Tax season is around the corner, and taxpaying individuals are looking for professional help to file their taxes. Not all tax professionals are created equal. Some tax preparers may be restricted on how they can represent individuals based on their specific certification. Enrolled agents are tax professionals; who do not have any limitations when it comes to representing their clients in front of the IRS. The enrolled agent status is the highest credential for tax professionals, provided by the Internal Revenue Service (IRS). Tax preparers who have earned the Enrolled Agent (EA) identification are truly tax experts.
What is an Enrolled Agent?
Enrolled agents (EAs) are tax professionals who have earned the privilege and responsibility to represent taxpayers before the IRS. EAs have unrestricted practice rights. This means that they can represent all types of taxpayers – individuals, self-employed, companies, organizations; and all other entities who have tax-paying obligations.
Enrolled agents are federally licensed, and they can work in any state. They can work on all types of tax matters and can represent clients before IRS offices throughout the country.
Requirements for Becoming an Enrolled Agent
The candidate must pass a rigorous three-part examination – the Special Enrollment Exam (SEE) to become an enrolled agent. The SEE exam is separated into three parts: individuals, businesses, representation, practices, and procedures. Another way to certify as an enrolled agent is to work in a role that involves interpreting the tax law at the IRS for a minimum of five years.
If the candidate qualifies for the certification, the IRS issues a suitability check. The background check determines the potential enrolled agent’s personal tax history.
Enrolled agents are not required to get a college degree in accounting or business administration.
However, to retain their active enrolled agent license and practice rights; enrolled agents must complete 72 hours of continuing education every 36 months, with a minimum of 16 credits per year. Topics can range from updates to tax regulation to ethics classes.
Enrolled agents are the only tax preparers who are not required to obtain a state license. However, they must abide by the specifications of the Treasury Department’s Circular 230; which provides the procedures and guidelines controlling enrolled agents.
What Do Enrolled Agents Do?
Enrolled agents are qualified to prepare tax returns, provide expertise and advise individuals on any tax-related concerns. They can also represent the taxpayers they are working with before the IRS in any capacity.
EAs can handle tax-related issues without a hassle because they are not only familiar with the tax law, but also know how to deal with the unique circumstances taxpayers might face.
An enrolled agent is knowledgeable about the Federal tax law, IRS regulations, specific tax situations, and cost-effective tax strategies.
Here are some specific situations taxpayers might benefit from the services of enrolled agents.
Tax audits do not happen very often, but when they occur enrolled agents can help. An enrolled agent can guide their taxpaying clients through the whole audit process and provide support every step of the way.
Ongoing Investigation by the IRS
Being investigated by the IRS is a serious matter and requires serious attention. An IRS enrolled agent can provide expert consultation and guide the investigated taxpayer every step of the way. If the investigation becomes criminal, the investigated individual might benefit from working with a tax attorney.
Fraudulent Tax Claims
If a taxpayer committed tax fraud – underreported the incomes, claimed credits that they did not earn, or claimed false deductions, the taxpayer could be suspected of tax fraud.
An IRS enrolled agent, or a tax attorney can assist the investigated taxpayer in every step during the tax investigation process.
Failing to File a Tax Return or Pay Owed Taxes
If a taxpayer fails to file the tax return in time or fails to pay the amount of taxes owed on the time it can lead to paying fines that can get huge depending on how long it has been since the tax return has been filed.
An IRS enrolled agent can help you significantly reduce the tax penalties and costs associated with failing to pay taxes on time or to file a tax return.
Unfiled Tax Returns
If a taxpayer fails to file the tax result it can result in huge IRS penalties and liabilities. An enrolled agent can help you file old tax returns and ensure the taxpayer can get a maximum deduction and pay the least amount of taxes owed. Enrolled agents can also assist and walk the taxpayers through any penalties and liabilities they might face.
Enrolled agents can help if a taxpayer has been issued a tax lien by the IRS. The enrolled agent can further analyze the situation and determine how they can terminate the tax lien or prevent the IRS from seeking further collection actions.
Enrolled agents can also help if the IRS has implemented a tax levy. EAs are familiar with different ways and strategies the tax levies can be stopped thus preventing the taxpayer to pay the fines and penalties.
Working with an IRS enrolled agent can be beneficial for taxpayers in difficult tax situations.
Enrolled agents can help you understand how taxes are calculated based on your business type and assist you with coming out with tax strategies that can help you pay the least amount of taxes.
An enrolled agent can also help you figure out which business expenses are deductible from the taxes. They can prepare and file your business, personal, and payroll taxes.
If your file returns are located in more than one state, you definitely need an enrolled agent’s help, since they have the right to file taxes in all states.