Circular 230 Update
If you prepare Federal Tax Returns for compensation, you need to understand this
Benefits of Becoming an Enrolled Agent
BEST STRATEGY TO PASS EA EXAM - FREE Online Test Bank: CLICK HERE
What is an Enrolled Agent (EA)?
An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers before any office of the Internal Revenue Service. An enrolled agent can negotiate with the IRS during examinations and appeals, and act in place of a taxpayer signing consents and executing agreements on their behalf. An enrolled agent is the only professional granted a right to practice directly from the U.S. government. Attorneys and certified public accountants (CPA) have state licenses, which limits their practice only to the states where they are licensed. Unlike a CPA or Attorney, an enrolled agent holds a federal license and has the right to represent any taxpayer in any state regarding federal tax matters. An enrolled agent is considered a tax specialist, which sets them apart from attorneys or CPAs who do not always specialize in taxes. The practice of enrolled agents before the IRS is not limited and they may represent taxpayers before the IRS, performing the same tasks as an Attorney or CPA. The capabilities of an enrolled agent extend beyond just preparing returns to areas such as representing clients in cases involving audits, collections, and appeals.
Separate yourself from the crowd
An un-enrolled return preparer may not sign documents for a taxpayer and may only represent taxpayers in limited situations before revenue agents and customer service representatives. An un-enrolled preparer’s ability to practice before the IRS is very limited. Generally, it is limited to the examination function of the Service, and only with respect to a return he or she prepared. Consequently, an un-enrolled preparer cannot practice before appeals officers, revenue officers, and Counsel. In addition, an un-enrolled preparer cannot execute claims for refund, receive refund checks, execute consents to extend the statutory period for assessment or collection, execute closing agreements, or execute waivers of restriction on assessment or collection of a deficiency in tax.
Why Become an Enrolled Agent?
An enrolled agent (EA) does not need a college degree; rather they must demonstrate special competence in tax matters by passing all three parts of the IRS Special Enrollment Examination. An individual with 5 years of relevant employment with the IRS may apply for enrollment to become tax agent (EA) without taking the exam.
How to Become an Enrolled Agent?
You must file Form 23, Application for Enrollment to Practice before the Internal Revenue Service, within one year of the date you passed all parts of the examination. Form 23 is available online at www.irs.gov. The IRS may take approximately 60 days to process your request. During that time, a background check is performed to ensure that you have not engaged in any conduct that would justify the suspension or disbarment of an attorney, CPA, or enrolled agent from practice before the IRS.
The IRS Special Enrollment Examination (SEE):The EA Exam, officially known as the Special Enrollment Examination (SEE), is a three-part exam administered by Prometric on behalf of the Internal Revenue Service. Each part is taken as a separate 100 question EA exam and you will have 3.5 hours to answer all questions for that part. A new EA examination period commences each year on May 1 and continues through February 28 of the following year. No testing occurs during March or April. The period that begins on May 1, 2012 will include questions based on the 2011 tax year. A passing score on each part of the SEE exam is required before the IRS will admit an enrolled agent to practice. Scaled
scores are determined by ranking your EA test results against others taking the examination, on a scale ranging between 40 and 130. A score of 105 is the minimum required to pass the SEE. Test results are available immediately following the EA test. Those who pass are informed, but they do not receive a score. Those who fail receive a score along with a diagnostic report indicating the areas of weakness. A candidate may re-take each part up to four times each testing period. There is a two year window from the time you pass
the first part, to pass the other two parts of the SEE exam.
How to Register for the IRS Special Enrollment Exam
All candidates who wish to schedule an EA examination need a Preparer Tax Identification Number (PTIN) - To obtain a PTIN, you will need to complete a W-7P by mail, fax or online at www.irs.gov. The online method is quickest and provides you with the instantaneous issuance of the PTIN.
EA Examinations are administered by computer at Prometric testing centers. Currently, the Special Enrollment Examination is given at nearly 300 Prometric testing centers located across the United States and internationally. Test centers are located in most major metropolitan areas. Once you have your PTIN, you may register online at www.prometric.com/irs for your Special Enrollment Exam.
The questions are multiple choice. Each provides four options from which you choose your answer. Three different multiple-choice formats are used.
Format 1 - Direct question - Which of the following entities are required to file Form 709, United States Gift Tax Return?
A. An individual
B. An estate or trust
C. A corporation
D. All of the above
Format 2 - Incomplete sentence - Supplemental wages are compensation paid in addition to an employee’s regular wages. They do not include payments for:
A. Accumulated sick leave
B. Nondeductible moving expenses
C. Vacation pay
D. Travel reimbursements paid at the Federal Government per diem rate
Format 3 - All of the following except - There are five tests which must be met for you to claim an exemption for a dependent. Which of the following is not a requirement?
A. Citizen or Resident Test
B. Member of Household or Relationship Test
C. Disability Test
D. Joint Return Test
The Best Strategy to Pass on the First Attempt:
Fast Forward Academy has a number of tools to help best prepare you for the Special Enrollment Exam (SEE) with a comprehensive enrolled agent review course including a study guide, free online test bank, and practice exams. As you know, the EA exam is graded on a curve so here’s how to use our EA review course to give yourself a competitive advantage.
The best strategy to help you pass the first time: