Do you HAVE to become an enrolled agent with the Internal Revenue Service (IRS) in order to be a tax preparer? No. All you really need to prepare taxes is to obtain a Preparer Tax Identification Number (PTIN) from the IRS (as well as some tax-prep knowledge, of course, if you’re going to do it right.)
However, is it a good idea to take the Special Enrollment Exam (SEE, or more casually referred to as the Enrolled Agents Exam, or EA Exam) – or to renew your EA status? Absolutely, depending on what you want to do with your tax preparation career. Being an enrolled agent can give your tax prep career and reputation a big boost and give your clients more confidence in your abilities.
That’s why we recommend you take the summer to prep for the Enrolled Agent Exam, or Special Enrollment Exam. (You can use EA Exam and SEE interchangeably.) This time of year is so much more relaxed compared to the frenzied time between January and April, which makes it the perfect time to prep for and take the exam. Then, you can have your certification in place in time for tax season.
Also, the exam is only offered each year May 1 through February 28. (Although it’s worth noting that this year, updates to the exam were delayed due to the government shutdown. Therefore, the newest exam with questions about 2018 calendar year tax law will be available on July 1, 2019. Exams given before that will be based on 2017 calendar year tax law.)
So, whether you’re renewing your enrolled agent status (which you have to do every three years) or taking the exam for the first time, now is the time to think about how you can prep for the SEE.
First, what’s the difference between a tax preparer and an enrolled agent?
One of the biggest advantages to becoming a certified enrolled agent, besides being able to demonstrate your proficiency in preparing individual and business tax returns, is that you have unlimited representation rights before the IRS. That means that if needed, you can represent your clients for anything, including audits, payment and collection issues, and appeals. Without the EA designation, your ability to represent your clients is limited.
What should I expect when getting ready for and taking the EA exam?
First, there are three parts to the EA exam:
- Part 1: Individuals
- Part 2: Businesses
- Part 3: Representation, Practice and Procedures
Second, know what kinds of questions are on the SEE:
- Direct questions
- Incomplete sentences
- “All of the following except” questions
Also, be aware that there are experimental questions, which don’t count towards your final score, mixed in with the standard questions that do count towards your score – but you won’t know which are which. The IRS sprinkles these questions throughout the exam to test them before adding them to future exams.
How hard is the exam?
The difficulty of an exam is relative since different test takers have different abilities and different ways of preparing themselves. However, depending on what source you look at, each part can take anywhere from 50 hours to 100 hours to prep for. (Part 3 is considered to need slightly less study time than parts 1 and 2, but again, it all depends on your individual ability level and comfort with test taking.)
During the 2017-2018 testing period, the pass rates for each section were:
- Part 1 = 61%
- Part 2 = 64%
- Part 3 = 82%
In other words, it’s common for people not to pass on their first try. So, if that happens to you, don’t get discouraged. Keep studying and try again. You can try taking the exam up to four times in any given testing period. After that, you’ll have to wait until the next testing period to try again.
If you are having trouble or just want to have some guidance while studying, consider signing up for an EA test prep course. There are many out there to choose from, including the Income Tax School EA Review.
Have any study tips to help me prepare for the SEE?
Absolutely.
- Make studying a priority. It’s so easy to get distracted when you’re preparing for your Special Enrollment Exam. Birthdays, holidays, vacations, day-to-day demands, and just life in general all have a way of interfering with your study time. However, for at least this period before you take your exam (which is a relatively short amount of time in the scheme of things), you’ve got to make studying your priority. Set aside at least an hour, preferably two, every day to go over what you need to know for the exam.
- Get buy-in from family and friends. Make sure everyone knows what your goal is – and what it’s going to take for you to get there. That way, when you have to turn down a dinner invitation or take an hour before bed to study and read, you have everyone’s support.
- Try different techniques to find what works best for you. What’s going to make you feel the most confident walking into your exam? Are you good at memorizing facts and figures? Flash cards might be right for you. Do unexpected situations make you nervous? Take practice tests, so the real SEE feels more familiar to you. Experiment with listening to audio books versus reading, studying in the morning versus the evening, reviewing material on the treadmill versus in a quiet place. Where, how, and when do you best absorb the material you need to review?
- Get help with studying. You don’t have to go it alone. Look into books, videos, and EA prep courses. Reach out to others who are preparing for the EA Exam and put together a study group, so you always have support.
Once I’ve passed the test, what do I have to do to keep my enrolled agent status?
Once you’re officially an enrolled agent, you need to:
- Get 72 hours of continuing education credits every three years
- Have at least 16 hours of continuing ed every year (two hours of which must be in ethics)
- Use IRS-approved continuing education providers (like The Income Tax School)
- Take the EA Exam every three years to maintain your enrolled agent status
See the full enrolled agent requirements on the IRS website.
Any other advantages I should know about being an enrolled agent for tax preparation?
Besides boosting your career and reputation, being compelled to maintain continuing education requirements can help motivate you to always be on top of changes in tax law and in the tax prep industry in general. It’s a way to make sure you’re maintaining your professional knowledge in a formalized way.
If you don’t already have a solid tax education, the best way to get it – and to ensure you obtain all of the knowledge required for the EA Exam is to go through The Income Tax School’s Chartered Tax Certificate Programs. Completion of one of our certificate programs not only prepare you for the EA exam, it will enhance your reputation as a trusted tax professional and give you a competitive advantage in your market.
Enjoy your summer – definitely make time for a little fun – and take this time to get into the rhythm of using this time to your advantage to prep for the EA Exam.