An enrolled agent is a tax specialist authorized to represent taxpayers before the IRS. Enrolled agents earn their credentials after passing the three part IRS Special Enrollment Examination (SEE). A former IRS agent can become an enrolled agent without taking the SEE, but needs to have at least five years of experience in interpreting and applying the tax code as an IRS employee.
Even though certified public accountants (CPAs) and tax attorneys can also represent taxpayers before the IRS, the status of an enrolled agent is the highest credential awarded by the IRS.
Qualifying Criteria of Enrolled Agents
The SEE exam for enrolled agents has three parts:
The applicant must achieve passing scores in all three parts in order to earn their credentials. An enrolled agent must have a Personal Tax Identification Number (PTIN) and renew it every year. Before applicants take the SEE exam, they are required to obtain a PTIN.
Applicants are required to undergo a background check before enrollment to ensure they have been compliant with tax law and do not owe taxes. If the IRS finds that an applicant failed to pay taxes on time, has a tax debt, or was involved in tax avoidance or evasion, the agency may choose not to enroll the applicant.
All enrolled agents are required to complete the 72 hours of continuing education courses every three years. They must also follow the ethical standards set by the agency.
Representation Rights and Abilities of an Enrolled Agent
An enrolled agent has the freedom to choose to handle any type of tax problem. They can represent any taxpayer before the IRS and choose the IRS offices before which they represent their clients. They have unrestricted rights to any administrative level of the IRS.
Enrolled agents, because of their specialized knowledge of the tax code, as well as their experience and expertise in resolving tax problems, are hired by taxpayers for IRS representation. Enrolled agents prepare a tax case, represent it before the IRS and negotiate its terms to achieve the most favorable resolution to a tax problem. As enrolled agents are required to renew their status every three years, they are current with the tax laws, tax codes and IRS polices.
Enrolled agents develop their skills and knowledge through continuing education required by the IRS. Under the continuing education requirements, the IRS necessitates enrolled agents to obtain 72 hours of continuing education every three years, along with a minimum of 16 hours for each enrollment year. Two hours are on ethics or professional conduct.
To practice before the U.S. Tax Court, an enrolled agent must pass the non-attorneys admission examination. Enrolled agents that pass the exam can also practice before the United States Tax Court.
Ways Enrolled Agents Help Taxpayers
Enrolled agents help to analyze a tax case so that all possible methods of resolution are explored before the most suitable method is chosen. An enrolled agent's experience in handing various tax cases makes a vital difference in the preparation of a tax case. It allows them to develop an approach that gets the most benefit for the taxpayer while minimizing the disadvantages for non-compliance.
Analysis and preparation of a tax case is performed thoroughly during the process of resolution to discover possibilities for achieving the most advantageous resolution. Taxpayers may hire enrolled agents to resolve their tax problems such as tax debt, collection actions, tax refund problems, audits, tax fraud, appeals, and issues with payment of taxes.