Frequent changes and increasing complexity in tax law mean there is a growing demand for Enrolled Agents (EAs). For accountants and finance professionals who excel in tax matters and are seeking a career that offers both growth opportunities and flexibility, this may be the right credential for you. If you're asking, "What is an Enrolled Agent, and how do I become one," we're sharing everything you need to know.
An Enrolled Agent is a competent and knowledgeable tax professional who is authorized by the U.S. Department of the Treasury to represent taxpayers before the Internal Revenue Service (IRS). This is the highest credential awarded by the IRS, and those who hold it have proven they have the specialized experience and knowledge, plus the broad scope of practice necessary to handle a wide variety of tax matters, including representing individuals, businesses and organizations in dealings with the IRS.
An Enrolled Agent's career typically includes the following:
While other tax professionals, including CPAs, obtain their license through a state agency, EAs hold a national credential and can practice anywhere in the United States.
The EA credential dates back to the 1880s. Individuals and businesses were submitting fraudulent claims for property loss and damage sustained during the Civil War while people with legitimate claims were unable to get them settled. Congress empowered enrolled agents to prepare claims against the government with the Horse Act of 1884.
Woodrow Wilson then signed the Revenue Act of 1913, expanding enrolled agents' roles to include preparing taxes and resolving taxpayer disputes with the IRS. In 1972, the National Association of Enrolled Agents was formed.
While Enrolled Agents, Certified Public Accountants, and tax attorneys can all represent clients in matters involving the Internal Revenue Service, there are fairly significant between the three careers.
Now that you know what it is and how to become one, let's look at some of the benefits of becoming an EA.
As an Enrolled Agent, you can practice before the IRS without any restrictions, including representing clients in issues like audits and appeals, so you can provide a more comprehensive service than other tax professionals.
Becoming an EA is challenging, so obtaining this credential proves that you have a deep and comprehensive understanding of federal taxation, can navigate difficult scenarios and offer valuable guidance and representation to your clients.
Earning your Enrolled Agent credential opens the doors to wider career opportunities than you would otherwise have. In addition to opening your own tax firm or consultation company, you can also pursue government careers and may be highly sought after by businesses and corporations.
The path to an enrolled agent career is often more accessible than becoming a CPA. You don't need a college degree, and you only need two years of relevant experience, though you will need to pass the three-part EA Exam.
As an enrolled agent, you have several career options ahead of you as qualified tax professionals are in high demand. The most common places of employment for EAs are public accounting firms, both small and large, working as tax staff to prepare returns for a wide variety of clients. Banks often rely on EAs to ensure the bank is compliant with tax laws and regulation while law firms specializing in tax will hire EAs to handle IRS-related notices and communications for their clients.
You can even start your own tax planning and preparation firm and assist individuals and businesses with their tax needs. Having your own business allows you to specialize in particular niches and areas of interest, like working with high-net worth individuals or real estate agents and companies.
An EA's salary is dependent on several factors including experience, location, and the type of experience. However, the salary range is typically between $42,000 for entry-level EAs, and up to $60,000 for senior-level EAs 1 .
Enrolled Agents are essential to making sure that individuals and businesses have an advocate in issues with the IRS and can successfully navigate complex federal taxes. Thus, the IRS has strict requirements in place to guarantee that anyone with the credential has the in-depth knowledge to act as a trusted expert to their clients.
The IRS does not have specific educational prerequisites in place, so EAs may not have a college degree or formal secondary education. However, candidates are expected to show a strong and comprehensive understanding of tax concepts, laws and regulations.
So, while a degree may not be required, most Enrolled Agents do have a formal background in finance or accounting to gain the foundational knowledge to fulfill the role.
You will also need to pass the Special Enrollment Exam (SEE), more often simply called the EA Exam.
The IRS requires a minimum of two years of relevant, tax-focused work experience, which can include preparing tax returns, advising clients on tax-related issues, assisting with tax planning or representing clients in tax matters.
The IRS EA Exam is divided into three separate sections, and each section covers specific topics called "domains."
Each section consists of three multiple-choice questions over a 3.5-hour testing time, and once you pass the first section, your credit is valid for two years, so you'll have two years to complete the other two sections before the first credit expires.
After you pass your test but before you begin your Enrolled Agent career, you must also receive a background check. In addition to looking at criminal history, such as the presence of felony convictions, the IRS also considers your tax compliance history when reviewing your candidacy.
You may be exploring your career options right now, but when you're ready to take the EA Exam, Becker will be there to help you meet your goals! Sign up for our newsletter and be the first to know when our EA Exam Review is available so you can start studying!
