In basic terms, an enrolled agent is a very specialized financial advisor who can help with tax issues and is credentialed by the IRS. If you understand what bookkeepers do and how they can help your business, you are already familiar with what a tax advisor can help you with.
Enrolled agents are further qualified as they are empowered by the United States Department of Treasury. This elite status is not easy to obtain as a qualified agent must complete continuing education and have adequate status to continue having this qualification. Because of this, there are few practicing enrolled agents in the United States.
What is an Enrolled Agent?
According to the IRS, an enrolled agent is an individual who has earned the privilege of representing taxpayers before the IRS. They have done that by either passing a three-part IRS examination that covers individual and business tax returns or through relevant experience as a former employee of the IRS.
Becoming an enrolled agent is nothing small. It is, in fact, the highest credential that the IRS awards individuals with. Those who have this elite status are required to adhere to specific ethical standards and complete at least 72 hours of continuing education every three years.
According to the National Association of Enrolled Agents, because of these requirements, there are only approximately 54,000 enrolled agents in the United States.
An enrolled agent is authorized to do such duties by the United States Department of Treasury, which allows them to represent taxpayers in front of the IRS for any tax issues. This includes tax collections, appeals for tax delinquencies, and tax audits. If you expect to receive a tax audit this year, you should work with a qualified tax expert like an enrolled agent.
What Can an Enrolled Agent Do?
Like lawyers and CPAs (certified public accountants), enrolled agents have unlimited practice rights, according to the IRS. They are not restricted by the taxpayers that they are allowed to represent. They are also not limited by the tax matters they can take on or by which IRS offices they can represent customers before.
The greatest power that an enrolled agent has is the ability to represent taxpayers in front of the IRS regarding tax appeals, tax collections, and tax audits. They can speak on your behalf to any IRS representative you are needing to deal with. If you expect a tax audit, you would be wise to hire an enrolled agent to help you get the best agreement with the IRS.
Enrolled agents can assist in preparing tax returns for individuals and businesses. If you are a taxpayer, partner in a partnership, part of a corporation, have a trust or estate, or need help with any other tax entity, working with an enrolled agent can be in your favor.
The only place an enrolled agent is limited is in tax court. To represent you in tax court, you would want a licensed attorney – someone who has passed the United States Tax Court Non-Attorney exam.
How Do I Hire an Enrolled Agent?
There is a database on the NAEA (National Association of Enrolled Agents) website that provides you with a list of all of the enrolled agents in your specific area. What’s great about this database is that it only has NAEA members, who are bound by a specific code of ethics and professional conduct parameters.
Some enrolled agents work at firms that are already established doing tax preparation, but many are independent contractors. If you are looking for a qualified tax expert, you can look no further, as Sherry Borshoff is an enrolled agent at Borshoff Consulting.
How Can an Enrolled Agent Help You?
It often makes sense to hire an enrolled agent to help you with your tax matters. When you are choosing which legal entity will work best for your business, working with an enrolled agent can help because they understand taxation for different business types. They can assist you in explanations of which tax deductions you may qualify for based on your business entity.
Enrolled agents are also qualified to help you prepare your tax returns. Because they can cross state lines, an enrolled agent is helpful if you are required to file business or personal taxes in multiple states.
Also, if you are going to be audited, an enrolled agent is the right person to have on your payroll. They are able to represent you in contacting and dealing with the IRS, which can put you in quite a stressful environment if you are not accustomed to dealing with the IRS.
Enrolled agents can settle tax collection matters and appeals on your behalf in conjunction with helping you with a tax audit. This can be especially helpful if you are dealing with tax penalties, tax evasion issues, tax liens, tax levies, tax fees, or other unpleasant matters.
Since an enrolled agent specializes in taxes, finding one to help you with your tax issues is a wise choice to make – for your individual taxes or business taxes.
How is an Enrolled Agent Different from Other Tax Experts?
Enrolled agents are different from other tax professionals in several different ways. They have credentials that bookkeepers or CPAs may not have. It’s important that you speak to your tax consultant about their tax credentials before hiring them to determine how they can best help you. Discuss your needs, explain where you need help, and hire accordingly.
Enrolled agents obtain this status by either working for the IRS for at least five years in a specific capacity or by having a passing score on all three parts of the SEE (Special Enrollment Examination) and by passing a suitability check administered by the IRS, which examines the individual’s personal tax experience.
These qualifications are not easy to come by. The SEE exam alone features over 300 questions and takes over three hours to complete. You must pass each of the three parts within two years.
The requirements don’t stop there, though. The IRS requires enrolled agents to complete 72 hours of continuing education at least every three years.
This includes a minimum of 16 credited hours each year so that they can continue having their enrolled agent license and practicing rights. This continuing education requires classes like tax codes, tax laws, and ethical practices in business.
Enrolled agents are also different in that they are federally licensed tax experts. This means that they can handle tax matters in any state of the United States. A CPA would be different because they are licensed at the state level and are only permitted to handle tax matters in specific jurisdictions – the areas in which they were licensed.
CPAs are able to practice many of the same things that enrolled agents do, but they often deal with more accounting and bookkeeping duties. Enrolled agents, on the other hand, specialize in taxation. An enrolled agent may have the knowledge of a CPA, but it is not the same thing.
Enrolled agents can represent you under specific tax conditions. Enrolled agents are allowed confidentiality between themselves and taxpayers when representing taxpayers in tax situations and matters that involve tax collections.
It’s important to determine whether an enrolled agent is right for you. Hopefully, this article has given you some insight into what an enrolled agent does and how they stand apart from other tax professionals. It might be in your best interest to hire an enrolled agent to help you with your tax issues, especially if you are going to need representation with the IRS.
If you would like to work with an enrolled agent today, look no further. Sherry Borshoff is an enrolled agent with an impeccable reputation. Be sure to hire Indiana’s tax expert to help you with your tax issues today! Book a free consultation for more information.