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.
Table of Contents
- What is an Enrolled Agent?
- Differences between EAs, CPAs, and tax attorneys
- Benefits of becoming an EA
- EA salary and career opportunities
- How to become an Enrolled Agent
- Passing the Special Enrollment Examination
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 Enrolled Agent's career 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 license through a state agency, EAs hold a national credential and can practice anywhere in the United States.
History and background of EA credentials
The EA credential dates back to the 1880s. Individuals and businesses were submitting fraudulent claims for property loss and damage sustained during the Civil War while people with legitimate claims were unable to get them settled. Congress empowered enrolled agents to prepare claims against the government with the Horse Act of 1884.
Woodrow Wilson then signed the Revenue Act of 1913, expanding enrolled agents' roles to include preparing taxes and resolving taxpayer disputes with the IRS. In 1972, the National Association of Enrolled Agents was formed.
EAs, CPAs, and tax attorneys
While Enrolled Agents, Certified Public Accountants, and tax attorneys can all represent clients in matters involving the Internal Revenue Service, there are fairly significant between the three careers.
Qualifications
- EAs are licensed by the IRS and must have two years of experience in tax services but don't need to meet specific education requirements aside from passing the Special Enrollment Exam (SEE).
- CPAs are licensed by the state and have to have a minimum of 150 college hours, one year of experience, and pass the CPA Exam.
- Tax attorneys are licensed to practice law by their state bar association and must have a Juris Doctor degree from a law school and pass the bar, but they don't need experience.
Scope of work
- An enrolled agent career is solely focused on taxation, mainly preparing tax returns and representing taxpayers before the IRS for audits, collections, and appeals.
- CPAs have a broad scope of expertise and can work in tax, audit, accounting, or financial consulting
- Tax attorneys specialize in tax and can provide legal advice on tax compliance and strategies to avoid legal issues as well as provide counsel in tax litigation, estate planning, and corporate tax issues.
Take the next step: Enrolled Agent vs CPA
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 credential 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 credential 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.
Accessible entry
The path to an enrolled agent career is often more accessible than becoming a CPA. You don't need a college degree, and you only need two years of relevant experience, though you will need to pass the three-part EA Exam.
Take the next step: A complete guide to the EA Exam
Enrolled Agent career opportunities and salary
As an enrolled agent, you have several career options ahead of you as qualified tax professionals are in high demand. The most common places of employment for EAs are public accounting firms, both small and large, working as tax staff to prepare returns for a wide variety of clients. Banks often rely on EAs to ensure the bank is compliant with tax laws and regulation while law firms specializing in tax will hire EAs to handle IRS-related notices and communications for their clients.
You can even start your own tax planning and preparation firm and assist individuals and businesses with their tax needs. Having your own business allows you to specialize in particular niches and areas of interest, like working with high-net worth individuals or real estate agents and companies.
EA salary information
An EA's salary is dependent on several factors including experience, location, and the type of experience. However, the salary range is typically between $42,000 for entry-level EAs, and up to $60,000 for senior-level EAs1.
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 credential 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.
You will also need to pass the Special Enrollment Exam (SEE), more often simply called the EA Exam.
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.
Take the next step: How to become an enrolled agent
Passing the Special Enrollment Examination
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.
Take the next step: 10 Tips to pass the SEE Exam
Background check
After you pass your test but before you begin your Enrolled Agent career, you 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.
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 EA Exam, Becker will be there to help you meet your goals! Sign up for our newsletter and be the first to know when our EA Exam Review is available so you can start studying!
Resources
- https://www.ais-cpa.com/enrolled-agent-ea-salary-guide/