If you help clients with taxes, becoming an enrolled agent (EA) might prove one of the best career moves you could make. The IRS empowers EAs with an array of tools unavailable to most other tax preparers. These professionals can speak on a client’s behalf, argue disputes, and make cases to the federal taxation authorities. The credential essentially allows EAs to handle virtually any situation that may arise in the case of a taxpayer.
Included among the information below are the many benefits EA certification may bring to your career. This page explores why any tax preparer or accountant might consider adding this credential to begin earning an EA salary. This guide also explains how to become an enrolled agent and prepare for the enrolled agent exam. If you think earning an EA certification would suit you, read on to learn everything you need to know about the process.
WHY BECOME AN ENROLLED AGENT?
Enrolled agent certification comes with countless benefits. The credential raises your profile, opens new career doors, attracts work, and gives you confidence in your abilities as an accountant. Whether you work as a tax preparer or accountant or simply want to move into the field of tax preparation, becoming an EA bestows credibility on your enterprise. Several other benefits of passing the Special Enrollment Examination (SEE) follow below.
- Earning Potential: When it comes to tax preparation, you can do everything a client needs once you become an enrolled agent. Because you can argue tax law, discuss audits with the IRS, deal with the IRS collections department, and make appeals, you can provide a full gamut of services. Not everyone can provide these services, which puts you in high demand and a position of great earning potential.
- Jack of All Taxes: An enrolled agent can do almost anything in the world of tax preparation. They can handle collections issues, answer questions on behalf of clients, file appeals, and make challenges to the IRS. This freedom enables credential holders to fully represent clients in a way that only EAs and CPAs can.
- National Credentials: The “EA” by your name represents a federal designation handed down by the U.S. Department of the Treasury. In other words, it allows you to work anywhere in the country. This contrasts with CPA licensure, which is state-specific with limitations and restrictions. Clients know that enrolled agents can work across state lines without hassle.
- Certified Expertise: “EA” represents the highest level of professionalism in the field of tax preparation. Clients can take comfort in the knowledge that you really know the ropes, just as patients recognize that “MD” indicates a certain level of attainment in the field of medicine.
- Job Stability: Governments will not stop levying taxes any time soon, so as an EA you enjoy a steady flow of work from individuals, tax-prep firms, law firms, accounting firms, and all manners of corporations. Virtually everyone must pay taxes of some sort, and the ever-changing tax code means even more job security for enrolled agents.
UNDERSTANDING THE SPECIAL ENROLLMENT EXAM (SEE)
Like any other test, the special enrollment exam rewards those who do a little preparation (and the more the better). To ace the exam, you must first understand it. The section below outlines what to expect when sitting for the SEE.
Frequently Asked Questions About the SEE
- What Does an EA Do? An enrolled agent prepares taxes for clients. As the name suggests, EAs can act as their clients’ agents, representing them before the IRS. The credential grants EAs more authority than many other tax preparers, allowing them to speak for clients, argue tax law with the IRS, and make appeals. CPAs can also represent clients in this way, but many other tax professionals can not. And because CPA licenses come from the state governments, they feature more limitations than EA certification.
- How Do You Become an Enrolled Agent? According to the IRS, becoming an enrolled agent requires just four steps. You must first obtain your preparer tax identification number (PTIN), which puts you in the Treasury Department’s database. Next, you should register for and take the SEE. If you pass all parts of the exam, you may then apply for enrollment through the IRS website. Finally, you must pass a suitability or background check that looks at your tax history and any past criminal behavior.
- When Is the SEE Administered? Prometric administers the SEE on behalf of the IRS during between May and February. Candidates can take the exam up to four times during that window.
- Where Can I Take the SEE? Prometric hosts roughly 300 sites where candidates can take the SEE. Applicants register to take the exam and pick an exam site through the Prometric website. You do not need to take the exam in the state in which you reside.
- How Is the SEE Taken? Prometric computerizes the exam, which splits into three 100-question sections: individuals; businesses; and representation, practice, and procedure. Questions follow a multiple-choice format, which may include fill-in-the-blanks, direct answers, and narrative questions.
- How Often Can I Take the SEE? Students can take all parts together or sit for each section separately. They can make four attempts during each exam window. Once they pass a section, they can take up to two years to complete the remainder of the exam.
Fulfilling the Special Enrollment Exam Requirements
The SEE assumes you possess a basic understanding of tax preparation. The questions represent an intermediate-level knowledge of the subject, similar to what you might receive in an undergraduate class. Unlike many other professional exams, the SEE does not require you to meet any particular work experience or educational standards.
The only professional requirement for taking the test is holding a PTIN. This step should prove easy for most applicants, because anyone who prepares taxes for compensation already needs a PTIN. If you do not currently meet this requirement, simply create an account on the IRS website and fill out an online application.
Exam Composition and Timing
Each of the SSE’s three components requires adequate preparation and attention. You should allocate enough time to study for each individual section. Some experts suggest at least 50 hours for each. As you can see in the table below, all three sections stand alone and present their own hurdles.
