| According to the IRS, there are roughly 1.2 million paid | | | | return without demonstrating a minimum level of |
| tax preparers in the United States. Approximately | | | | capability. This is changing later this year when all paid |
| 46,000 of these individuals are enrolled agents. In | | | | preparers will need to register with the IRS and pass a |
| addition to preparing returns, the EA designation can | | | | competency exam. The new regulations will not |
| allow a practitioner to represent and act on behalf of | | | | require Circular 230 practitioners (enrolled agents, |
| any taxpayer before any office of the IRS. When | | | | certified public accountants and tax attorneys) to take |
| practicing before the IRS an EA has the same | | | | any of the new return preparer tests to prove their |
| privileges as a CPA or Attorney, who are also | | | | competency. Everyone else who will prepare returns |
| considered Circular 230 professionals. Unenrolled | | | | for a fee is required to take the new exam. These |
| preparers (unlike enrolled agents, attorneys or CPA's) | | | | unenrolled preparers have not met the minimum |
| do not have the full privileges of practice before the | | | | standards set by IRS and will need to take the IRS |
| IRS. They may only represent taxpayers in a limited | | | | exam, regardless of any other designations they may |
| capacity for returns that they prepared. | | | | have earned. |
| Why have only a select few tax professionals chosen | | | | As you might imagine, many tax professionals will be |
| to earn the EA credential? After all, most have no | | | | required register with the IRS, pass the new tax |
| credentials at all and there are almost ten times as | | | | preparer exam, and satisfy annual continuing education |
| many Certified Public Accountants (CPA) as there are | | | | requirements. Some of these individuals will likely opt |
| enrolled agents. Perhaps it is because enrolled agents | | | | for the enrolled agent exam in order to increase their |
| were the only tax professionals required by the US | | | | capabilities. We expect the ranks of the EA to grow |
| government to demonstrate their tax expertise by | | | | substantially as the designation allows a practitioner to |
| passing a difficult qualification exam. Most tax | | | | do far more than an unenrolled "paid preparer." |
| preparers, both experienced and inexperienced, have | | | | Mandatory registration for paid preparers is set to |
| elected not to take the EA exam because they simply | | | | begin later this fall, and we anticipate administration of |
| were not required to do so. While I am certainly not | | | | the new exam as early as the first half of 2011. Since |
| attempting to diminish the qualifications, neither | | | | those who hold the EA credentials are exempt, the |
| attorneys nor CPA's are required to demonstrate | | | | smart choice for many will be to go for the EA before |
| competence in tax preparation or representation | | | | they are required to register. |
| matters before they may stand for taxpayers before | | | | There is no education requirement before an individual |
| the IRS. Perhaps that is because the prerequisite | | | | may take the EA Exam. Even the most seasoned tax |
| education and bar exams and are viewed as difficult | | | | professionals can have difficulty on the test without |
| enough to justify admittance. | | | | proper study and a good enrolled agent course or |
| There are several reasons the enrolled agent EA | | | | study guide. There are several different types of |
| designation is quickly becoming the title of choice for | | | | enrolled agent courses available in the market today. |
| many of these tax professionals. For one, we are | | | | Whether you prefer online questions, or a book, there |
| about to enter into a period of regulatory oversight for | | | | plenty of options available to help you learn fast and |
| all paid preparers. In the past, anyone could prepare a | | | | pass. Good luck. |