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Are you a tax preparer looking to advance your career? Or, are you planning to break into the tax profession? In either scenario, the best thing you can do is earn the enrolled agent (EA) credential. The EA designation offers numerous advantages and is valuable to tax professionals at all career stages. So, learn about the benefits of becoming an enrolled agent so you have the incentive you need to start your own EA journey.
The National Association of Enrolled Agents (NAEA) gives this definition of an enrolled agent:
An enrolled agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels—examination, collection, and appeals—of the Internal Revenue Service. In addition to taxpayer representation, enrolled agents often provide tax consultation services and prepare a wide range of federal and state tax returns.”
Additionally, when we break the title down, we can see that “enrolled” means permitted to practice by the federal government. And “agent” means a person authorized to appear in place of the taxpayer before the IRS. So, obviously, EAs have impressive and wide-ranging responsibilities.
In short, the EA designation can be particularly beneficial for certain tax professionals. Specifically, the designation is the best path forward for a Registered Tax Preparer (RTP) or an unenrolled preparer without an accounting or law degree.
However, if you don’t fit into one of these categories, don’t shy away from earning the EA. Truth be told, the benefits may apply to you too.
The 6 reasons for becoming an enrolled agent are impressive, as they include:
Now, the U.S. Certified Public Accountant (CPA) license is one of the most respected accounting certifications in the country. And when it comes to representing clients before the IRS, the EA is completely on par with the CPA. Therefore, if certain obstacles are preventing you from earning the CPA, you can still specialize in tax with an EA credential and find success.
According to the IRS, CPAs and EAs can represent a taxpayer without any limitations. As an EA, you’ll be listed in the IRS National Database and have clearance to handle any type of tax matter, including audits, collections, and appeals. You can also represent clients before any IRS office and in any state.
Now, EAs do have to meet certain standards to remain in the IRS National Database. In particular, to maintain your EA license, you’ll have to keep up with the Continuing Education (CE) and Preparer Tax Identification Number (PTIN) requirements. You can learn more about these and other enrolled agent requirements. But rest assured, they are not overly difficult to accomplish.
Furthermore, your professional clearance level as an EA ensures that you never have to turn away a client. Consequently, you can provide a wide range of services to the public. Essentially, you have endless opportunities to represent clients before the IRS. For this reason alone, you set yourself apart from your non-enrolled peers.
In the chart below, the National Association of Tax Professionals (NATP) compares the abilities of various tax professionals. And as you’ll see, when it comes to taxes, there’s nothing you can’t do as an EA.
|No Designation||Annual Filing Season Program||
Certified Public Accountant
|Provide missing information|
|Call about processing|
|Respond about math errors and preparation|
|Argue tax law|
|On behalf of the taxpayer, disagree with the IRS on a tax return they prepared|
|Disagree with the IRS for the taxpayer on a tax returnanyone prepared|
|Communicate with the IRS in an audit on a tax return they prepared|
|Talk with the IRS in an audit on a tax return that anyone prepared|
|Speak with the IRS collections office|
Of course, the IRS doesn’t award unlimited representation to just anyone. Therefore, you have to fulfill specific requirements to receive the EA credential. But once you meet these requirements and get the official stamp of approval, you’ll be recognized as a true tax expert.
So, in the process of your earning your EA designation, you expand your knowledge of the tax profession and your capabilities within it. Then, with the designation on your resume, you gain instant credibility. And, the Department of Treasury regulates the EA designation, so all 50 states recognize and respect it.
As a result, the EA license carries national acceptance and esteem. And with that, it stands in stark contrast to the CPA license. Of course, the CPA license is highly regarded, but it is not universally regulated. As you may know, individual state boards of accountancy grant the CPA license. Therefore, the CPA application process and CPA requirements vary from state to state.
Also, the CPA Exam syllabus lacks a deep discussion of tax. So, CPAs may or may not have the same level of tax knowledge as EAs. And they may or may not be able to offer a similar range of services.
Additionally, few CPAs will choose to keep up with and perform tax services. As a result, they’ll have to consistently decline opportunities to work with clients. So, with the EA credential, you’re going to be much better situated in the tax industry. You’ll have unmatched knowledge and skills, and you’ll be ready to help clients when and how they need.
Remember, as an EA, you’ll be a confirmed tax expert with unlimited rights before the IRS. Accordingly, you’ll have nearly endless opportunities to earn money. And because you’ll be qualified to complete the most complicated tax returns, you can push your income potential even higher.
Specifically, the services you can offer as an EA include:
These services are lucrative because they are vast and in demand across all industries. A wide range of entities needs the assistance of EAs, such as accounting firms, law firms, investment firms, corporate accounting departments, state departments of revenue, banks, and private practices.
