A Career Alternative: The Enrolled Agent
Session Moderator: I'm excited about our workshop leader, Eva Rosenberg, a.k.a. Tax Mama. She has a very informative workshop planned for you and has served it up in her unique style that has resulted in a worldwide following.
Eva has decades of tax and business experience, across a surprising spectrum of industries. Combining formal training at national CPA firms and years in the trenches with her warm, homey style, she does her best to protect her brood from the ravages of the U.S. Income Tax system.
Eva's free, weekly newsletter, Ask TaxMama is a great resource. Her office in Southern California specializes in small businesses, non-filers trying to get back into the system and Internet-based businesses across the globe.
Eva, thanks for being here today!
Eva Rosenberg: Thank you so much for joining us today. I know, it's hot and beautiful, and you'd rather be outside. So, your dedication to your future is appreciated.
All accounting majors - and the rest of world - seem to know about Certified Public Accountants. Going through school, through the Accounting Club, in all our classes, much of the focus is becoming a CPA when you graduate.
You already know the long, competitive road you must travel to get there. Not only do you have to work for a firm for two years, you still have to pass the exam in order to have any chance at good income and a future.
What's your other option? I'll bet no one ever told you about Enrolled Agents. When I was in college, I'd never even heard the term. In fact, it wasn't until the year after I completed my Master's Degree that I ever even heard of this profession. So, I'm going to tell you about the best-kept secret in accounting - the Enrolled Agent the EA.
EAs are very special tax professionals. We've been around since right after the Civil War. Our license comes from the U.S. Treasury. So unlike CPAs, we can practice nationally, without re-certifying or re-testing state-by-state. Like CPAs and attorneys, we are governed by the U.S. Treasury Department Circular 230, the ethical bible of tax representation. Recently, through the efforts of Enrolled Agents throughout the country, we obtained permission for accountants to be able to keep their EA status when they became CPAs. (In the past, upon getting certified, accountants had to sacrifice their EA cards). Due to the national representation capability, many CPA's are becoming EAs. (In fact, after a seminar I recently held, I got a 'thank you' from someone at KPMG saying that she was inspired to take the EA exam that fall.)
What do EAs do?
We prepare and sign tax returns, represent the client at tax audits, intercede for our clients on collections issues, set up installment tax liability, sign consents to extend the statutory period for assessment. In fact, EAs may take the Tax Court exam and represent taxpayers before the court, without having gone to Law School or sitting for the Bar Exam.
Although, I will admit, I know some Enrolled Agents whose reputations are so strong that some Tax Court judges will allow them to represent clients even though they have not taken the Exam. In short, in the eyes of the Internal Revenue Service, we are the nation's tax specialists.
Session Moderator: Eva, how does the public view EAs?
Eva Rosenberg: In general, most people don't really know about us. And despite how active I am in educating people about EAs, I will admit, many of my clients still tell their friends, or introduce me as a CPA. Let's face it; with hundreds of thousands of CPAs in the country, they've got a bigger public relations budget. (When was the last time you saw a Milquetoast accountant on a TV show who was an EA? No - you've seen CPAs!)
Session Moderator: So, they view you as qualified as a CPA?
Eva Rosenberg: They can't tell the difference. But, within the IRS? Frankly, since I spend a great deal of time in IRS offices, I have gotten to know many auditors and collections officers. We get into conversations. Many of them admit that when they see the rep's power of attorney and it says EA, they perk up a bit. The EA tells them two things:
1. They are likely to be up against someone who understands the tax code.
2. They will be treated with courtesy.
No offense to the CPAs here, but IRS staff admit that, too often, when a CPA or attorney comes in they are full of ego and bluster. Some idiot must have taught them that the way to handle an audit is to be rude, overbearing and to shove their knowledge down the throat of the agent. Imagine how much the agent loves that treatment! Remember - the auditor has power and discretion in your case.
Janet Llewellyn: Are there any EA firms out there? It seems that the only ones I've heard of are independent agents.
Eva Rosenberg: Janet, there are several firms, but they are all small firms - except H&R Block. They are often run by EA’s.
Moving back to audits -- In fact, during one audit, I knew I was going to have a problem because I was dealing with an entertainment industry client with incomplete information. Right up front, I told her the limitations in my presentation. These were going to be my problem areas. And I asked her how she could help me make it work out for the taxpayer. So she helped me.
