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Need Tax Preparation or IRS Tax Help? Find an Enrolled Agent.

Need Tax Preparation or IRS Tax Help? Find an Enrolled Agent.

Tax season's just around the corner. When looking into the various designations of tax professionals and the services they offer, have you thought about working with an Enrolled Agent?

You might not have heard of EAs. Most people know about Certified Public Accountants because of their stronger presence in the professional sector and the image they've earned as America's trusted financial advisers in corporate, small business and personal matters. In contrast, EAs are more well-known within the tax business than the general public, although many serve the public and individual clients in firms of all sizes. EAs also work in tax departments at large corporations and in governmental roles. Interestingly, EAs came to be as a result of the Horse Act of 1884 after the Civil War as professionals intended to represent claimants for losses in the war. Enrolled agents expanded their role to help U.S. citizens with monetary relief after the income tax was enacted in 1913. Today, EAs are looked to for their specific expertise in all tax matters and the ability to represent taxpayers nationwide.

There are innumerable benefits to working with an EA, and here are some of the top reasons why you should look to one if you're in the market for a new tax professional.

EAs have an incredibly deep knowledge of tax laws that CPAs might not.

Enrolled Agents are tax law experts licensed directly by the IRS after passing a rigorous three-part exam and a background check. Former IRS employees are also eligible to become EAs after sufficient experience and don't need to take the exam. While the general public may be less aware of the EA designation since CPAs are more ubiquitous, the licensing requirements between the two are drastically different.

The IRS decides on competency standards and testing requirements for EAs, while state accountancy boards set the standards for CPAs. Some states require supervised work experience before licensure is granted and an advanced degree plus passing the uniform CPA exam, but this type of competency is based on understanding generally accepted accounting principles, financial statement analysis and audits, financial controls, and other aspects of publicly traded companies' positions and fairly presenting their financial data. Tax law is not included on the CPA exam, and not all CPAs concentrate in taxation.

EAs, on the other hand, focus predominantly on different areas of tax law and have been thoroughly tested in individual, business and fiduciary taxation. Whereas EAs can't sign off on financial statements for public companies and Securities and Exchange Commission filings as CPAs can, they're an excellent fit for small business owners who don't plan on taking their companies public.

EAs have an advantage in resolving cases with the IRS.

If you have tax matters that require intervention, you can be represented to every level of the IRS up to the U.S. Tax Court by a CPA or EA. EAs have an advantage when it comes to representation matters in large part because of the subset of EAs who are former revenue officers or agents and may still have contacts with the service in addition to internal knowledge of policy and procedures to get your case resolved in a speedy manner.

Even for EAs who never worked for the agency, IRS employees are more likely to be amenable during negotiations since they're aware that EAs have the intimate knowledge of tax law applications and IRS procedures that CPAs and tax attorneys might not.

The EA license is more portable.

CPAs are limited to the states in which they are licensed to practice. In the event you're having trouble with state tax authorities, EAs can represent you in any state to any tax authority since it's a federal license. This is particularly important if you move around frequently or face multistate tax issues (such as working in one state and living in another) and would like to take your tax professional with you across state lines.

Working with an Enrolled Agent provides assurance that you're getting a tax professional who has dedicated their career to tax preparation and representation in business, personal and fiduciary tax matters (including state-level taxes).

Lee Reams Sr., EA writes for TaxBuzz, a tax news and advice website. Reach him at [email protected] or on LinkedIn.

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Lee Reams, BSME, EA

Lee Reams, BSME, EA

Editor-in-Chief

Besides his role at CountingWorks as an educator and speaker to thousands of accountants nationwide, Lee manages a technical research service for a large group of tax accountants which sharpens his technical skills. Lee served on the Board of Blackline Systems, is a former Board of Director for the California Tax Education Council, is a Past President of the San Fernando Valley Chapter of Enrolled Agents, Member and Past Director for the California Society of Enrolled Agents.

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