Enrolled Agent

“Enrolled” means to be licensed to practice by the federal government, and “agent” means authorized to appear in the place of the taxpayer at the IRS. Only enrolled agents, attorneys, and CPAs 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 get certified in two different ways:

1. They can take and pass the Special Enrollment Examination (SEE), which covers all aspects of individual and business tax law, as well as issues around tax representation, practices and procedures. Enrolled agents must also complete 72 hours of continuing education courses every three years to maintain their enrolled agent status.

2. If they worked at the IRS for five or more years, they might be able to obtain enrolled agent status without taking the SEE. Many enrolled agents are former IRS agents, so this option seems to be pretty popular. However current IRS employees cannot be certified as enrolled agents.

All enrolled agents have also successfully passed a background check. It’s safe to say that when you approach an enrolled agent, you’re speaking with someone who knows tax law inside and out.

Enrolled agents have something called unlimited practice rights (also sometimes called unlimited representation rights). This means that they can help anyone—individuals, businesses, and any other entity—with any aspect of their taxes.

Enrolled agents can, among other things:

• Help you with tax planning
• Give you tax advice and help you navigate complicated tax rules
• Prepare, sign, and file your tax return
• Represent you before the IRS when dealing with audit, payment, or collection issues
• Assist you with any other tax matters

Enrolled agents aren’t the only tax professionals with unlimited practice rights—attorneys and certified public accountants (CPAs) have them, too. So what’s the difference?

The first major difference is that enrolled agents are pure tax specialists, focused solely on tax compliance issues, whereas most CPAs and attorneys are not. Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are given unlimited representation rights 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.

So, if you think your taxes are too complicated to file yourself using online software and are looking for help from a professional, consider hiring an enrolled agent.

CPAs don’t necessarily specialize in taxes. They provide a range of services that span the entire accounting profession, including corporate finance, estate planning, financial planning, and reporting. If you need an expert to tell you how to position your business to minimize your tax bill, talk to a CPA that has experience with tax filing and compliance.

Attorneys don’t necessarily specialize in tax compliance either. If you’re incorporating or dissolving a business, evaluating a business deal, getting sued, or looking for help with anything else that goes beyond the boundaries of pure tax advice or accounting, talk to an attorney.

You can figure out whether someone is a certified enrolled agent, or find enrolled agents in your zip code, using this handy IRS directory of certified tax return preparers.

Simply select your country, input your zip code and search radius, type in the person’s surname if you’re looking up a specific individual, check the “Enrolled Agent Credential” checkbox, and press “Search.”

The form will spit out an alphabetical list of all nearby credentialed enrolled agents, along with a list of any other certifications they may have (e.g., whether they’re a licensed attorney, a CPA, an enrolled actuary, etc.).

If you’re not sure whether a certain tax advisor or preparer is legitimate, the IRS recommends looking them up with the Better Business Bureau. You can also personally ask the IRS to verify the status of an enrolled agent by emailing epp@irs.gov with the agent’s first and last name, address (if available) and enrolled agent number (if available).

Avoid hiring someone who bases their fee on a percentage of your income tax refund—most licensed, professional tax preparers will never bill you this way. Also make sure that they e-file, since the IRS requires that preparers who do taxes for more than 10 clients must file electronically.

Never send a tax document to the IRS without reviewing it yourself, and make sure that the preparer signs the documents themselves and includes their Preparer Tax Identification Number (PTIN). Licensed enrolled agents, CPAs, and attorneys all have PTINs, and are legally required to include them on any returns they are paid to fill out.

Also, never, ever sign a blank return. If your preparer asks you for one, that’s one of the surest signs that you might be dealing with a tax prep scam.

The IRS Restructuring and Reform Act of 1998 allow federally authorized practitioners (those bound by the Department of Treasury’s Circular 230 regulations) 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.

In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing education, reported every three years, to maintain their enrolled agent status. NAEA members are held to a higher standard, they are obligated to complete 30 hours per year (for a total of 90 hours per three year period). Because of the expertise necessary to become an enrolled agent and the requirements to maintain the license, there are only about 46,000 practicing enrolled agents.

Enrolled agents are required to abide by the provisions of the Department of Treasury’s Circular 230, which provides the regulations governing the practice of enrolled agents before the IRS. NAEA (National Association of Enrolled Agents) members are also bound by a Code of Ethics and Rules of Professional Conduct of the Association.