Becoming an enrolled agent can be worthwhile for anyone interested in a finance career that specializes in tax services in the U.S., without the hassle of navigating state licensing requirements. Enrolled agents hold positions that are unique, and hiring outlooks for these tax professionals are positive.
To answer the question, What is an enrolled agent? the National Association of Enrolled Agents (NAEA) describes agents as being able to represent any taxpayer who has an issue with the IRS. Businesses, individuals, estates, and trusts can all use enrolled agents. These tax professionals are the only agents with the authority and federal licensing from the Treasury Department to act on behalf of taxpayers in an unlimited number of tax matters.
After studying the job descriptions of enrolled agents from across the nation, PayScale, an on-demand compensation data firm, found that their job duties often include the following:
- Offering tax guidance. Advising management decisions regarding tax consequences, assessing various financial options, and recommending best practices.
- Handling funds. Requesting disbursements from clients and filing tax payments.
- Preparing tax returns. Collecting, assessing, and preparing tax returns for federal, state, and local taxes.
- Making recommendations. Studying regulations, analyzing options, and advising strategies to help minimize the tax liability of clients.
- Computing outcomes. Determining the potential impact of the tax decisions of management regarding relevant regulations.
Licensing and Certification
It is important for individuals to fully understand the types of credentials that are required to become an enrolled agent because the occupation comes with strict regulations.
Enrolled agents must:
- Earn a bachelor’s degree in a finance, accounting, or economics-related field
- Obtain an IRS preparer tax identification number (PTIN)
- Pass all three parts of the IRS Special Enrollment Examination (SEE)
- Apply for enrolled agent licensing through the IRS
- Pass a tax compliance background check
- Maintain the required number of continued education credits to renew licensing
Many colleges and universities offer courses with information relevant to the work of enrolled agents and the topics included in the SEE. But additional exam-specific study will be necessary for individuals who are seeking to pass the SEE and prepare for their careers as enrolled agents.
Salary and Career Outlook
The average salary of an enrolled agent is $48,788. Entry-level enrolled agents (five or fewer years of experience) can expect to earn an average salary of $42,000; midcareer enrolled agents (five to 10 years), $50,000; experienced enrolled agents (10 to 20 years), $55,000; and late-career enrolled agents (20 or more years), $60,000.
Based on these findings from PayScale, enrolled agents can expect to receive significant increases over the course of their careers.
Enrolled Agent vs. Certified Public Accountant
Many find it difficult to distinguish the various occupations within the finance industry. Those who wonder what an enrolled agent does also often want to understand the difference between this occupation and a certified public accountant (CPA).
According to NAEA, only enrolled agents receive special federally licensed status and work solely on tax- and IRS-related tasks. Prior to earning their licensure, enrolled agents must demonstrate their competence in all areas of tax law, representation, and ethics; then they are granted unlimited practice rights to represent taxpayers in standing before the IRS.
Unlike enrolled agents, CPAs can only receive state licensure. Although they may choose to specialize in tax-related services, they may also work in other finance-related areas. Their work may include accounting, auditing, financial assessment, reporting, and the sale of financial products, among other tasks.
Here are some similarities between CPAs and enrolled agents.
- Represent taxpayers before the IRS
- Prepare tax returns
- Work on collection matters
- Handle tax appeals for individual clients, institutions, businesses, and employers
The difference in this last respect is in the scope of work. The duties of enrolled agents are limited solely to tax services, whereas CPAs can provide these same services separately or with the other bulleted services.
The Treasury Department does not require enrolled agents to have a degree, but a bachelor’s or master’s degree in accounting would be helpful to understanding the complex accounting that the IRS and tax codes use. Getting a Master of Accountancy online from Ohio University is practical because students can work full time while working toward their graduate degree.
Find out more about how Ohio University’s online Master of Accountancy program strives to prepare students for success as financial professionals in today’s competitive landscape.