Enrolled Agents: How an IRS Enrolled Agent Can Help You With Taxes
What is an IRS Enrolled Agent?
An Enrolled Agent (EA) is a tax professional who represents taxpayers in matters relating to the Internal Revenue Service (IRS) tax laws. An EA is licensed to represent taxpayers before the IRS on disputes, they can prepare tax returns, and they can answer questions regarding tax laws. This designation is comparable to an accountant or an attorney that specializes in IRS matters relating to tax laws. However, unlike an attorney or CPA, they receive their authority from the federal government instead of state governments. The IRS Enrolled agent can choose to represent any taxpayer and may specialize in certain areas of tax law that they practice. The benefit of working with an enrolled agent is that they specialize in dealing with the IRS.
Typically the enrolled agent acts as a legal representative for the taxpayer in issues that relate to IRS tax matters. The enrolled agent must pass the three parts of the Special Enrollment Exam (unless they qualify from having years of experience working for the IRS) which certifies that the agent has proven competence in the areas of tax law. Moreover, enrolled agents must complete 72 hours of continuing education every three years to maintain their status.
The Enrolled Agent designation was recognized on July 7th, 1884, after many taxpayers were taken advantage of by dishonest tax representatives. These immoral tax representatives were behind many fraudulent war loss claims following the Civil War. Therefore, congress acted and President Chester A. Arthur signed the bill that recognized the enrolled agent. In 1913, when the income tax became law with the ratification of the 16th amendment, enrolled agents began to help with taxpayers who needed monetary relief or who needed various tax returns filed. As audits increased over the years, enrolled agents began to help with taxpayer representation for things such as collections, audits, and appeals.
Reasons to Seek the Help of an Enrolled Agent (EA)
Tax laws and the regulations issued by the IRS can be overwhelming. An enrolled agent can assist the taxpayer with understanding the inner workings of the law and know the best strategy to deal with the unique circumstances for their tax-related issues. An enrolled agent understands Federal tax law, IRS regulations, and specific situations that relate to taxpayers and, most importantly, how to obtain the best, most cost-effective outcome for the taxpayer.
If any of the following circumstances apply to you, an enrolled agent is one type of tax professional that can provide needed relief.
- Tax Audit: Tax audits happen rarely, but when they do, an enrolled agent can help. An enrolled agent can help you navigate the process and provide support along the way.
- IRS investigation: Being investigated by the IRS is a very critical matter. Depending on your situation, an IRS enrolled agent who knows the IRS laws inside and out can offer a level of consult to you and coach you through an investigation. Furthermore, a tax attorney can help if the investigation becomes criminal.
- Tax Fraud: If you have committed tax fraud such as underreporting income, claiming false or deductions or claimed credits that you did not earn, this could be considered tax fraud. A tax attorney or an IRS enrolled agent can help you to navigate through the process of the investigation.
- Failure to file and failure to pay tax penalties: Failing to file tax returns, or not paying taxes owed eventually results in tax penalties that can become expensive depending on the amount of time that has passed. An IRS Enrolled Agent can work in your favor to reduce significantly the tax penalties and costs associated with the consequences of failing to file taxes under IRS regulations.
- Unfiled tax returns: Having unfiled tax returns can lead to steep penalties and interest from the IRS. An enrolled agent can help you file old taxes and ensure that you get the maximum amount of deductions as well as helping you work through any penalties and interest that you may incur.
- Tax Liens: If you have had a tax lien filed against you, it is a good idea to seek the help of a tax professional. An enrolled agent is one type of tax professional that can analyze your situation and find the best course of action to get the tax lien removed and prevent the IRS from taking any further collection actions.
- Tax Levies: A tax levy is a serious matter, and the IRS will continue to seize assets until they have taken enough to cover all the taxes owed plus penalties and interest. An enrolled agent is aware of the many different ways tax levies can be stopped. It is a good idea to seek help from a tax professional when faced with this situation.
Resolution to Tax Issues
An enrolled agent can offer sound advice about many of the solutions to tax issues provided by the IRS. The complexity of the solutions provided by the IRS to deal with tax problems are something that an enrolled agent is highly trained to negotiate.
The following are examples of some of the resolutions that an IRS enrolled agent can negotiate on your behalf.
The IRS enrolled agent or tax attorney may focus on resolving tax problems and be well versed in the regulations and workings of the IRS. Because the enrolled agent has passed both competency and certification to practice, taxpayers have the peace of mind knowing that they are not risking getting “scammed” by the many self-proclaimed tax relief companies that advertise their services over the internet.