But, in the course of chatting, she told me that she had a similar situation the day before. The CPA had come in representing a man, in the entertainment industry, the son of a famous performer. He was also missing information - and tried to trick the auditor - and to bully her into giving his client credit for expenses he couldn't prove. The auditor had the discretion to insist on getting documentation - and did. But she admitted to me, "I really felt sorry for his client. If he had come into the office without his accountant, I'd have probably talked it over with him to get a feel about whether he really incurred those expenses for business. I'd have probably given it to him. But his accountant was so rude and made me so mad. Maybe I was a little more nasty than I needed to be." Can you blame her?
Remember, those are people we're dealing with.
Before I go on. Thought I'd take a break for questions?
As an Enrolled Agent, I have represented people in Hawaii, Texas, New York, all over the place. No government agency has asked me for anything more than my EA number (except for the Los Angeles County Tax Assessors' Office, but they're tough on everyone).
Janet Llewellyn: What about salary expectations?
Ken Merwin: Eva - can you point out resource(s) for courses (preferably on-line) to prepare one for the EA exam?
Eva Rosenberg: good question Janet: Depending on where you are working, EAs with solid tax experience can earn as much as CPAs. One student of mine passed the EA exam on the first try, with just a little tax preparation experience. She does not have her CPA, but Susan is the manager of a tax department at KPMG in Los Angeles - where they have their choice of all the CPAs in the world. They must think this EA is pretty hot. Typically, EAs charge just a bit less than CPAs for professional services. Although, the more experienced ones have hourly billing rates that are higher than CPAs. I charge $150.00 per hour for consultations, audits and representation. Once CPA I just spoke to only receives $100.00 per hour. Many EAs tend to be better at the fundamentals, like bookkeeping and payroll. For those areas, they typically charge between $25.00 and $50.00 per hour in this part of the world. Comparably less in more rural, less expensive areas.
Session Moderator: Is this because the designation is not widely known, do you think?
Janet Llewellyn: What about career path? Is it similar to a CPA?
Let me answer Ken's question first. There are three excellent resources for materials. The first is the IRS, the application, Form 2587 should be out by July 1st - order it NOW. Order all the materials in the booklet and start studying. The application book includes an order form for the materials - send it in ASAP. You will get a box of publications. There are just a couple more study tools to order. The next place is my favorite study tool. Jim Bank's FasTax ($54.95). This is wonderful! Jim put together an excellent study tool in his disk. It covers about 5 years worth of exams, with a testing feature to help you gauge your progress. Several of my students figured out that they can print out some of the questions and answers each day and read them throughout the course of the day. By the end of each day, they'd memorized 10 questions and answers - and could visualize them for the exam. The next source offers a couple of options: Gleim Publishing Federal Tax Questions Book ($29.95 w/software ) or EA Exam Series ($92 book + $140.00 software)
When I was teaching the review course, I used the Federal Tax Questions Book, which contains tax questions and explanations of the answers from all the exams that covered taxes (CPA, Bar, EA, etc.) It was cheap and handy. Now, though, they have come out with a set of books that are focused just on the EA exam. They've added software to both sets. Good tools. Good value.
Going back to Janet's question about the career track. It's much less work than getting your CPA. And you can do it while you're still in school. You're already good at taking exams? All you have to do is pass a really intense, two-day exam offered each fall by the IRS. No sweat. Pass the test and you're certified. No degree necessary. Even college students can become Enrolled Agents. (I've taught people with limited English and limited tax background to pass the EA exam in one summer. So you should be able to pass - if you really cram.)
Eva Rosenberg: First, file an application to take the Special Enrollment Examination (SEE) which will take place nationwide on September 28 and 29, 2000. Select Form 2587 from the forms on this page: www.irs.ustreas.gov/prod/forms_pubs/forms.html or http://ftp.fedworld.gov/pub/irs-pdf/f2587.pdf- in Adobe Format.
Oh, the exam? Actually, it's not a piece of cake. You'll really have to apply yourself. There are four parts, over two days. They cover:
It is offered only once each year. This year, it will be on September 28 and 29, 2000. Although you don't have to spend two years in a CPA firm, once you get certified, of course, you'll have to do CPE. The IRS expects 24 hours each year (72 every three renewal period). But the National Association of Enrolled Agents requires 30 hours. We are also bound a stringent code of ethics ... and are regulated by IRS's Circular 230, just like CPAs and attorneys. The results tend to come out in about January or February. Once you pass the written exam and apply for your T-Card, there's one more test to pass, a background check. They will look to see if you are in compliance on your own tax filings, see if there you have a criminal record and generally, get an overall sense of your probity. If you've received your card, usually after tax season is over, you know you've passed - and can breathe a sigh of relief.
