February is recognized as National Enrolled Agent Month, a time to celebrate and acknowledge the crucial role that enrolled agents play in the field of taxation.
Taxation has long been a part of society, dating back to ancient Egypt. With society and tax laws growing exponentially since the days of the Pharaohs, there is a need for tax experts who specialize in tax planning, preparation, and resolution of tax issues for individuals, businesses, and organizations. National enrolled agents are tax professionals who are federally licensed to represent taxpayers before the Internal Revenue Service (IRS).
Enrolled agents are essential for several reasons. First, an Enrolled Agent (EA) is the highest IRS-awarded qualification for a Tax Professional. The IRS states that EAs are uncontested experts on tax topics with a deep understanding of the complex tax code.
To become an EA, an applicant must pass an IRS-administered, which covers individual taxation, business and Corporate taxation, and general practices and procedures. The qualifying exam is in three parts, similar to the CPA exam, but once the three parts are passed, the federal government (not individual states) distinguishes them as tax specialists.
EAs must stay up-to-date on changes and developments in tax laws and regulations with a mandated continuing education of 72 hours every three years. This expertise allows them to provide valuable guidance to taxpayers in maximizing tax savings and ensuring compliance with tax obligations.
Secondly, enrolled agents are authorized to represent taxpayers in all matters before the IRS, including audits, appeals, and collections, allowing them to possess a wide range of tax knowledge. EAs are subject matter experts in areas like entity selection, estate planning, depreciation, gift tax, partnership tax, and corporate taxation, including C corps and S corps. Their representation can help taxpayers navigate the complexities of the tax system and achieve fair outcomes in their dealings with the IRS.
Taxation Versus Accounting
Accounting is the process of creating, analyzing, and organizing financial statements and completing tax returns.
Taxation refers to the fees and financial obligations imposed by a government on its residents. Taxation applies to payments of mandatory levies, including levies on income, corporations, properties, capital gains, asset sales, gifts, and inheritances. Generally, Enrolled Agents focus more on taxation, while CPAs focus more on accounting.
Some CPAs are not as well versed in tax or tax mitigation as much as many taxpayers are led to believe. An Enrolled Agent is generally more versed in taxation, while CPAs are more versed in Accounting. EAs not only provide a broader range of tax advice than a CPA but can also complete and sign tax returns.
At KAJMST, we appreciate the dedication and expertise of enrolled agents in serving the tax needs of individuals and businesses. Their role in providing tax guidance, preparation, and representation is invaluable in helping taxpayers navigate the complexities of the tax system and achieve financial well-being.
KAJMST works directly and equally with CPAs and EAs. If you are an enrolled agent, please contact us today to learn how we can better help you serve your clients.