Some professional accounting credentials, like the CPA (certified public accountant), are well-known. Others, like enrolled agent (EA), you might not be familiar with. Accounting professionals who have earned this designation are qualified to represent individual, commercial and nonprofit taxpayers before the Internal Revenue Service (IRS).
The Role of an Enrolled Agent
First and foremost, enrolled agents are accounting professionals directly involved in tax preparation. As opposed to other types of tax preparers, EAs are “the only federally licensed tax practitioners who specialize in taxation,” according to the National Association of Enrolled Agents. This credential gives accounting professionals unique expertise in tax preparation of all types, including income tax, estate tax, inheritance tax, payroll tax, gift tax, taxes on retirements savings and taxes on nonprofit organizations. Enrolled agents often work in private practices or large accounting firms, preparing tax documents for clients, the Houston Chronicle reported. They have the unlimited right to represent any kind of taxpayer in any kind of tax matter before all offices of the IRS.
The Path to an EA Credential
Representing taxpayers is a “privilege,” according to the IRS, as well as “the highest credential the IRS awards.” To earn that privilege, aspiring enrolled agents must get a passing score on a three-part test called the Special Enrollment Examination. Over a combined 12 hours, candidates will answer hundreds of questions that evaluate their knowledge of individual tax returns, business tax returns and the practices and procedures of representing taxpayers, the IRS reported. Candidates can also become enrolled agents after several years of work experience for the IRS. After earning EA status, accounting professionals must meet strict ethical standards and complete required continuing education courses regularly.
Choosing between EA and CPA Status
As an aspiring accounting professional trying to plot out your future career, how do you decide whether the EA or CPA credential is right for you? It all depends on your professional goals.
There are pros and cons to each path. For example, CPAs earn a higher salary on average than EAs. To even sit for the exam, CPAs need five years of full-time college study and often years of experience in the field, prerequisites that are not necessary for candidates pursuing the EA credential. Also note that states, not the federal government, issue the CPA credential. A CPA who moves to a state with different requirements may have to meet those new requirements to achieve CPA certification in this new state. On the other hand, it’s the federal government (through the IRS) that awards EA status.
Because both qualifications have their advantages and their disadvantages, students should consider what aspect of accounting they want to handle when deciding which path to pursue. If your interest is primarily or exclusively taxation, the EA designation will help you become an elite expert. However, if you want to immerse yourself more generally, becoming a CPA will allow you to handle matters of auditing, finance and business law as well as tax preparation.