Guide to Tax Professionals, Part 4: What Is an Enrolled Agent?

If there’s a chance you will need representation before the IRS, one option is an enrolled agent. This Part 4 of the Guide to Tax Professionals explains what an enrolled agent can do for you. (Part 1, Part 2, Part 3) Enrolled agents practice before all administrative levels of the IRS, including exams, collection actions, and appeals. These “unlimited practice rights” allow enrolled agents, like attorneys and CPAs, to represent any type of taxpayer in any type of tax matter before the IRS.[1] They often also prepare tax returns and consult with clients regarding tax issues.[2]

Like attorneys and CPAs, enrolled agents must meet a set of education requirements before they attain unlimited practice rights. The first option is to pass a Special Enrollment Exam (SEE) testing preparation of individual and business tax returns and representation procedures, and also pass a background check. The second option is to work for the IRS for 5 years doing work that involves interpreting the United States tax code. Enrolled agents also must complete continuing education to keep their licenses.

Unlike attorneys and CPAs, enrolled agents are licensed by the IRS, not states. As a result, the only ethical standards and privileges that apply to enrolled agents are IRS-generated. The IRS details ethics and privileges in its Circular 230,[3] which explains that no privilege or confidentiality applies between enrolled agents and clients in the preparation and filing of a federal tax return.[4] Taxpayers may think that everything they say to an enrolled agent is private, but in truth most communications must be disclosed to the IRS. Because of competing and often conflicting ethical rules enforced by the licensing states and professional organizations, attorneys and CPAs may offer somewhat more protection to the taxpayer.[5]

Further, enrolled agents who are former IRS employees, like tax attorneys who previously worked as federal prosecutors or IRS special agents, may have a tendency to adopt the government’s mindset in representing taxpayers rather than leading with a healthy skepticism of IRS conduct. Keep this in mind when choosing a tax professional to represent you.

— By Julia Damron, Esq., Barnes Law

Julia Damron is an associate attorney with Barnes Law, licensed to practice law in California.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] “Enrolled Agent Information”, IRS.gov, https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information, last updated April 22, 2016.

[2] “Becoming an Enrolled Agent FAQs”, National Association of Enrolled Agents, 2016, http://www.naea.org/become-enrolled-agent/becoming-enrolled-agent-faqs.

[3] Treasury Department Circular No. 230 (Rev. 6-2014), available at https://www.irs.gov/pub/irs-pdf/pcir230.pdf.

[4] “What Is an Enrolled Agent?”, National Association of Enrolled Agents, 2016, http://www.naea.org/taxpayers/what-enrolled-agent.

[5] For an IRS perspective on tax return preparers’ competence in general, see IRS Publication 4832 (Rev. 12-2009), available at https://www.irs.gov/pub/irs-pdf/p4832.pdf.