What is a registered agent?
An Enrolled Agent (EA) is a tax practitioner licensed by the United States government to represent taxpayers in tax matters. Tax Service (IRS). EAs must pass an exam or have sufficient experience as an IRS employee and pass a background check. Enrolled agents first appeared in 1884 due to problems with Civil War casualty claims.
Key points to remember
- Enrolled agents are federally licensed to represent taxpayers before the IRS.
- Prospective enrollees must either pass the Special Enrollment Examination (SEE) or meet the minimum IRS experience requirements.
- Fraudulent claims submitted for Civil War losses prompted the creation of the enrolled agent.
- Enrolled agents also provide tax planning and preparation.
- Although enrolled agents can represent individuals and businesses before the IRS, they are not employees of the IRS.
Understanding Enrolled Agents
An Enrolled Agent is a federally-licensed tax practitioner who has unlimited rights to represent taxpayers before the IRS for any issues related to collections, auditsWhere tax appeals. According to the National Association of Enrolled Agents (NAEA) – the organization that represents licensed EAs – they are licensed to advise, represent and prepare tax returns for individuals, corporations, partnerships, estates, trusts and any what is required to be declared to the tax authorities.
History of the registered agency
In the 1880s, standards for lawyers were inadequate and Certified Public Accountants (CPA) did not exist. The enrolled agent profession began after fraudulent claims were submitted for Civil War losses. Congress has taken steps to regulate EAs to prepare for Civil War claims and to represent citizens in their interactions with the Treasury Department. In 1884, the Horse Act was signed into law by President Chester Arthur to establish and standardize registered agents.
In 1913, when the 16th Amendment was passed, the duties of the EA were expanded to include tax preparation and resolve taxpayer disputes with the IRS. In 1972, a group of enrolled agents collaborated to form the NAEA to represent the interests of EAs and enhance the professional development of its members.
Registered Agent Requirements
EAs are not required to obtain university degrees. Some former IRS employees with five years of tax experience can apply to become an enrolled agent without taking the exam. Non-exempt individuals must take and pass the Special Enrollment Examination (SEE). All registered agents must complete 72 hours of continuing education every 36 months. CPAs and attorneys can serve as enrolled agents without taking the exam.
Enrolled agents are the only tax professionals who do not need a state license. However, they have a federal license and can represent a taxpayer in any state. They must meet the specifications of Treasury Department Circular 230, which provides guidelines governing enrolled agents. Registered Agents who are members of the NAEA are also subject to a code of ethics and rules of professional conduct.
Benefits of using a registered agent
NAEA members must complete 30 hours per year of continuing education or 90 hours every three years, which is significantly more than the IRS requirement. Registered agents offer tax planningtax return preparation and representation services for businesses and individuals.
Enrolled Agents vs Other Tax Professionals
Enrolled agents are required to demonstrate proficiency in all aspects of tax, ethics, and representation, unlike CPAs and attorneys, who may not specialize in tax.
EAs are not employees of the IRS. Additionally, they cannot display their credentials when representing clients and advertising their services. They cannot use the term certified as part of a title or infer an employee relationship with the IRS.
Outlook for registered agents
Hiring of tax examiners is expected to decrease by 2% from 2018 to 2028, as the growth of the tax examiner industry is closely tied to changes in federal, state and local government budgets. The growth of the enrolled agent industry depends on changes in industry rules and demand for tax services. However, there is a growing need for environmental assessments in private and public accounting firms, law firms, corporations, local and state government agencies, and banks.
How to become a registered agent?
To become an Enrolled Agent, a person must obtain a Preparer Tax ID, pass the Special Enrollment Examination, register as an Agent, and be found fit (eg, background check) to practice. as a registered agent. Former IRS employees with at least 5 years of experience as tax professionals in the field.
What does a registered agent do?
An enrolled agent is licensed by the US federal government to represent taxpayers before the IRS. They can also serve as tax advisors, planners and preparers.
How is an Enrolled Agent different from a CPA?
While an Enrolled Agent (EA) and a Certified Public Accountant (CPA) are qualified and licensed tax professionals. However, an enrolled agent focuses specifically on taxation, whereas a CPA may specialize in taxation and other financial and accounting matters. A person can be an EA and a CPA; however, an appointment does not necessarily qualify the person to serve as the other. The job functions and offerings of CPAs are broader than those of an EA.