Obviously, with so many opportunities available to you, you’ll have additional freedom in how, when, and where you work. You can decide if you want to work full-time or part-time, year-round or just during busy season, for yourself or someone else. Moreover, you can choose to focus on certain types of accounts or clients. In any case, your earnings potential is up to you.
According to PayScale, EAs command an average hourly rate of $20.46. That number translates into an average salary of $48,707 per year. And of course, the more experience you have as an EA, the higher your salary.
|Level||Years of Experience||Average Pay|
As we all know, only 2 things in life are certain: death and taxes. And because taxes are a sure thing, so is your career as an EA. Basically, as long as people have to pay taxes, they’ll need you. In fact, Congress created the EA role way back in 1884. So, we can safely say that this designation has staying power.
EAs will be in demand indefinitely, even during tough economic times. When other professions and industries may be struggling, you’ll be able to stay afloat with your EA designation. But people also need EAs when the economy is healthier for several reasons.
First, the tax code is continuously changing, and people need help understanding and applying those changes. Second, the IRS has been increasing the number of examinations they perform each season. As a result, more people are calling on EAs to get them through audits.
The EA credential has one clear advantage over other accounting certifications including the CPA, CMA, and CIA. To earn the EA designation, you don’t have to meet any education or experience requirements. That’s right: you don’t need a specific degree or job to become an EA.
Instead, the process of becoming an EA consists of 3 steps:
A PTIN is a Preparer Tax Identification Number. Consequently, all paid tax preparers (i.e., enrolled agents) must have a PTIN.
To receive a PTIN, you simply need to create an account on the IRS website and complete the application.
Officially, the EA exam is known as the Special Enrollment Examination (SEE). The exam consists of 3 parts and covers federal taxation. For each part, you must answer 100 multiple-choice questions in a 3.5 hour time period.
The EA exam pass rates range from 61% to 86%. So, the exam shouldn’t be too difficult if you’re in tax or plan to practice tax.
However, you may be able to avoid the EA exam altogether. You can also earn the EA credential if you have 5 years previous job experience with the IRS. Specifically, you can become an EA if you have consistent experience applying and interpreting the Internal Revenue Code and certain tax regulations. Typically, candidates who qualify for the exam exemption have held one of these taxpayer-facing positions:
EA candidates with relevant IRS experience must fill out a form and undergo a background check and review of their tax transcripts.
Once you pass the 3-part EA exam, you have 1 year to apply for enrollment. As part of the application process, you must complete a form and pay a $30 fee. Application processing takes 60 days. During this time, the IRS will conduct a review of your personal tax compliance.
Finally, the EA designation provides a significant return on investment. Meaning, you’ll spend a relatively small amount of money to bring yourself unlimited earnings potential.
The typical cost breakdown for the EA designation looks like this:
Altogether, earning the EA designation will likely cost you less than $1,100. That total is significantly lower than what you’ll pay for other accounting certifications.
But you also must consider your time investment as well. Specifically, I’m referring to the amount of time you’ll spend studying for the EA exam.
So, you must pass all 3 of the EA exam parts within 2 years. Now, if you’re highly familiar with the tax code, you can sufficiently prepare for the exam in a matter of 4 to 7 weeks. However, if you need further tax law training, you could spend at least 4 months studying for the exam. In this case, you’ll need to spend more time on study and prep. But know that study time for the EA exam is generally still less than that of other exams. For example, it can take candidates 1-2 years to pass the CPA, CIA, or CMA exam.
Once you have the EA credential in hand, you’ll need to maintain it. CE requirements are common in the world of accounting certifications. For the EA credential, you must clock 72 hours of CE every 3 years with a minimum of 16 hours per year. At least 2 of the annual 16 hours must discuss an ethics topic.
CE courses can cost anywhere from $200 to $300 a year. But as you’ve learned, the EA salary can handle that figure with ease.
As an EA, you’ll also have plenty of unique networking opportunities. You’ll have the chance to attend numerous Enrolled Agent Association events. Typically, these events include a learning component so you can expand your tax knowledge. They also include a social component so you grow your professional network. And, you may even be able to earn CE at conferences and seminars.
As you may have noticed, one of your EA expenses could be an enrolled agent review course. And you really should invest in an EA review course because they are an invaluable resource for EA exam success. They’ll also help you pass the exam on your first try!
For example, some courses include an access until you pass guarantee and assistance from exam mentors. With these features, your EA journey can be pretty short and smooth. Therefore, you should learn more about EA review courses and get my personal recommendations. I can help you find the right enrolled agent course for you. And, I offer EA course discounts so you can save big on your exam prep.
Just like your EA review course, I’m here to help you become an enrolled agent. In my 10-step guide, I outline the path to becoming an enrolled agent from start to finish and tell youhow to become an enrolled agent. Additionally, I provide answers to EA exam FAQs to keep you moving forward toward the EA designation.
I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!