Having the Highest Credential from the IRS

I just wanted to send along a quick note regarding the practice. I am officially an Enrolled Agent (EA) now.

You may be wondering what this means. Below are some highlights.

Here is the official definition from the IRS website - An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.

Now that you have read the above, feel free to ignore it. Simply, I will not be representing clients in front of the IRS or doing tax returns. The reason I pursued the EA designation was to increase my tax knowledge. It was this or get my CPA, and I went the EA route.

I began this journey a few years ago and stopped the testing during Covid. I started the process from the beginning again last year and passed the third section earlier this year. Then it took several months for the IRS to process my application.

As you know, I spend an inordinate amount of time focusing on taxes and tax planning. This is critical with my clients. Taxes come into play on everything from current high income to future distributions in retirement. While we cannot control the market, we have more control over taxes than most people think.

Just going through this testing and designation process dramatically improved my tax knowledge, which should be great for my clients.

Finally, I have asked a couple of organizations in my world how many financial advisors have both the CFP (Certified Financial Planning) and EA (Enrolled Agent) designations. I am still waiting to hear back from the CFP Board (going on three months for their response), but one organization said their information shows 4% of advisors have both designations. Personally, I think the percentage is a bit lower, but let’s go with 4%. My mom always told me I am unique. Maybe that is true😉

Thanks for humoring me on this week’s article. We will get back to more exciting stuff next week!

CFP