Yes, I am an Enrolled Agent in all 50 states, but
I get it all the time… “This is Diane. She’s my CPA.”
Me: “No, I’m an Enrolled Agent.”
Them: “Huh?”
Me: “Enrolled Agent”
Them: “You’re an IRS agent?”
Me: “Nevermind…”
I’ve given up explaining. My license is on my wall if you want to look.
If you want to know what this weird thing is that I am, let’s start with some history.
The Horse Act of 1884
During the Civil War, people still traveled on horses, including the armies. They needed a lot of horses. How did they fill their horse needs? They took them from civilians in exchange for an IOU collectible after the war. After the war, people would go to the US Treasury office and make a claim for their horse money. Easy, right? Until some bright soul decided to “help” people get “free” government money by making fake claims for them, getting them some horse money, and keeping a cut. Easy money for the scammers… for a while.
Fast forward nearly 20 years. A government auditor figured out that they have paid out more in horse claims than there could possibly have been horses in the US at the time. They had to put a stop to the claims, but how?
Back then the American Bar Association was only a few years old. Most lawyers hung up a shingle out front and that was their license to practice law. They trained as apprentices. There was no bar exam, no license, no code of professional ethics.
The US government did not take kindly to being scammed by unethical lawyers, so in 1884, President Chester A Arthur (a Civil War vet and a lawyer himself) signed the Horse Act into law. The US Treasury could not regulate the practice of law in general, but it could regulate who practiced law in front of the US Treasury. They could test your knowledge of the law and require you to be a law-abiding person of good moral character.
Enrolled Agents
Once you passed their standards, you were “enrolled to practice before the US Treasury” and were named an Enrolled Agent. Years pass and the Internal Revenue Service was formed. They are the collection department for the US Treasury. Therefore, Enrolled Agents can practice before the IRS because it is a branch of the US Treasury. Enrolled Agents are still tested and licensed under the same 1884 law that is 30 years older than the IRS itself.
So, you’re a CPA, right?
Nope. CPAs are licensed by the state where they practice. A Certified Public Accountant is licensed to review figures and decide if they are correct and complete for the Public to view and use to make decisions. Many CPAs go to work in corporate jobs and never fill out one tax form in their whole career. There are no tax law questions on the CPA exam. They are not licensed to defend you against the government.
Wait, you’re a lawyer?
Nope, not a lawyer. I cannot practice in court. I didn’t go to law school. But if I’m dealing with US Treasury regulations (tax law) I can represent you in front of the US Treasury, which is the IRS in most cases. There are also no tax law questions on the bar exam. They aren’t tax experts. They come to me if there is a tax question. There are attorneys that ARE tax experts, however being a lawyer doesn’t guarantee any training in tax law.
Then what are you?
I’m a tax expert. I passed the hard test. I take 24 hours of tax law classes every year. I’m required to be well-versed in all areas of taxation. I must be a good citizen and pay my taxes. I’m an Enrolled Agent. I’m who you want on your side when the IRS comes knocking.
