Updated: Mar 7
CPA, EA, AFSP, USTCP... there are so many different professional credentials that exist right now that if you’re searching the internet for tax help it can be very easy to get confused and even flustered if you don’t know what they all mean. Sometimes, professionals, myself included, get so caught up in tax jargon that we forget to break things down so the average taxpayer can understand. Charge our heads not our hearts!
One of the best-kept secret credentials that a tax professional can receive is that of an Enrolled Agent also known as an EA. This post will help you as you’re searching for tax relief to know if an EA will be beneficial to your tax situation. I will be covering what an EA is, the origin of Enrolled Agents, and what type of work an Enrolled Agent does in the tax world. At the end of this post there is a bonus video that gives a general overview of an Enrolled Agent vs. CPA.
What is an Enrolled Agent?
An Enrolled Agent is the highest and also most expansive credential that is awarded by the IRS. It grants the individual holding the license unlimited representation rights before the IRS. This means an Enrolled Agent can stand in the shoes of their clients and advocate on their behalf in front of the IRS whether it be negotiating back taxes or an in-person audit. The only other licensed professionals that can do that are a Certified Public Accountant (CPA) and a Tax Attorney.
But if you ask NAEA, which is the National Association of Enrolled Agents, Enrolled Agents are America's Tax Experts. The reason for this is since it is a federal license Enrolled Agents are able to practice before the IRS and prepare income tax returns in all 50 states, making the license very unique. It is also the only credential of the 3 with unlimited practice rights whose test materials focus solely on tax law.
Origin of Enrolled Agents
The Enrolled Agent designation is not known by many but it was actually created after the Civil War when Congress Authorized the Enabling Act of 1884, also known as the Horse Act of 1884. These set regulations on who could be an Enrolled Agent and what authority they had. At the time taxpayers were making loss claims against the United States from the Civil War.
Like now, many taxpayers were facing difficulty in making claims of their financial hardships against the government. So on July 7th, 1884 President Chester A. Arthur, signed the bill that Congress passed that gave agents the power to advocate for their clients and make claims against the government but it also included a suitability check. Because just like now there were scammers representing citizens and making outrageous claims, specifically about horses which is why the act is also known as the Horse Act.
The standard included not only suitability checks but criminal records, moral character, all of these factors along with testing. The people who passed the requirements were known as Enrolled Agents.
The scope of what Enrolled Agents can do was widened in 1913 when President Woodrow Wilson signed the Revenue Act of 1913. This broadened scope included claims for monetary relief for citizens whose taxes had become inequitable, my favorite part of being an EA. 1913 is also the year the first 1040 was created, take a peek at it here.
Enrolled Agents are governed by Circular 230, which was created in 1921 but has seen quite a few revisions since then. The IRS has put much more in place to make sure that taxpayers aren't being taken advantage of by someone posing like a professional. You can even verify the credentials of an EA now by e-mailing the IRS. In 1994, the initials E.A. were finally designated by the Treasury Department, like that of Enrolled Agent.
What does an Enrolled Agent do?
Enrolled Agents have always represented American citizens before the treasury department. Even before there was a tax return. Tax representation is yet one of the distinct roles of an EA. This makes it different from all other tax designations. If you are tired of fighting the IRS alone you need an Enrolled Agent, CPA, or Tax Attorney that can step in your shoes and take over.
As the tax world has evolved so have the practice rights of Enrolled Agents. Not only can they represent you in an audit in all 50 states or negotiate your tax liability and debt. Enrolled Agents are also authorized to prepare tax returns, do tax advising, consulting, and planning.
Why wouldn't they be? After taking a 3 part comprehensive test on tax law no wonder they are known as America's Tax Experts!
You may not be sure if you would like to work with an E.A. vs. a C.P.A. on your tax situation. Check out the video below for an overview of each designation.
If you'd like to work with me book a call at www.bowenstaxsolutions.com .
Before you leave don't forget to get the free checklist that I've created to help you prepare for your fight, the Back Tax Negotiation Checklist!
Did you know that the E.A. designation is older than the C.P.A. designation? Let me know in the comments.
Timalyn S. Bowens EA is America's Favorite EA and Tax Expert that has a personal mission to fill the tax literacy gap by educating taxpayers on how the tax law affects them. Timalyn is also the owner of Bowens Tax Solutions. They will work hard to find a legal solution that is customized for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states.
If you are facing questions regarding your personal or business taxes, working with the right professional makes all the difference. Timalyn is here to assist you with tax representation, tax planning, and more. Visit www.bowenstaxsolutions.com for more information.