A lot of tax professionals want to advance their careers but don’t know which to choose: EA vs CPA. Both are great certifications that will help you get promoted, earn a higher salary, and guide your career. Both of these licenses are great options, but which one should you get. Let’s compare each one and
Category: EA Exam
What Is An EA?
If you’ve ever had difficulty with the IRS, you might be familiar with an enrolled agent (EA). An enrolled agent is a tax practitioner that represents taxpayers for audits, collections and appeals to the Internal Revenue Service (IRS). EA’s are tax professionals authorized by the U.S. Department of the Treasury to act on behalf of their clients, and have a crucial role in helping to navigate issues with the IRS.
Let’s take a closer look at what Enrolled Agents do for companies and clients they work with.
What does an EA Do?
Enrolled Agents play an important role when tax season rolls around. Not only do Enrolled Agents collect all of a company’s yearly financial information to prepare federal, state and local tax returns, they also act in an important consultant role to help management make tax decisions.
Here are some of the common tasks an Enrolled Agent is expected to perform:
- Consult with management on various tax matters and consequences of different courses of action, and recommending the best plan for filing and paying taxes.
- Compute taxes for each of the different courses of action recommended to management
- Pay tax payments to the IRS
- Analyze and format all financial information to prepare returns
Strategize ways to minimize tax liability and recommend them to management team
Essentially, an Enrolled Agent must know the tax code like the back of his or her hand to correctly forecast and give recommendations to management when filing taxes. Furthermore, an EA must keep current on any provisions or updates to the tax code that occur yearly.
We’ll break down the process of becoming an EA below:
How do you become an EA?
Becoming a certified Enrolled Agent (EA) requires four steps: registering for your Preparer Tax Identification Number (PTIN), study for and pass the Special Enrollment Examination (SEE), apply for enrollment through the National Association of Enrolled Agents, and pass a suitability background check.
However, one loophole exists for IRS employees. If you’ve worked for the IRS for 5 years, you can bypass most if not all of these requirements because of your technical experience.
Let’s take a closer look at each step below:
Preparer Tax Identification Number (PTIN)
Applying for and receiving your PTIN is fairly simple. However, you’ll need a lot of information handy before you begin the application process. Here’s what you need:
- Your Social Security Number
- Personal Information (Name, Address, DOB)
- Business Contact Information
- Previous year’s individual tax return
- Explanation for felony convictions (if you have any)
- Explanations for problems with previous tax obligations (if you have any)
- Professional Certification information (if applicable)
Once you complete the application, your PTIN is issued to you. Hence, you can move onto the next step - the SEE exam!
Special Enrollment Exam (SEE)
The Special Enrollment Exam (SEE) is divided into 3 parts:
- Part 1 - Individuals
- Part 2 - Businesses
- Part 3 - Representation, Practices and Procedures
Unlike the CPA exam and many other professional accreditations, there is no education requirement for taking the SEE exam. That’s because the exam is purely based on your technical knowledge of tax code - you don’t need any other types of professional education or work experience to sit for the exam.
As we mentioned before, IRS employees who have worked for the agency for five years can bypass the exam and application process because of the technical skills they’ve gathered working for the agency!
There is a one-time, nonrefundable cost for the exam. Furthermore, if you fail the exam, you’ll have to pay the $184.97 fee again to retake it.
Also, each part of the SEE contains 100 questions; you’ll have 3.5 hours to work through them all.
Scheduling Your Exam
Prometric is the platform used to locate a testing center, pay your test fees, and schedule your exam. You can schedule your SEE exam anytime between May 1 through February of the following year. However, tests are not given during the “blackout” period in March and April, during which time the test content is updated with the most recent tax codes and provisions.
Applying for Enrollment
After you pass the SEE exam, you’ll need to apply for official enrollment as an agent. Basically, this is a background check that ensures you meet their tax reporting requirements and code of ethics. Ultimately, this process ensures you haven’t done anything that would bar you from practicing tax preparation and representation before the IRS.
To complete the application, you’ll need to pay the $30 application fee and submit Form 23.
Wait for the Results of The Suitability Check
As we mentioned before, the final step is waiting for the IRS to review your application and perform a background check. If you have any previous felony convictions, unpaid taxes or issues with tax attorneys or tax preparers in the past, you’ll need to explain these to the IRS to find out if these will impact your acceptance at all.
Once your suitability check clears, congratulations! You’re now authorized to represent taxpayers before the IRS.
How Much Will I Make As an Enrolled Agent?
Becoming an Enrolled Agent is a decently compensated position, and also acts as a useful stepping stone into other tax preparation and representation careers. According to Payscale.com, the average salary of an enrolled agent is $48,000 a year. However, this can go as high at $74,000 depending on the size of the company or organization your work for.
Additionally, many Enrolled Agents can make a sizable commission based on the organizations they work with.
What Career Opportunities Are Available for EA?
An Enrolled Agent position is a valuable stepping stone for several finance-related career fields. Here are some of the most popular career paths for an EA to pursue:
A business tax director creates the tax strategy for the business or corporations they work for. In addition to preparing tax returns and reports, tax directors also implement new procedures according to tax laws both domestic and foreign (if the company has dealings overseas).
Tax Manager / Senior Tax Manager
A Senior Tax Manager works with large corporations to ensure they are compliant with local, state and federal tax obligations. They are also responsible for overseeing internal audits and implementing tax policies into accounting practices across corporations.
Study for your EA Exam
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What Is An Enrolled Agent?
Learn what it means to become an EA (Enrolled Agent), and see if this career path is right for you. From studying for the exam to actuailly being an EA!
Enrolled Agent (EA) Salary Guide
Find out if becoming an Enrolled Agent is the right career path for you. Compare your salary potential and career trajectory as an EA today!