An enrolled agent is a tax advisor, tax practitioner who the federal government of the USA authorizes. We will mention Enrolled Agent Salary here. It is the licensor of the Internal Revenue Service (IRS). They represent the taxpayers in the country by working for the tax issues like audits, appeals, and collection. The IRS awards it for the highest credentials. It is recognized across 50 states in the U.S. approximately 53,000 Enrolled agents are practicing in the U.S, as per the National Association of Enrolled Agents. The position was created during the fraudulent war loss claim rooted back to 1884. After the 1913 Revenue Act was passed, the credentials were expanded for the monetary claim. Including estates, income and gifts became complex to resolve, and hence auditing became prevalent.
For becoming an Enrolled Agent, the candidates must get the PTIN (Preparer Tax Identification Number) from IRS, pass the SEE (Special Enrollment Examination) on three parts, or have worked for five consecutive years IRS. A background check will be conducted based on personal compliance once the applicants get enrolled under Form 23. To qualify for the renewal, the individual must have completed 72 hours of CPE (Continuing Professional Education), including two hours of professional conduct in three years. Also, they must renew PTIN within the period for the next renewal.
Enrolled agents are the tax specialists authorized by the federal, having unlimited rights to represent the taxpayers to the IRS (Internal Revenue Service). An individual with EA designation is a tax expert. They are said to be “enrolled agents because they are licensed, especially by the federal government.
The client consults with them to resolve their tax liens, unpaid penalties, tax levies, and any other issues on tax-paying. They create plans to cover the entire process, from filling forms and speaking on behalf of clients regarding legal matters. They also guide the client during the tax filing and explain the tax regulations. They are usually self-employed or working for a company. It is a fast-paced role with hectic deadlines.
They must always develop a strategy to work on agreements, estimation, payments, and settlements. The EA must take part in hearings via phone calls, and thereby the individual must be good with communication skills. They must have a clear understanding of the IRS documentation, as the documents get filed with IRS. For this reason, in particular, they must be well organized and capable enough to prepare reports, meet, and complete the work before the deadline. To become an Enrolled Agent, the candidates should have proper certification from the IRS; also, they must have a background check with public accounting. Also, one must have practical experience in tax preparation.
Duties and Responsibility
Their daily responsibility is based on the complexity of the tax that is to be filled and the working organization. But the core job involves the following:
- Conducting Interview
To understand the tax filing, EA must have consultations with their clients and conduct interviews to collect relevant financial documents. Also, they help their clients with queries regarding the tax format and explain the impact of their tax on the business.
- Developing Tax Strategy
Working as an individual or for a company, the EA must assist with the tax strategy, varying from a large-scale financial plan annually and to advice for specific transactions and cases. The job is to find the opportunity for minimizing the tax.
- Prepare Forms
EA prepares tax forms for the client, which includes multilayer, multistate and year-end tax forms. This is accomplished through e-files, which can be printed and sent to the clients for their reviews and signature. After obtaining the approval from the client, the forms are submitted to state agencies and IRS.
- Review Accounting Procedures
Being an EA, the individual must check on their client’s accounting procedure as a standard policy. They review the tax returns and keep checking whether the information is accurate or not, notifying the clients of any errors or violations.
- Represent Clients
As an exemption of the tax courts, the EA may represent their clients during the conference, hearings, or any form of meetings with the IRS based on the tax issues. In addition, on behalf of the client, they communicate with IRS for discussions, mail response, or other digital means.
Skills and Qualification – Enrolled Agent
They are the meticulous individuals processing the paperwork and using their techniques to find out a solution for the client’s problem.
Reasons to Become Enrolled Agent
They have the highest credentials among IRS. The individuals obtaining this status must follow the standards. Their practice rights are unlimited and unrestricted to the following, representing taxpayers, handling various tax matters, representing clients with IRS officials.
There are several programs for the EA. Individuals without certification may tend to lose the rights of those clients preparing for returns.
To become an Enrolled Agent:
- There will also be a background check to qualify three-part comprehensive IRS test, namely, SEE (Special Enrollment Exam).
- As a former employee of the Internal Revenue Service (IRS) having a minimum of 5 years of experience interpreting tax.
Graduates with engineering and management backgrounds or any other professionals without a finance background can become Enrolled Agents with proper three months of dedication to the course.
The aspiring candidates have to pass three parts of SEE which deal with the USA tax system includes:
- Individual taxes
- Business taxes
- Tax representation
The aspirants can schedule their interview anytime, as it is not mandatory to clear in a single attempt. Also, the exams won’t be conducted during March and April as these are the peak time for the tax filing.
The Average Enrolled Agent Salary
The national average salary for an EA is above $50,000, including commission and bonus. But the actual salary may vary considering the variables. It depends on the scope of responsibility, years of experience, previous company size; these are the major factors affecting the salary of an Enrolled Agent. The larger the firm is, the higher the pay for the specific role. Compared to EA, CPA makes a slightly higher income with a variation of $20,000. That is, they make up to $70,000 per year. In the long run, varying geographical constraints and corporate salary are the limitations for the income of CPA.
Enrolled Agents fit into many job positions. Hence their salaries vary across the state, and they are spread widely. Also, an individual’s educational background, type, of course, certification, prior experience, and salary makes a difference in their income. If in case you’re specialized, income will get increased. The big chains pay more based on one’s experience that is $20-$30 for an hour, which roughly comes around $40,000-$50,000 per year. EA’s salary varies on many other factors, like varying location, experience, and type of EA. There are three levels of salary which is entry-level, mid-level, and higher level.
- Enrolled Agent Salary – Entry Level: An entry-level EA with a maximum of five years experience can earn $42,000 on average per year.
- Enrolled Agent Salary – Mid-Level: They are mid-level EA, with work experience of five years to ten years of experience. They can expect up to $50,000 annually.
- Enrolled Agent Salary – Higher Level: A senior experienced for 10-20 years makes an average salary of $55,000. Those of EA having 20+ years of experience can expect a $60,000 annual salary minimum.
Various Positions of Enrolled Agent
They are tax experts. It requires high knowledge regarding tax consumption. The common positions of EA and their salary include the following:
- Tax Preparer
The average salary of a tax preparer is $41,871.They work with the taxpayers to complete the work with federal and state tax returns. They may either work independently or for an organization. It is quite hectic based on the season, as the workload may be high from December to April.
- Tax Manager
The average salary for a tax manager is $96,242. They handle the overall tax filing and compliance with the state, local, federal tax laws and the organization. This position is usually for CPAs; the Enrolled Agent certificate will make way for other specializations.
The average salary of a bookkeeper is $41,846.Generally, they work with businesses to ensure that decisions made are economical and safe to keep the overall finance under control and tight. The position does not revolve around taxes, but it is beneficial to have experience in tax planning.
The average salary of an office manager is $46,697.They supervise the overall ongoing projects. They work with their teammate to ensure smooth runoff of the business; they must be up to date on the ongoing projects and keep reporting to the higher authorities daily. An organization with multiple projects in hand requires an office manager as tax expertise.