Registration and Fees for the SEE
Once you acquire your PTIN, you can schedule an exam. The test costs $185, which you pay upon registering. The fee allows you to take each section once, and you do not need to take them all on the same day.
Registering for the SEE
- How to Register – Schedule your exam online through the Prometric website or by calling (800) 306-3926. When you register, you create a user profile at the site, then pay for your exam with a credit card. At that point, you receive the date, time, and place of your test, plus a confirmation code. Store this code in a safe place, because you need it to make any changes to your exam schedule. You must also bring it with you on exam day.
- What Is Needed for Registration – To schedule your exam, you must provide your Social Security number and a valid, government-issued ID, like a driver’s license. You also need an email address and other contact information.
- When to Register – Make sure to allow plenty of time to study before your exam. In some cases, Prometric offers tests on a same-day basis. Most often, however, people schedule about 45 days ahead of time.
- Paying for the SEE – The exam costs $185, and applicants usually pay by credit card. You can also pay by e-check over the telephone. The nonrefundable fee covers all three exam sections for up to two years.
Scoring the Enrolled Agent Exam
The IRS created a scaled scoring system for the exam. The scale ranges from 40-130, and scores are available immediately after you complete the test. If you fail, you receive a diagnostic assessment to help you prepare to take the test again.
- What Score Do You Need to Pass the SEE? The IRS, along with a board of enrolled agents, determined that 105 constitutes a passing score. Remember, Prometric scales the score according to IRS guidelines.
- How Does SEE Scoring Work? A panel of experts established the grading rubric of the SEE, creating the scale system. A computer determines the number of correct answers and enters that number into its scaling algorithm.
- Who Scores the SEE? Prometric grades the examination based upon IRS guidelines. Candidates who do not pass receive a proficiency grade for each of the main topics of the exam. These grades include weak, acceptable, and strong.
- When Are SEE Scores Released? The exam takes place electronically, which allows Prometric to compile and release the scores as soon as you finish.
After the Exam: Maintaining Your SEE Certification
Once you pass all three exam parts, you can take up to one year to enroll with the IRS, after which you lose eligibility. After obtaining your EA license, you must renew with the IRS every three years. During each three-year period, you must complete 72 hours of continuing education (at least 16 hours every year).
PREPARING FOR THE SEE
Like other professional certification examinations, the SEE proves difficult for many. Make sure to allocate a couple of months of study for each section. Preparation is the key to success.
Top 5 Tips for Exam Preparation
- Read Prometric’s Candidate Information Bulletins: These updates contain new changes to tax laws, and they often end up reflected in the test. Since Prometric switched to a closed examination, the company frequently incorporates changes into its test questions.
- Know Your Formulas: Commit your tax preparation formulas to memory. For example, remember that the 10% taxable income limit for corporations includes income from gross dividends. These kinds of formulas exist for many sections of the exam, and having them at the ready will pay big rewards.
- Understand Your Weak Spots: According to Prometric data, the average test-taker finds Part 3 (representing clients) the easiest and Part 2 (business law) the most difficult. Do you find business law the most challenging? Then by all means, give it more study time than you allot for other parts of the exam.
- Numbers 1 and 2: The first two parts of the exam contain many of the same — or at least very similar — themes. It makes sense to schedule those two close together. Part 3 is independent, so when you take it doesn’t matter as much.
- Get Comfortable Ahead of Time: Prometric suggests that you arrive 15 minutes before your exam starts to get familiar with their electronic testing system. The company also offers an online tutorial for the testing material. Complete the tutorial ahead of time, and you should at least feel comfortable with the mechanics of the exam.
SEE Practice Exams and Study Resources
You can never practice enough for a professional examination. Fortunately, you can find a wealth of resources online to help prepare for the SEE. Many cost nothing and prove well worth your time. Others may require a fee, but they pay dividends in the long run.
- Prometric Website: Once you create an account at Prometric, you gain access to the many resources the test administrators provide. These include candidate information bulletins, a sample test tutorial, sample questions and answers, and a “what to expect” video guide.
- IRS Website: The IRS site features an array of tools to help you pass your SEE. The federal taxation portal offers links to sample tests, frequently asked questions, and examples of the contents of each section, plus access to many of the forms on which Prometric bases its questions.
- National Association of Enrolled Agents: The primary professional organization for enrolled agents, NAEA provides information on becoming an enrolled agent on its site. This includes the organization’s own preparation course, which features an assigned mentor to help get you through the process.
- Books: Do you remember buying a book filled with tips and sample questions when you wanted to study for the SAT? You can select from a variety of similar guides for SEE preparation, too. Check any online bookseller to find SEE study guides.
- Other Courses: Like books, you can find scores of courses from an array of test-prep organizations — some better quality than others. A cursory internet search turns up dozens of options. Do your homework to find one that works for you.
NOT READY FOR CERTIFICATION YET? EXPLORE DEGREE OPTIONS IN ACCOUNTING