If you can find a review course in your area, I really recommend that you take it. It's much easier to commit to doing the homework and study assignments when you have to face an instructor and a room full of impatient students.
Does anyone here teach an exam review course?
Some classes I know about tend to be in California:
CSEA in Tustin, CA on Saturday beginning July 15 Cost is $425 including all books. The class has nine meetings, 8 on Saturday from 8:30 to 3:30 and the last on Sunday. Bill Geideman - his phone is 714-669-0453 .
Jenny: What kind of national associations exist for EAs?
Eva Rosenberg: The NAEA - the National Association of Enrolled Agents www.naea.org is based in the Washington DC area. They have chapters all over the country. There are other accounting organizations that welcome CPAs and other accountants as well. By the way, NAEA has an affiliate membership for other professionals.
Other organizations include NATP - National Association for Tax Professionals.
Inland Society of Tax Consultants (But I think they are Calif based)
Check with your local university. Many of them offer review courses through their extension departments. And if you find that they don't? Well, then...sounds like an opportunity for you, doesn't it? Pass the exam and be a hero - create the course to help others...and develop a stream of income technical college student...they do not get much for yourself. What better credentials do you need? After all, you'll have passed the exam! What a way to start a practice.
Ken Merwin: Eva - do you think the EA program would be do-able for a 2 year in the area of tax...primarily personal?
Eva Rosenberg: Ken, I think this would be an IDEAL course for a technical college. But you do need some good basic tax classes. Although the class I set up at UCLA runs only 12 weeks in the summer (Saturdays) and people who had never done taxes before passed the exam. However, in a 2-year program, you could actually teach students to DO tax returns not just pass an exam different skills entirely.
Session Moderator: Eva, do you see this as a limitation?
Eva Rosenberg: Tina, Do I see what as a limitation?
Session Moderator: That it focuses on tax…Is this a limitation in our consultative age?
Eva Rosenberg: Ahhh! Not at all. Even with more people doing their own returns on line and even with a proposed flat tax...on the way...The tax system isn't going anywhere.
Someone with 'expertise' is a valuable asset to businesses especially now with the maze of Internet tax issues coming up. I have one friend, in her 60s who started this a career about 10 years ago she does no marketing, no advertising but she is swamped with referrals and has the most complicated cases I have ever seen. And we bring them to a satisfactory resolution. Often people come to her after they've tried law firms - and she takes care of the problem. OK, so she calls me,... or about two dozen other friends
Session Moderator: "We" - does this mean you work with her? Do EAs work together often?
Eva Rosenberg: Oh yes. Sometimes the networks are informal, but no one needs to work alone. However through NAEA and CSEA (Calif) I've met so many people who are so strong in so many areas, plus the attorneys and CPAs I know that we can solve any problem, anywhere in the country.
Session Moderator: This seems very different than CPAs - no?
Eva Rosenberg: Some CPAs feel that everyone is competition. There are so few of us (comparatively) that we are just of a mind to help each other. Besides, different kinds of people become EA.
Ken Merwin: Eva - I can see this as great potential for a work-from-home situation using Internet, etc. There are some great networks (with privacy features) to exchange files, etc. for a "virtual" group.
Eva Rosenberg: Ken, that's exactly right. This is great for students, housewives even pregnant teens
Gail Perry: How many CPAs are out there for each EA?
Session Moderator: Yes, I believe Jenny wanted to know how many EAs are out there.
Eva Rosenberg: Gail - there about at least 20 CPAs for each EA.
This is a great career for people who want independence. EAs tend not to fit into corporate modes. We live on our own schedule; get creative and artistic; write; make music, travel and shake up the world. You rarely see large firms consisting of Enrolled Agents.
Session Moderator: Eva - we have about five minutes left. Do you have any more words of wisdom for our audience today?
Eva Rosenberg: If you're a CPA or an attorney add the EA to your credentials - and hit the road on your motorcycle with your modem and laptop
Session Moderator: Great! Thanks.
Eva - this has been a great, information-packed session today. Thanks for being here. Are there any other questions for Eva?
Eva Rosenberg: I thank you all for coming! You've been great.
Session Moderator: I think YOU are great. Thanks for an entertaining workshop.
Thanks to all of you who signed on today. Don't forget to let us know if there's a topic you would like to see in our workshop series.
Have a successful week!