An Enrolled Agent is authorized by the federal government to represent individuals, businesses, corporations, estates, trusts and organizations before the IRS. Though not every taxpayer needs an EA, this well-trained tax professional can help when you face a difficult tax situation.
The process of becoming an Enrolled Agent is rigorous. Before an individual can add that appellation to his or her name, it’s necessary to pass an exam. The Special Enrollment Exam is actually three tests in one with each part lasting 3.5 hours. The broad areas covered are Individuals, Businesses and Representation, Practices and Procedures.
More specific areas covered include but are not limited to income and assets, deductions and credits, sole proprietors, farmers, forming a corporation and corporations. Further topics for study are family partnerships, accounting methods, home office, employment taxes, cost of goods sold, accounting methods and S income.
Another way to join this workforce is to have worked for the IRS for at least five years in a position that requires knowledge of the tax code. Regulations also require that once individuals are EAs they must take 72 hours of continuing education courses every three years and 16 hours annually in order to stay on top of ever-changing taxation laws and procedures.
Since EAs have licenses issued by the IRS. it holds them to a high ethical standard. A background check is run to ensure that they have filed their taxes on time and have no outstanding balances. They must demonstrate competence.
Within the last 10 years there must not have been any felony convictions or felony convictions for dishonesty or breach of trust. Since honesty is a target value as set by the IRS, an EA must not try to deceive or defraud you. Not every taxpayer needs an EA, but if your business or you are ever audited, it’s good to have one on your side.
Unlike CPAs, who are state-based, these tax experts can represent you anywhere in the country. As your advocate before the IRS, they will work hard to see that you are treated equitably in accordance with the tax code. If you owe back taxes or did not file your returns or did not pay your penalties, EAs will try to negotiate a payment plan that’s favorable to you. Discussions about penalty abatement may also on the table.
Besides representing you during an audit or preparing your state and federal returns, other work areas for this his tax professional are tax fraud, tax evasion, debt relief and trying to get satisfaction under the innocent spouse rule.