An EA or an enrolled agent is a federally licensed tax practitioner who has the right to represent taxpayers before the IRS. EAs prepare taxes, help with audits and tax appeals, advise, represent and prepare tax returns for people corporations, partnerships, estates, trusts and anyone else that is required to report to the IRS.
How To Become an EA
In order to become an EA, you need to pass a three-part comprehensive exam that covers ALL aspects of the tax code. That seems pretty daunting… The main topics include: Individuals, Businesses and Representation, Practice and Procedure. EAs must have passed a background check conducted by the IRS that not only investigates your criminal and employment histories but also your financial records such as your personal tax history. Basically, if you don’t file your own taxes, they won’t let you become an EA. In addition to the background check and examinations, you must also obtain a PTIN or Personal Tax Identification Number from the IRS and take continuing education courses every three years to stay up to date on the newest items of the tax code.
How EA’s Began
According to Investopedia, Enrolled Agents began after fraudulent claims were submitted for Civil War losses. In the 1880s, there were inadequate attorney standards, and CPAs were not in existence. Congress took action to regulate EAs to prepare Civil War claims and represent citizens in their interactions with the Treasury Department. In 1884, the Horse Act was signed into law by President Chester Arthur to establish and standardize enrolled agents.
An EA is the highest distinction for practice before the IRS. It is comparable to a CPA, however a CPA has more expertise and training in the fields of accounting and during the year work, vs the EA who specializes primarily in tax preparation and representation only.
In 1913, when the 16th Amendment was passed, EA duties expanded to include tax preparation and resolving taxpayer disputes with the IRS. In 1972, a group of enrolled agents collaborated to form the NAEA to represent the interests of EAs and increase the professional development of its members.
According to the NAEA (National Association of Enrolled Agents), this certification benefits taxpayers in two unique ways: Emphasis on Ethics, Proof of Expertise.
By hiring an EA to do your taxes, you can save a whole lot of time and effort and rest assured that you are in good hands. The CE requirements ensure that EAs have the specific knowledge to effectively perform tax related tasks and stay up to date with the ever-changing tax code. If you are wondering, our owner, Ward is an EA.