What is an Enrolled Agent (EA)?
Enrolled Agents: The Tax Professionals
The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the Treasury Department. This Congressional regulation made Enrolled Agents the first to be appointed as representatives, with CPAs and attorneys being given this right later.
An Enrolled Agent is an individual who has demonstrated technical competence in the field of taxation. The term "Enrolled", means the individual, is licensed by the federal government. The term "Agent", means the individual, is authorized to appear in place of the taxpayer at the Internal Revenue Service. Only Enrolled Agents (EAs), attorneys, and Certified Public Accountants (CPAs) may represent taxpayers before the IRS at all administrative levels.
Can't my unlicensed tax preparer do as much? No! The Department of the Treasury and the Internal Revenue Service recognize only the three categories of tax practitioners noted above to represent all taxpayers through all of the levels, including District Director and Appeals level. IRS Publication 947, page 3, states, "An unenrolled return preparer may represent the taxpayer only concerning the tax liability for the year or period covered by the return that he or she prepared. The unenrolled return preparer is only permitted to represent taxpayers before the examination function of the IRS and is not permitted to represent taxpayers before Appeals, Collection, or any other function of the IRS." For more information about what an unenrolled return preparer may and may not do please see - www.irs.gov/businesses/small/article/0,,id=107751,00.html.
In addition, in Virginia, the Supreme Court of the Commonwealth of Virginia regulates, (1) who can hold themselves out to be a tax expert in UPR 5-101, "Holding Out as a Tax Expert" and, (2) who can practice law in tax matters in UPR 5-102, "Practice Law in Tax Matters". Please see the Virginia State Bar's web page
www.vsb.org/docs/upr_2007-08pg.pdf for a copy of the Rules of the Virginia Supreme Court - Unauthorized Practice Rules and Considerations.
The Supreme Court's Rules state, a non-lawyer may hold himself out as an expert in the preparation of tax returns and may prepare tax returns. A Certified Public Accountant or a person duly enrolled [Enrolled Agent] may hold himself out as authorized to practice before the Internal Revenue Service, as those terms are defined by the then applicable federal regulations and to the extent permitted therein.
If I am audited, shouldn't I hire an attorney? If your problem is of a criminal nature, yes. Otherwise, you may find an EA is not as expensive. EAs and CPAs have the exact same practice rights before the IRS, in non-criminal matters, as attorneys and EAs specialize in taxes.
Anyone representing taxpayers before the IRS is required to abide by the provisions of U.S. Treasury Department Circular 230. Circular 230 contains the rules, duties and restrictions governing practice before the Internal Revenue Service and anyone found to be in violation of its provisions may be suspended or disbarred.
In addition, all members of the Chapter are required to be members of the National Association of Enrolled Agents (NAEA). Members of NAEA are required to adhere to the association's "Code of Ethics" and "Rules of Professional Conduct" in dealings with taxpayers and the IRS.
An EA's expertise in the continually changing field of tax law enables them to effectively represent taxpayers audited by the IRS. EAs are required to complete 72 hours of continuing professional education, reported every three years, to maintain their status as an EA. Members of NAEA are required to complete a minimum of 30 hours of continuing professional education each year in the interpretation, application and administration of federal and state tax laws in order to maintain membership in the organization. This requirement surpasses the IRS' required minimum of 16 hours per year.
Only the Enrolled Agent is required to demonstrate to the Internal Revenue Service their competence in matters of taxation before they may represent a taxpayer before the IRS. Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all EAs specialize in taxation. EAs are the only taxpayer representatives who receive their right to practice from the United States government and can practice in all 50 states. (CPAs and attorneys are licensed by the states and can practice only in the states in which they are licensed.)
Privilege and the Enrolled Agent
The IRS Restructuring and Reform Act of 1998 allows federally authorized
practitioners (those bound by Circular 230) a limited client privilege.
See
www4.law.cornell.edu/uscode/26/7525.html for additional information.
This privilege allows confidentiality between the taxpayer and the Enrolled Agent under certain conditions. The privilege applies to situations where the taxpayer is being represented in cases involving audits and collection matters. It is not applicable to the preparation and filing of a tax return. The new privilege does not apply to state tax matters, although a number of states have an accountant-client privilege. Please note that Virginia does not have an accountant-client privilege.
How to Locate an Enrolled Agent
The ability to locate an Enrolled Agent in your area is as close as your computer, your telephone or your mailbox. You can click here for our members, or go to the National Association of Enrolled Agents (NAEA) or Virginia Society of Enrolled Agents (VASEA) web sites noted below.
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Tax laws are subject to change at any time. Consult your local Enrolled Agent for the latest information.
Please Note: This information is provided to you by the Blue Ridge Chapter of the Virginia Society of Enrolled Agents for use as general guidance. The Chapter is not engaged in rendering specific legal, tax, or accounting advice. Only a qualified tax professional with all the facts at his or her disposal can determine the appropriateness of the application of any law to a given set of facts.
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