The other day at a networking meeting I was asked the question, “What Can an Enrolled Agent Do for Me?”  I really had to think about that.  You see, I had two different answers:  The first one was, “nothing” and the second one was, “everything.”   Both answers are right.  Let me explain.

 

An Enrolled Agent is someone who is licensed by the Department of the Treasury to represent taxpayers like yourself in front of the IRS.  Let’s say you are getting audited, you can hire an Enrolled Agent to help you through it.  If you have an Enrolled Agent, you don’t have to talk to the IRS at all; the EA can do all the talking for you.   That’s probably one of the biggest advantages.

 

You can represent yourself, but most taxpayers really should not try to represent themselves during an IRS audit.  You’ve probably heard the saying, “The defendant who tries to represent himself in court has a fool for an attorney.”  It’s pretty much the same in an audit.  Honest, intelligent people can get themselves tripped up by the IRS.

 

For example:  one taxpayer was trying to represent herself when the IRS denied her refund claim on an amended return.  She had made numerous phone calls and written letters to the IRS explaining her claim, but was getting nowhere.  When she called me in, I discovered that she had been responding to what she “thought” was the problem, not what the IRS was asking for.  It’s actually a fairly common mistake—talking to the IRS can be confusing.

 

Another issue is debt resolution.  You might have seen those tacky TV commercials where the little old lady says, “I settled my taxes for pennies on the dollar.”  That’s known as an Offer in Compromise (OIC).  And while that company is out of business now (they used some questionable practices) an Offer in Compromise is something that an Enrolled Agent can do for you.  But there’s a really important thing about preparing an Offer In Compromise in the first place:  it’s knowing if you really need one in the first place.  For example:  I once received a call from a woman who wanted me to prepare an OIC for her because the IRS said she owed them $15,000.  Well, I could have just done the OIC paperwork, but I reviewed her tax returns first and found that the IRS actually owed her $8,000 instead.  An $8,000 refund is a whole lot better than paying anything to the IRS isn‘t it?

 

Enrolled Agents are required to prove their competence in all areas of taxation, representation and ethics before they can practice before the IRS by passing a three-part federal exam.  All enrolled agents specialize in taxation.  This is very different from attorneys or CPAs who are licensed by their respective states and may not specialize in taxation at all.

 

An Enrolled Agent can prepare a tax return, represent you in an audit, and help you settle your IRS debt.  Some Enrolled Agents can even represent you in Tax Court, but only those EAs that have passed a special Tax Court exam can do that.

 

The Enrolled Agent designation was created back in 1884 when Congress passed the Horse Act.  At the time there were lots of dubious claims for Civil War reparations—there were more claims for horses then there were horses lost in the Civil War.   Most of the dubious claims were from agents representing the people with claims as most of the agents were scam artists and con men.  Congress decided that the agents needed to be regulated.  They created a standard which required suitability checks, criminal record checks, moral character, and testing.  When the income tax was passed in 1913, the role of Enrolled Agent was expanded to include claims for relief of citizens whose taxes had become inequitable.  As tax regulations became more cumbersome and complex, the role for EAs kept expanding.

 

As an Enrolled Agent, I can do a lot to help you with your taxes; but, I’m no longer able to get Congress to give you a horse.

 

For more EA information you can check out the McTax Hangout video:  https://plus.google.com/u/0/106432421922678528479/posts/iKYcxFGzZjn?cfem=1