An Enrolled Agent (EA) is a tax professional recognized by the Internal Revenue Service (IRS) as an expert in personal and business tax laws. This individual can represent their clients before the IRS for tax issues, including audits, collections, and appeals.
This article will define the Enrolled Agent (EA) designation, situations where you should hire them, and the qualifications of people who have earned the EA designation.
What Is an Enrolled Agent (EA) Designation?
The Enrolled Agent (EA) designation is awarded to a tax professional by the IRS after thoroughly reviewing the experience, conducting background checks, and completing official tests. Therefore, a professional with an EA designation is often considered the most experienced and proven expert in tax law.
Not all tax professionals are EAs. Enrolled Agent is a designation similar to the Certified Public Accountant (CPA) designation. Most EAs will flag it next to their names on business cards, websites, social media, and other identifiable business material.
How Can an EA Help Me?
EAs have unrestricted practice rights, meaning they can represent any taxpayer for any tax matter in any IRS jurisdiction.
An Enrolled Agent (EA) can do all of the following:
- Help you with tax planning
- Give tax advice
- Break down complicated tax rules and exceptional cases
- Prepare, sign, and file your tax return
- Represent you during an audit
- Handle any other tax matters
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Should You Hire a Professional With an EA Designation?
Hiring an EA is an excellent choice if you are looking for help with a tax-related matter. The IRS grants the EA designation to those who have succeeded in proving they are amongst the most knowledgeable on taxes in every field. This includes personal, business, real estate, liquid assets, and trust. Whatever your tax issues, chances are that an EA can help.
You should look into hiring an Enrolled Agent if:
- You need help planning around current or future taxes
- You need advice on complicated tax rules that don’t have clear solutions
- You need help preparing, signing, and filing a tax return
- You need representation before the IRS during an audit
- You need help with making payments on delinquent or exceptional tax collections
- You are starting your own business and want help implementing new tax rules
- You are a business owner that wants to minimize the taxes imposed
- You are planning an estate and need help with the taxes
- You have other tax-related issues
Due to their expertise, EAs may charge a higher fee than other tax professionals with a narrower knowledge niche. Therefore, consider your budget or reach out to several EAs to get a quote.
Also, do not hesitate to inquire about previous experience. In some cases, you may find reviews or testimonials from previous clients.
As detached agents of the IRS, EAs are held accountable and expected to keep their tax knowledge updated by the IRS. You can confirm the current status of someone’s EA designation by contacting the IRS directly. More information is available here.
Can I Consult a CPA or an Attorney for My Tax Matters Instead?
The IRS recognizes EAs as the ultimate tax matter experts. When it comes to taxes, EAs are generally considered to have more credibility than CPAs. EAs work exclusively with taxes, whereas taxes are just one of many streams a CPA may work on. Due to the specialized nature of their work, an EA is likely to have much more specialized knowledge of taxes than CPAs.
The same considerations apply when comparing an EA with an attorney. EAs can likely provide better advice and information regarding tax law than an attorney can. Attorneys specializing in tax law only specialize in certain aspects of how tax law works and in representing it as a defense. Attorneys are best at dealing with lawsuits, ratifying documents for business deals, or emergent issues related to the law. EAs can prevent these issues with proper tax planning and troubleshooting.
What Does It Take to Earn and Maintain the EA Designation?
A prospective EA must pass a three-part test certified by the IRS or have experience as a former IRS employee.
The IRS test contains 100 multiple choice questions. It covers a broad spectrum of tax-related laws on limits, income brackets, and phase-outs. The three tests are conducted during a scheduled period, with a time limit of 3.5 hours per test.
The three parts of the EA exam are
- Individuals – This part of the exam tests the candidate’s knowledge of personal taxes for individuals.
- Businesses – This part relates to all business types, big and small, including LLCs and corporations.
- Representation, Practice, and Procedures – This final section of the exam relates to the methods and protocols implemented by the IRS, the automated system of how taxes are counted and collected, and how the EA can properly serve clients in these matters when presented to the IRS.
Courses are available online and are authenticated through the IRS by providers who ensure the information being learned is up to date and relevant to the current tax models. The full process of earning a designation can take anywhere from 3 to 8 months of coursework and practice testing, depending on how much a prospective EA knows about tax law already. The EA designation can be revoked at any time by the IRS for malpractice.
Alternatively, former IRS employees can become EAs if they have enough experience without the need for an exam. These are exceptional cases reserved for employees with extensive past technical experience.
To maintain the designation, an EA must undergo 72 hours of continuing education courses every three years through an IRS-approved Continuing Education (CE) provider. A minimum of 16 hours of course material must be completed annually, with a minimum of 2 hours dedicated to ethics.
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About the Author
Ash & Pri
Ash & Pri are the founders of AshandPri.com, where they empower readers to make smart money decisions across all aspects of life.
After achieving their FIRE goals in their 30s, they launched their blogging business in late 2021 and scaled it up quickly to generate a consistent income within a few months.
You can find their expert financial advice & tips featured on sites like Forbes, GoBankingRates, Apartment Therapy, MSN, and more.