Becoming an IRS enrolled agent is one of the most impactful ways you can invest in your career as a tax preparer. If you’re looking for ways to grow your tax preparation business, here’s how being an enrolled agent could help:
What is an enrolled agent?
Other than CPAs and attorneys, enrolled agents are the only other tax preparers who have unlimited representation rights before the IRS. As an enrolled agent, you can represent any taxpayer in almost any situation.
Since non-credentialed tax preparers have no representation rights and Annual Filing Season Program participants have only limited representation rights, the enrolled agent credential offers a chance to significantly expand your services.
Why become an enrolled agent?
For tax professionals, becoming an EA can help grow your business, enhance your skills, and provide a more comprehensive service to your clients. Here are some compelling reasons to consider this career path:
- Represent clients before the IRS – As an enrolled agent, you have the authority to represent clients in front of the IRS, providing valuable support during audits and other proceedings.
- Increase income potential – EAs often command higher fees for their expertise. As an enrolled agent, you can expand or enhance your existing service offering with services like tax planning, audit defense, tax education, or financial consultation.
- Grow your tax prep business – Becoming an EA enhances your credibility and trustworthiness. This specialized knowledge and credential can attract more clients, as many individuals and businesses prefer to work with tax professionals who have the authority to handle complex tax issues directly with the IRS.
- High demand due to CPA shortage – The ongoing shortage of CPAs has increased the demand for enrolled agents, presenting a lucrative opportunity for newcomers to this area of the industry.
- Lower barrier than CPA licensing – The requirements to become an enrolled agent are generally less stringent than those for CPA licensure, allowing for a quicker path to certification and practice.
Steps to becoming an enrolled agent
Because enrolled agent status is “the highest credential the IRS awards,” earning it does take time and commitment.
There are two paths to becoming an enrolled agent. The first and most common involves taking a comprehensive exam and following these steps:
Path 1: Take the Special Enrollment Examination (SEE)
Step 1. Obtain a PTIN – Requesting your Preparer Tax Identification Number (PTIN) usually only takes 15 minutes and is free of charge. You’ll need your Social Security number, personal information, business information, and professional certifications to complete your application. If you’re already working as a tax preparer, you can use your current PTIN.
Step 2. Prepare for the Special Enrollment Examination (SEE) – The SEE is an exam created by the IRS to assess your understanding of the federal U.S. tax code. The exam consists of three parts:
- Individual
- Representation, Practices, and Procedures
You must register separately for each portion of the exam and pay a fee of $184.97 for each test. Enrolled Agents typically spend an average of 200 to 300 hours studying for all three parts of the exam. To make the most of your investment, create a plan for how to study for the EA exam so you can pass each section on your first attempt. Prepare 3 to 6 months in advance to ensure enough time to study and prepare effectively. All three sections must be completed and passed within two years of each other.
TaxSlayer Pro partners with Surgent, an accounting and financial education platform, to offer discounts on EA prep courses. Courses include study materials, learning software, and unlimited practice exams for those looking to take the SEE exam to become enrolled agents.
Step 3. Submit an application to the IRS – After you’ve successfully passed the SEE, complete your enrolled agent application online or by mailing Form 23 to the IRS.
Step 4. Pass the IRS’s suitability check – The suitability check will investigate your criminal background and tax compliance history. Any unfiled returns or unpaid taxes could disqualify you, so make sure that you’re up to date and compliant before submitting your application.
Path 2: IRS Experience Route
The second, less common path to enrolled agent status is for former IRS employees who meet the requirements to bypass the SEE. If you have at least five years of experience in certain IRS positions as well as the experience outlined in Circular 230, you can become an enrolled agent by passing a background check and verifying your training and work experience.
Circular 230 includes specific qualifications in the practice of tax matters before the IRS. This means you should have direct exposure to various tax-related responsibilities such as preparing tax returns, representing taxpayers in audits, or providing tax advice. This ensures that you have the necessary knowledge to competently serve taxpayers in a professional capacity as an enrolled agent.
Requirements to maintain enrolled agent status
Fortunately, after the hard work of becoming an enrolled agent, maintaining your EA credential is relatively simple. To keep your credential active, you must renew your PTIN each year and complete 72 hours of approved continuing education every three years. This includes a minimum of 16 hours of education each year.
Note: Any education completed before your initial certification does not count toward these continuing education hours. Additionally, at least two hours of continuing education each year should focus on ethics and/or professional conduct.
Be sure to verify that you’re obtaining your continuing education credits through an IRS-approved provider.
If you think becoming an enrolled agent is the right choice for you, check out the IRS’s Enrolled Agent FAQ page.
