What is an Enrolled Agent?
An "Enrolled Agent" is the
federally-licensed tax professional who has demonstrated special competence
in tax preparation and also has
practice rights to represent any taxpayer regarding any tax matter before
any IRS office. Enrolled Agents are empowered by the United States Department
of the Treasury to represent taxpayers before all administrative levels
of the Internal Revenue Service for audits, collections, and appeals.
Enrolled Agents have been regulated by Congress since year 1884!
Enrolled Agent status is the HIGHEST credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete a minimum of 72 hours of continuing professional education every three years which gets reported to the IRS.
Frank DiPaola, EA and Janet McDonald, EA are Enrolled Agents who are Members of the: National Association of Enrolled Agents (NAEA)
What Are the Differences Between Enrolled Agents and Other Tax Professionals?
Agents" Compared to "Certified Public Accountants (CPA's)"
Unlike certified public accountants (CPA's) and attorneys, who may or may not choose to specialize in taxes, ALL Enrolled Agents specialize in taxation. While CPA's and attorneys are licensed by the STATES, Enrolled Agents are federally-licensed by the United States Department of Treasury.
CPA's and attorneys do not have a continuing professional education (CPE) requirement by the IRS. Their CPE requirements vary since they are governed by their respective state licensing boards. Enrolled Agents are required to complete a minimum of 72 hours of continuing professional education every three years which gets reported to the IRS.
"Enrolled Agents" Compared to "Annual Filing Season Program (AFSP) Participants"
The Annual Filing Season Program (AFSP) is a voluntary program in which the participant does NOT have unlimited representation rights like those held by Enrolled Agents, CPA's and attorneys. The participant only has LIMITED representation rights.
AFSP participants are only required to pass a basic one hundred question exam on individual taxation and complete a minimum of 18 hours of continuing professional education each year in order to receive a Record of Completion. Enrolled agents MUST either be a former IRS employee with specialized tax law experience OR an individual that passes a stringent and comprehensive three-part IRS examination that covers all aspects of the United States tax code including, but not limited to, taxation of individuals, corporations, partnerships, estates, trusts, practice and procedures, and ethics. Enrolled Agents must also complete a minimum of 16 hours of continuing professional education each year.
Are There Really That Many Tax Changes Each Year That Might Affect Me?
YES! Every year there
are numerous changes to the tax laws and tax code. The National Taxpayer
Advocate has identified the complexity of the tax code as the most serious
problem facing taxpayers and the IRS alike. The Internal Revenue Code
(IRC) sections now number from 1 to over 9,899 and encompass more than
72,500 pages! A recent review of the tax code turned up that it includes
3.8 million words and that there had been approximately 4,428 changes
to the code over the preceding ten years, an average of more than one
Frequently, provisions are added to the tax code and others expire. Some provisions are indexed for inflation, so they change as well. Some are effective at the beginning of the year, while others become effective on the date a particular bill or law is signed. The tax code and regulations are very complex and Congress is continually changing the tax laws.
Enrolled Agents take continuing professional education courses each year to keep up with the changes and have research tools at their disposal to constantly monitor updates. Most taxpayers do not have the time, desire, or the research tools necessary to read the volumes of material that are added to or deleted from the tax code each year. When you choose an enrolled agent, you know your preparer keeps up with the rules and regulations and will use this expertise to do the best job possible for you!
Why Should I Choose An Enrolled Agent Who Is A Member of the National Association of Enrolled Agents (NAEA)?
IRS recommends using
a tax preparer that is a member of a professional organization that
offers continuing education and other resources, and holds members to
a code of ethics.
NAEA goes beyond IRS’ recommendations by requiring its members to fulfill continuing professional education requirements that exceed the IRS’ required minimum. Members are required to maintain a standard of 30 hours of continuing professional education per year or total of at least 90 hours in a three year period, rather than the minimum IRS standard for an enrolled agent of 16 hours per year with a three year total of 72 hours.
In addition, NAEA members must adhere to a stringent Code of Ethics and Rules of Professional Conduct. Members of NAEA belong to a strong network of experienced, well-trained tax professionals who effectively represent their clients and work to make the tax code fair and reasonably enforced.
What is "Representation"?
Taxpayers who find themselves in tax trouble are allowed to represent themselves before the various administrative levels of the IRS. However, most taxpayers facing IRS collection action, an IRS audit, or an appeal of any collection or examination action would be wise to send in an expert in his or her place. Taxpayers who are represented have a guide through the process, and someone authorized to speak on his or her behalf (and in his or her place) and ensure the matter is settled fairly. Enrolled agents are authorized by the IRS to represent taxpayers before the IRS. The advantage of working with an enrolled agent lies not only in the depth of experience and understanding of how to prepare a tax return, but the knowledge of tax law that may be used to represent taxpayers before the IRS.