Frequently Asked Tax Questions
What is an “Enrolled Agent”?
An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.
What does the term Enrolled Agent mean?
Enrolled means to be licensed to practice by the federal government, and Agent means authorized to appear in the place of the taxpayer at the IRS. Only Enrolled Agents, attorneys, and CPAs may represent taxpayers before the IRS. The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.
How does one become an Enrolled Agent?
The license is earned in one of two ways, by passing a comprehensive examination which covers all aspects of the tax code, or having worked at the IRS for five years in a position which regularly interpreted and applied the tax code and its regulations. All candidates are subjected to a rigorous background check conducted by the IRS.
How can an Enrolled Agent help me?
Enrolled Agents advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Enrolled Agents' expertise in the continually changing field of taxation enables them to effectively represent taxpayers audited by the IRS.
Privilege and the Enrolled Agent
The IRS Restructuring and Reform Act of 1998 allow federally authorized practitioners (those bound by the Department of Treasury's Circular 230 regulations) a limited client privilege. This privilege allows confidentiality between the taxpayer and the Enrolled Agent under certain conditions. The privilege applies to situations in which the taxpayer is being represented in cases involving audits and collection matters. It is not applicable to the preparation and filing of a tax return. This privilege does not apply to state tax matters, although a number of states have an accountant-client privilege.
Are Enrolled Agents required to take continuing professional education?
In addition to the stringent testing and application process, the IRS requires Enrolled Agents to complete 72 hours of continuing professional education, reported every three years, to maintain their Enrolled Agent status. NAEA members are obligated to complete 90 hours per three year reporting period. Because of the knowledge necessary to become an Enrolled Agent and the requirements to maintain the license, there are only about 46,000 practicing Enrolled Agents.
What are the differences between Enrolled Agents and other tax professionals?
Only Enrolled Agents are required to demonstrate to the IRS their competence in matters of taxation before they may represent a taxpayer before the IRS. Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all Enrolled Agents specialize in taxation. Enrolled Agents are the only taxpayer representatives who receive their right to practice from the U.S. government (CPAs and attorneys are licensed by the states).
Are Enrolled Agents bound by any ethical standards?
Enrolled Agents are required to abide by the provisions of the Department of Treasury's Circular 230, which provides the regulations governing the practice of Enrolled Agents before the IRS. NAEA members are also bound by a Code of Ethics and Rules of Professional Conduct of the Association.
This information courtesy of the National Association of Enrolled Agents. Original Article Here
Finding a Reputable Tax Preparer
San Diego BBB News Archive : 1/30/2007
It's National Consumer Protection Week (Feb 4-10) and the Better Business Bureau is joining with other national organizations and government agencies to encourage consumers to "Read Up, Reach Out and Be an Informed Consumer!"
This is particularly important as the tax filing deadline approaches. The BBB predicts that scam artists will try to take advantage of people's confusion over newly-enacted tax breaks that went into effect after the 2007 tax filing forms were printed. Reaching out to the BBB, the IRS and other trustworthy organizations for credible information will help consumers to recognize tax scams, resist being defrauded and make educated tax-related decisions.
Consumers who plan to use a tax preparer this year, for instance, should start the selection process now. If not, they may wind up victimized by a less-than-reputable tax preparer. Remember, you are ultimately responsible for everything on your tax return, even if someone else prepared it.
Most tax professionals are qualified and honest people. The BBB offers these tips for finding a reputable tax preparer:
- Get referrals from satisfied clients.
- Interview the potential preparer. Ask about their training, experience and knowledge of current tax law. Are they a member of a professional organization with continuing education requirements and a code of ethics? Are they willing to guarantee the accuracy of their work and amend the return if there is a mistake?
- How long they have been in business? You'll want someone who will still be around to answer questions that may arise later on.
- Contact the BBB (www.bbb.org) to determine if the preparer is one you can trust.
- Get an estimate for their fee prior to authorizing the work.
Steer clear of tax preparers who sound too good to be true. Beware if they:
- Boast that they can obtain larger refunds than competitors;
- Don't ask to review your records and receipts or discuss your qualifications for expenses and deductions;
- Base their fee on a percentage of the refund amount, rather than the complexity of the tax return; or
- Pressure you to sign up for immediate payment of your refund. This involves a loan that typically carries a high interest rate.
The IRS advises that tax preparers are acting illegally if they encourage you to claim inflated personal or business expenses, false deductions, or excessive exemptions; manipulate your income to obtain fraudulent tax credits; ask you to sign a blank or incomplete form; or guarantee that you will not be audited. Check that your preparer has signed your tax return, and get a copy and a payment receipt for your records.
Review your prepared return carefully before signing, and get clarification on entries that you don't understand. Heed the call of National Consumer Protection Week and "Read Up and Reach Out!" whenever you have doubts about a marketplace issue. The BBB is only a phone call or a mouse click (www.bbb.org) away!
San Diego BBB News Archive : 1/30/2007
Established Customers
- Call us, email or fax your information to us.
- We analyze and prepare your income tax return.
You can complete the entire process from the comfort of your home.
Our goal is to make the tax season as painless as possible.
What to Bring to your Tax Appointment
- Copy of last year's tax return (for new clients).
- W-2s and 1099s
- Unemployment
- Social Security Income
- Interest or Dividend Income
- Stock Sale Info
Stock Sale Info includes: the date you sold the stock and the sale price (this information should be on the 1099-B form you received from the financial institution). In addition, you will need to tell me the date you purchased the stock and how much you paid for it.
- Child / Dependent care expenses and provider information (name, address, federal ID or social security number and telephone number)
If you own your home:
- Mortgage interest paid (form 1098)
- Closing papers from any refinance done during the year
- Property taxes paid in year
- DMV fees paid
- Medical and dental expenses, if they are significant
- Donations (cash, non-cash and/or donation mileage). Please include date of donation, name, address, phone number, tax ID number of recipient.
- Employee business expenses, if they are significant
If you have your own business:
- Total income for the year
- Totals of expenses incurred in the year (ie. Advertising, supplies, insurance, meals, etc)
- Either actual auto expense totals (ie. Gas, oil change, repairs, tires) OR mileage figures for the year (total driven, business portion, commuting portion)
- Year, make and model of auto(s)
- Parking and toll expense
- Internet fees, and any phone lines except for your first one, including cell.
- If you use part of your home for business: total sq. ft. of house, sq ft of business portion. Also rent paid, utilities, repairs, etc paid in the year.
This list is not complete, but will cover most issues.
We look forward to meeting with you.