What is an enrolled agent?

An enrolled agent is someone who is recognized by the U.S. Department of Treasury as a tax advisor and federally-authorized tax practitioner. They typically work for accounting or tax firms, or they can be self-employed. They help individuals and businesses with their tax preparation.

Roles and responsibilities of an enrolled agent

Enrolled agents have a variety of roles and responsibilities to fulfill to meet the needs of their clients and comply with IRS rules and regulations. Some tasks they complete include:

• Represent clients (taxpayers) relating to issues with their taxes to the IRS.
• Maintain client confidentiality regarding tax information and personal documents.
• Perform audits and appeals on behalf of their clients.
• Provide tax advice to clients in adherence with IRS rules and regulations.
• Teach clients about tax laws and regulations and how they affect their business.
• Complete basic accounting tasks such as updating financial records and reviewing bank statements.
• Pursue continued education courses each year to maintain licensure.
• Check in with previous clients to provide additional services.
• Answer client calls and set up appointments to meet about their taxes.
• Help clients identify potential liabilities on their balance sheet.
• Create a tax plan for clients for future use.
• Calculate deductions and other exceptions that could contribute to a client paying less in taxes.

Benefits of hiring an enrolled agent

Here are some of the ways that hiring an enrolled agent can benefit your business:

• Allows you to focus on other aspects of your business:By hiring an enrolled agent to help with tax preparation and other accounting needs, you can put more focus toward other areas of your business such as sales and marketing, employee onboarding or day-to-day operations.
• Provides your business with extensive tax expertise:Enrolled agents are considered to have the highest credential a tax professional can receive. This, paired with their continued education requirements, means that they have up-to-date and advanced knowledge in tax-related matters.
• Helps small businesses in lieu of accounting departments:If you operate a small business or a sole proprietorship, an enrolled agent could potentially help you perform certain duties that would normally be assigned to members of an accounting department. For example, they could help you prepare and file your taxes or your tax return.

Enrolled agent FAQs

What kind of education is required to be an enrolled agent?

Here are the steps one would take to become an enrolled agent, as mentioned by the IRSand the National Association of Enrolled Agents:

1. Choose a track: either work for the IRS for five years or take the Special Enrollment Exam (SEE).
2. If they choose the former track, then they need to pursue work at the IRS.
3. If they choose the latter track, then they can move straight to step four.
4. Get a Preparer Tax Identification Number (PTIN).
5. Participate in an education course.
6. Register and take the SEE.
7. Apply for an enrolled agent license with the IRS.
8. Renew their enrolled agent license every three years.
9. Renew their PTIN every year.
10. Complete 16 hours of continued education (with at least two ethics courses) every year.
11. Complete 72 hours of continued education every three years.

Earning a degree in accounting, finance or business could be beneficial to enter an enrolled agent program, but it’s not a requirement.

What kinds of skills should enrolled agents have?

Enrolled agents have a variety of accounting skills to help their clients. Here are some examples of skills that tax preparers might have:

• Customer service skills
• Organization skills
• Advanced mathematics skills
• Time management skills
• Microsoft Office proficiency
• Microsoft Excel proficiency

How much money do enrolled agents make?

According to the Bureau of Labor Statistics (BLS), tax preparers in 2019 made between $21,750 and $87,060 per year, with higher wages reported in sectors like securities and commodities, contract work and financial investments.

What’s the difference between a CPA and an EA?

There are a few differences between a certified public accountant (CPA) and an EA, including the following:

• Education requirements:Enrolled agents aren’t always required to get a college degree, whereas CPAs are required to have at least a bachelor’s degree in accounting, finance or another area.
• Licensing requirements:Enrolled agents receive licensure at the federal level by the IRS, whereas CPAs receive licensure by their state board.
• Exam requirements:Enrolled agents need to take the three-part Special Enrollment Examination (SEE) exam, whereas CPAs have to take a four-part exam called the Uniform CPA Examination.

How do I hire an EA?

You can hire an enrolled agent by contacting a public accounting firm or tax firm within your area. They might have enrolled agents on staff who can take you in as a client on a temporary or more permanent basis. If you want to hire an enrolled agent who works as a sole proprietor, you may want to create a job post to publish on job websites. You could also take a more proactive role by searching the internet for freelance enrolled agents who live in your area.