Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Enrolled Agent (EA)

What it is:

An enrolled agent (EA) is person who is authorized to represent a taxpayer before the Internal Revenue Service (IRS).

How it works (Example):

To become an EA, a person has to pass a three-part comprehensive IRS test of individual and business tax returns or be a former IRS employee with appropriate experience. To maintain the credential, EAs must obey ethical standards and complete 72 hours of continuing education every three years.

The EA designation is the highest one the IRS confers, and EAs have the authority to represent any taxpayer for any tax matter.
 

Why it Matters:

Tax advisors can be CPAs, attorneys, or other people, but not all tax advisors are EAs. Treasury Department Circular No. 230 sets forth the requirements for who can practice before the IRS.

EAs and other tax advisors might help a client structure his assets such that his estate taxes are lower. They might help a company organize itself so that its shareholders pay less in taxes or so that an acquisition does not generate a large tax liability.