President Dinesen Tax & Accounting P.C.
Share this content

6 Things You Might Not Know About Enrolled Agents

Mar 4th 2016
President Dinesen Tax & Accounting P.C.
Share this content
meeting with client
iStock_Squaredpixels_meeting with client

In 2011, the National Association of Enrolled Agents commissioned a study that asked the public about their perception of the EA designation. The survey revealed that 87 percent of the public had never even heard of an EA.

The public’s knowledge of EAs seems to have increased in recent years, and EAs finally received protection from Congress in December 2015 to hold themselves out as EAs anywhere in the country.

Here are six things you may not know about EAs.

1. We’ve been around since 1884. The General Deficiency Appropriation Bill (sometimes called the “Horse Act of 1884”) was signed into law by President Chester A. Arthur on July 7, 1884.

In the years after the Civil War, Congress allowed citizens to submit claims for reimbursement for property losses suffered during the war. Many of these claims were fraudulent and were being filed by representatives acting on behalf of citizens.

This law in 1884 created the EA designation in an effort to regulate who could file claims with the government and to give the government the ability to sanction representatives who filed fraudulent claims.

2. We don’t work for the IRS. The word “agent” automatically conjures up thoughts of “IRS agent.” But we don’t work for the IRS.

The term “enrolled agent” can be defined in this way: “Enrolled” means that we are recognized by the US Treasury Department and the IRS to act as an “agent” for citizens when dealing with tax matters. Hence, “enrolled agent.”

3. There are two ways to become an EA. The EA designation is awarded by the Treasury Department after a person either:

  • Passes a series of exams (see No. 4 below); or
  • Works for the IRS for at least five years in a position that requires interpretation of tax law.

The IRS regulates EAs.

4. The Special Enrollment Exam is not a tax-preparation exam. One myth that’s out there is that the EA exam (the technical name is the Special Enrollment Exam, or SEE) is an exam about tax preparation. It’s not.

The SEE contains three parts: individual taxation, business taxation, and “representation, practice, and procedure” (basically, working with the IRS).

There are zero test questions that ask you to take information and create a tax return. You might need to perform calculations (I remember having questions asked about calculating the credit for daycare expenses, and there were LOTS of questions about basis calculations during the business portion of the test), but not once are you asked to create a tax return.

The SEE is designed to test a person’s knowledge of the tax code and IRS procedures because EAs are legally empowered to represent taxpayers in front of the IRS.

5. In the tax world, we are 100 percent equal to CPAs and attorneys. There are three groups of licensed professionals who have unlimited practice rights when handling tax matters for taxpayers: CPAs, attorneys, and … enrolled agents.

6. Until recently, there was no protection for EAs to hold themselves out as EAs. Surprisingly, an EA could get into trouble in some states for holding themselves out as an EA. State boards of accountancy would occasionally send letters to EAs, telling the EA to cease and desist with using the abbreviation “EA” because people might confuse the EA with a CPA.

This didn’t happen in all states, but it happened often enough to be an issue.

In the Protecting Americans from Tax Hikes (PATH) Act passed by Congress and signed into law in December 2015, a provision was included that formally allows EAs to call themselves EAs without being hassled. Here’s how the provision reads:

Section 410. Clarification of enrolled agent credentials. The provision permits enrolled agents approved by the IRS to use the designation “enrolled agent,” “EA,” or “E.A.” The provision is effective on the date of enactment.

Related article:

PATH Act Protects Enrolled Agent Credential

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.