subject: Enrolled Agents And The New Irs Return Preparer Registration Rules [print this page] The director of the IRS Office of Professional Responsibility, reserves the enrolled agent designation (EA) for individuals who demonstrate special competence in tax matters. The enrolled agents tax proficiency is validated to the IRS by passing a tedious three-part examination. Many people incorrectly refer to EA's as enrolled IRS agents, even though technically the EA represents the taxpayer and not the IRS. Such a thing as an enrolled IRS agent does not exist. A former IRS employee may apply to become an EA without passing the enrolled exam, provided they have a minimum of 5 years continuous employment with the Internal Revenue Service during which the applicant must have been regularly engaged in applying the regulations relating to income, estate, gift, employment, or excise taxes.
Enrolled agents, Certified Public Accountants, and Tax Attorneys must follow the rules contained Treasury Department Circular 230. This document, available on the IRS website, contains the framework for the regulation and registration requirements that these professionals must follow in order to represent taxpayers before the IRS. These Circular 230 professionals are duty bound to adhere to the strict rules and regulations that govern their practice. These individuals are considered to "practice before the IRS."
Practice before the IRS comprehends all matters connected with a presentation to the IRS relating to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the IRS. Such presentations include, but are not limited to preparing and filing documents with the IRS for a taxpayer, corresponding and communicating with the IRS, representing a taxpayer at conferences, hearings, or meetings with the IRS and rendering written advice with respect to any entity, transaction, plan or arrangement.
Certain tasks do not constitute practice before the IRS and may be performed by anyone, for the moment anyway. These tasks include preparation of a tax return, appearing as a witness for a taxpayer before the IRS, and furnishing information at the request of the IRS. Tax return preparers, who are not regulated under Treasury Circular 230, are known as unenrolled tax return preparers. The term "tax return preparer" means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax, or any claim for refund of tax. A person may be a preparer without regard to professional status, educational qualifications, nationality, residence, or business location. It is not necessary to prepare the entire return, a person is a considered a preparer as long as he prepares a substantial portion of the return.
Soon the IRS Office of Professional Responsibility will require all tax return paid tax return preparers who are not attorneys, certified public accountants or enrolled agents to take a competency test. Currently any person may prepare a federal tax return for any other person for a fee. There are no minimum competency standards. The IRS plans to require that paid tax return preparers who are not attorneys, certified public accountants, or enrolled agents pass an IRS competency test. It should be noted that certified public accountants, attorneys and enrolled agents already take competency tests. However, in the future the IRS will study tax return accuracy of attorneys and certified public accountants to ensure that this exemption to testing requirements is warranted.
