Enrolled Agent (EA)

What Is an Enrolled Agent?

An enrolled agent (EA) is a tax professional authorized by the United States government to address taxpayers in issues with respect to the Internal Revenue Service (IRS). EAs must finish an examination or have adequate experience as an IRS employee and pass an individual verification. Enrolled agents first appeared in 1884 due to issues emerging with Civil War loss claims.

Grasping Enrolled Agents

An enrolled agent is a federally licensed tax practitioner who has unlimited rights to address taxpayers before the IRS for any issues connecting with collections, audits, or tax appeals. As indicated by the National Association of Enrolled Agents (NAEA) — the organization that addresses licensed EAs — they are permitted to exhort, address, and prepare tax returns for individuals, corporations, partnerships, estates, trusts, and whatever else that is required to report to the IRS.

History of Enrolled Agency

During the 1880s, there were lacking attorney standards, and Certified public accountants (CPAs) were not in presence. The enrolled agent calling started after fraudulent claims were submitted for Civil War losses. Congress made a move to direct EAs to prepare Civil War claims and address residents in their interactions with the Treasury Department. In 1884, the Horse Act was endorsed into law by President Chester Arthur to lay out and normalize enrolled agents.

In 1913, when the 16th Amendment was passed, EA duties expanded to incorporate tax planning and settling taxpayer debates with the IRS. In 1972, a group of enrolled agents teamed up to form the NAEA to address the interests of EAs and increase the professional development of its individuals.

Requirements of Enrolled Agents

EAs are not required to get college degrees. An individual with five years of taxation experience with the IRS might apply to turn into an enrolled agent without taking the exam. They must complete 72 hours of continuing education like clockwork. CPAs and attorneys might act as enrolled agents without taking the exam.

Enrolled agents are the main tax professionals who don't need a state license. Be that as it may, they have a federal license and can address a taxpayer in any state. They must maintain the particulars of the Treasury Department's Circular 230, which gives the rules overseeing enrolled agents. Enrolled agents that have a NAEA participation are likewise subject to a code of ethics and rules of professional conduct.

Benefits of Using an Enrolled Agent

NAEA individuals must complete 30 hours out of each year of continuing education or 90 hours like clockwork, which is altogether more than the IRS essential. Enrolled agents offer tax planning, tax arrangement, and representation services for organizations and individuals.

Enrolled Agents versus Other Tax Professionals

Enrolled agents are required to demonstrate their capability in each part of taxes, ethics, and representation, not at all like CPAs and attorneys, who may not spend significant time in taxes.

EAs are not employees of the IRS. Moreover, they can't display their credentials while addressing clients and advertising their services. They can't utilize the term certified as part of a title or induce an employee relationship with the IRS.

Outlook for Enrolled Agents

The hiring of tax examiners is projected to decline 2% from 2018 to 2028 as the growth of the tax examiner industry is closely tied to changes in federal, state, and nearby government spending plans. The growth of the enrolled agent industry relies upon industry rule changes and the demand for tax services. In any case, there is a developing requirement for EAs in private and public accounting firms, law firms, corporations, neighborhood and state government agencies, and banks.