What is an Enrolled Agent?

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Dear Accounting Professor:

Can you explain what an Enrolled Agent is and what one has to do to become an Enrolled Agent?

Student


Dear Student:

An Enrolled Agent (EA) is someone who demonstrated knowledge of the federal income tax laws by passing three exams. The first exam is primarily focused on tax matters as they relate to the individual taxpayer. The second exam focuses on tax matters related to the business environment. The third exam focuses on taxation as it relates to estates, gifts, trusts, and matters related to representing taxpayers before the Internal Revenue Service (IRS). The IRS determines the content of each exam and administers the process of obtaining the EA credential.

A quick search on the Internet about Enrolled Agents suggests some confusion exists as to if this is a professional credential or a license. For example, the IRS describes its EA as being "the highest credential" available in the IRS (see https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information). Others describe the EA as a license. If you subscribe to the thought process that governments issue licenses and all others issue credentials, then it is a license. If you recognize that governments issue both licenses and credentials, then the EA might actually be both a license and a credential. Ignoring that aspect of confusion, no one becomes an Enrolled Agent until after they have passed the required exams and the IRS has completed its background checks on that applicant.

An active Enrolled Agent can represent taxpayers before the IRS and most states' income tax authorities involving non-criminal tax matters. (I use the phrase "most states" because seven states do not have an income tax. EAs are recognized in all states per https://www.surgent.com/ea-exam-review/about-ea-exam/.) The same is also true for actively licensed Certified Public Accountants (CPA). Neither can represent taxpayers before the tax authorities when criminal matters are involved.

As a point of interest  for those considering becoming an EA, the exam pass rates for the EA average above 70% for all three parts (see https://www.gleim.com/enrolled-agent-review/blog/enrolled-agent-exam-pass-rates/ for more details). Two other key points of interest are the absence of minimum education requirements and no supervised experience requirements to become an EA. With this in mind, it is not uncommon to find EAs who have bachelor degrees or higher. Many CPAs and some attorneys are also EAs.

My experience suggests that most are not familiar with the EA credential. I am confident that this is not the case with the CPA license. As to why it is this way, I think it is because the EA is not as well marketed as the CPA is. The number of EA holders is less than 10% of the total number of actively licensed CPA holders (including holders of both the EA and CPA like me). To me, this is fascinating because the EA credential's origins were traced back to 1884 (see https://www.naea.org/naea-education-foundation/enrolled-agents/) but were not formally labeled as Enrolled Agent until the mid-1966. Exams to become an EA were not introduced until the late 1959 (see https://fastforwardacademy.com/course/enrolled-agent-exam/enrolled-agents).

Location: Sloatsburg, NY 10974, USA

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