What is an Enrolled Agent?
Enrolled Agent (or EA) is a type of tax advisor who is a federally authorized tax practitioner empowered by the U.S. Department of the Treasury. Enrolled Agents represent taxpayers before the Internal Revenue Service (IRS) for tax issues including audits, collections, and appeals.
Enrolled agent status is the highest credential awarded by the IRS. The EA credential is recognized across all 50 U.S. states. Attorneys and certified public accountants (CPAs) are licensed on a state by state basis and are also empowered by the Department of the Treasury to represent taxpayers before the IRS. According to the National Association of Enrolled Agents, there are approximately 53,000 practicing EAs in the United States.
The position of enrolled agent was created as a reaction to fraudulent war loss claims in the wake of the American Civil War with roots tracing back to the Enabling Act of 1884, or General Deficiency Appropriation Bill (H.R. 2735), also known as the “Horse Act of 1884,” which was signed into law by President Chester A. Arthur on July 7, 1884. After the Civil War, many citizens faced difficulties in settling claims with the government for property confiscated for use in the war effort. As a result, Congress endowed enrolled agents with the power of advocacy to prepare claims against the government. From 1884 through the early 20th century, this statute remained largely unchanged.
When the Revenue Act of 1913 was passed, signed into law by President Woodrow Wilson on October 3, 1913, the scope of the enrolled agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable. As income, estate, gift and other sources of tax collections became more complex, the role of the enrolled agent increased to include the preparation of the many tax forms that were required. As a result of this complexity, audits became more prevalent and the enrolled agent role evolved into taxpayer representation, promulgating a series of statutes which were combined into a single Treasury Department Circular in February 19, 1921, known as Circular 230, to address “the laws and regulations governing the recognition of agents, attorneys, and other persons representing claimants before the Treasury Department and offices thereof.
To become an enrolled agent, an applicant must obtain a PTIN and achieve passing scores on all three parts of the Special Enrollment Examination, which covers many aspects of the Internal Revenue Code, or must have worked at the IRS for five consecutive years in a position which regularly engaged in applying and interpreting the provisions of the Internal Revenue Code and the regulations relating to income, estate, gift, employment, or excise taxes. A background check, including a review of the applicant’s personal and business tax compliance, is conducted after an applicant files Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, within one year of completing all three parts of the examination.
To qualify for renewal as an enrolled agent, an individual must complete 72 hours of continuing professional education (CPE) every three years, including two hours of ethics or professional conduct in each of the three years. To prevent overloading of CPEs in any year of an enrollment cycle, the IRS requires a minimum of 16 hours of CPE every year.
Individuals must renew their PTIN between October 16 and December 31 of each year.
Individuals must file Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, within the applicable renewal period. Renewal periods are based on the last digit of an enrolled agent’s Social Security number or tax identification number.
The right to practice before the Internal Revenue Service is regulated by Federal statute, and persons authorized to practice are known as “Federally Authorized Tax Practitioners, or “FATPs”. The FATP status is granted to attorneys, certified public accountants, and enrolled agents, each having unlimited representation rights before the Internal Revenue Service. These practitioners may represent their clients on any matters including audits, collection actions, payment issues, tax refund matters, and appeals. FATP status is also granted with limited representation rights to enrolled actuaries, enrolled retirement plan agents, and registered tax return preparers.
Enrolled agents, like other FATPs, are subject to a set of procedures and regulations described in Treasury Department Circular No. 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service.
When practicing before the Internal Revenue Service, enrolled agents may not use the term “certified” in describing their professional designation. An enrolled agent admitted to practice before the Internal Revenue Service may not state or imply that an employer/employee relationship exists between the enrolled agent and the Internal Revenue Service.
Practice in federal courts is limited. Enrolled agent status does not authorize the enrollee to practice before the United States Tax Court or in any other court. Practice in U.S. Tax Court is limited to members of the Bar of the Court. The Internal Revenue Code states, “No qualified person shall be denied admission to practice before the Tax Court because of his failure to be a member of any profession or calling.” Non-attorneys must pass a Tax Court exam for admission to the Bar of the Court. Attorneys are admitted to the Bar of the Tax Court without having to take the Tax Court examination. Practice in other federal courts is generally limited to persons licensed as attorneys.
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