Would you like to become an enrolled agent in finance? Although this professional accounting credential is not as widely recognized by the general public as the certified public accountant designation, the individuals who hold it have demonstrated to the nation’s ultimate taxation authority, the Internal Revenue Service, that they possess expert skills in the field of taxation.
What is an Enrolled Agent in Finance?
Arguably a taxpayer’s most important ally when tax season rolls around, an enrolled agent is a federally licensed tax expert allowed to practice in any of the nation’s fifty states. Focusing exclusively on taxation, these accounting professionals prepare tax returns, provide answers to questions about local, state and federal tax codes, aid in tax planning, and dole out tax advice regarding estates, trusts, corporations, partnerships and other legal entities. Perhaps most importantly to anyone who is rattled by the thought of having their tax return audited, enrolled agents are capable of representing their clients in clashes with the IRS. As the National Association of Enrolled Agents points out, anyone can complete a tax return, but only a select group of professionals is actually able to freely represent their clients’ interests in front of the IRS. In fact, enrolled agents, certified public accountants and lawyers are the only ones legally allowed to do so.
What Education is Required to Become an Enrolled Agent in Finance?
While certified public accountants and lawyers must fulfill strict educational requirements in order to attain their right to practice, there are no formal educational requirements for individuals interested in becoming enrolled agents. This does not mean that enrolled agents do not know their stuff; they must demonstrate their comprehension of taxation matters to the notoriously stern IRS in order to obtain their licensure. Instead, this flexibility allows accounting professionals to earn their knowledge and skills through varied career and educational paths.
What is Required to Become an Enrolled Agent?
According to the IRS, accounting professionals must follow a certain procedure to become enrolled agents. Accountants who have never been directly affiliated with the IRS must obtain a Preparer Tax Identification Number. Next, they must apply to sit for the Special Enrollment Exam. After successfully completing this three-part multiple-choice test, aspiring agents must enroll, pay the correct fee and pass a tax compliance review that confirms that all of their personal tax filings are in order. Current or past employees of the IRS who spent at least five years in a position where they worked heavily with the tax code may be allowed to skip the exam. But, they still need to complete the other steps.
How Do Enrolled Agents Maintain Their Licensure?
Licensure as an enrolled agent is not conferred for life. To maintain their status, enrolled agents must renew their Preparer Tax Identification Number annually and renew their licensure every three years. In order to successfully renew their licenses, enrolled agents need to demonstrate their commitment to staying up-to-date on the happenings in their field by completing 72 hours of approved continuing education coursework during the three-year period.
Why Aren’t Enrolled Agents More Widely Recognized by the General Public?
In many areas, enrolled agents advertise their services clearly. But, other states have laws that block professionals who are not certified public accountants from referring to themselves as anything more than accountants, a situation Forbes discusses in the article, “Enrolled Agents Deserve More Respect.” While these laws are intended to protect the public by preventing confusion regarding accounting accreditations, they can make finding an enrolled agent tough. To aid consumers in finding enrolled agents in their area, the National Association of Enrolled Agents offers an online referral service.
Related Resource: Certified Financial Planner
The certified public accountant designation may be the best-known professional credential accountants can secure to advance their careers, but it is far from the only one. Individuals who are interested in specializing in taxation may prefer to become an enrolled agent in finance.