Enrolled Agent


WHAT IS AN ENROLLED AGENT

Enrolled Agents Today

ENROLLED AGENTS (EA) ARE AMERICA'S TAX EXPERTS

Enrolled Agents (EA) are federally-licensed tax practitioners who may represent taxpayers before the IRS when it comes to collections, audits, and appeals. As authorized by the Department of Treasury's Circular 230 regulations, EAs are granted unlimited practice rights to represent taxpayers before IRS and are authorized to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS. The enrolled agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department. Enrolled agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers at all administrative levels within the IRS.

PRIVILEGE AND THE ENROLLED AGENT

The IRS Restructuring and Reform Act of 1998 provides federally-authorized practitioners (those bound by the Department of Treasury’s Circular 230 regulations) with a limited client privilege. This privilege allows confidentiality between the taxpayer and the enrolled agent under certain conditions. The privilege applies to situations in which the taxpayer is being represented in cases involving audits and collection matters. It is not applicable to the preparation and filing of a tax return. This privilege does not apply to state tax matters, although a number of states have an accountant-client privilege.

CONTINUING EDUCATION

In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing education every three years in order to maintain their active enrolled agent license and practice rights. NAEA members are held to a higher standard than the IRS' minimum 72-hour continuing education requirement. NAEA members must complete 30 hours of IRS-approved continuing education hours each year (which would lead to a total of 90 hours for each three-year EA enrollment cycle period). Because of the expertise necessary to become an enrolled agent and the requirements to maintain the license, there are only about 52,600 practicing enrolled agents.

THE DIFFERENCES BETWEEN ENROLLED AGENTS AND OTHER TAX PROFESSIONALS

Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are awarded unlimited representation rights to represent taxpayers before IRS. Unlike attorneys and CPAs, who are state-licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.



The History of Enrolled Agents (E.A.)

The history of Enrolled Agents dates back to 1884 when Congress authorized the Enabling Act of 1884, also known as the Horse Act of 1884. Congress recognized a need to regulate individuals representing citizens dealing with the Treasury Department about their claims against the U.S. This act gave the Secretary of the Treasury the authority to regulate who can represent these individuals.

Many people had claims for losses from the Civil War. The Treasury Department was being overwhelmed by some of the most dubious claims you can imagine. Horses were the number one reason for this act. It seemed as most of the horses in America were thoroughbreds. If the horses weren't thoroughbreds, then they were show horses. To make matters worse, there were more claims for horses, than there were horses lost in the Civil War.

These comparisons weren't just limited to livestock. It seems as if suddenly and miraculously, everything turned from junk to perfection. Timber used for log cabins became milled black walnut. If it was made pot metal, it became disguised silver. Rowboats were turned into yachts. And the claims became more and more ridiculous.

Congress recognized that a person wasn't making these claims, it was their agents who represented them. These agents would seek out people who might have a claim, right or wrong and for a percentage of what they could collect from the government, they would represent you. Most of these agents were confidence men or scam artists. Congress decided that these agents had to be regulated hence the Enabling Act of 1884. President Chester Arthur responded by signing the Act which was known as the Horse Act of 1884. A standard was created, suitability checks, criminal records, moral character, all of these factors along with testing. The people who passed the requirements were known as Enrolled Agents.

Back in the 1880's, you didn't have to go to college or even graduated from high schools to be a Doctor or Lawyer. You simply applied to the school of your choice and if accepted, off you went. No regulations. CPA's were nonexistent. Again, because the standards for practice as an Attorney were so lax, they and CPA's, as they became evolved, were required to take and pass the enrolled agents exam, in order to practice before the IRS until 1936. Since 1965, with the strict State guidelines and regulations for members of the Bar & CPA's, the Treasury department automatically recognizes members of the Bar and legitimate CPA's. Only Enrolled Agents CPA's and Attorney’s at Law can represent you before the IRS.

Today, Enrolled Agents must pass a difficult two-day examination given annually by the IRS. Less than 1/3 of test-takers pass this test and become Enrolled Agents. They are required to obtain at least 24 hours of continuing education credits to maintain their status, yearly. They must complete 72 hours during a 3-year cycle.

In 1994, the initials E.A. were finally designated by the Treasury Department, as that of Enrolled Agent