pursue government careers and may be highly sought after by businesses and corporations.
Becker can support your career as an Enrolled Agent
You may be exploring your career options right now, but when you're ready to take the Special Enrollment Examination, Becker will be there to help you meet your goals and maintain your knowledge with Continuing Professional Education designed to help you excel in your career.
