Anyone who has even gotten an official notification from the Internal Revenue Service knows the feeling of dread and unease it causes. Even those who have filed taxes on time and sent any money owed along with it, may be momentarily concerned they have made a costly mistake. Individuals with simple returns they handle themselves, or others with slightly more complicated financial situations who turn to commercial agencies for return preparation, probably do not require the services of a professional who has taken and passed the enrolled tax agent exam.
It is more common for corporations, partnerships, trusts, estates, and individuals with valuable assets to employ these professionals. They not only use them to prepare their taxes, but rely on the agents to present them in front of the IRS if the occasion arises. In fact these are the only individuals, with the exception of accountants and lawyers, who are permitted to negotiate on their client's behalf with government agents. They are even more qualified than most lawyers and CPAs, because taxes are their entire focus.
Agents who specialize in taxes make significantly more money, and often have more benefits, that those without the designation. Individuals interested in working toward such a designation need to know how long it takes and what it involves. Anyone who prepares taxes professionally must have a preparer identification number. To receive an enrollment designation, applicants must take and pass a three part examination. Once they have successfully completed the test, the IRS will check to make sure they do not have any unpaid taxes or returns outstanding.
The first of the three part test concerns individuals. Agents must answer multiple questions regarding gathering personal information necessary for returns, itemizing assets, deductions, and credits. They must be able to review and assist individuals with financial matters.
Financial expertise in the business sector is the heart of their test's second section. Applicants will be asked to explain how they differentiate between the various kinds of business entities. They must explain how S corporations and partnerships work and how the taxes differ between the two. Agents must have a clear understanding about farming operations and what constitutes taxation exempt status.
The final section of the examination focuses on practices and procedures. The applicants have to understand what representation before the IRS entails in any situation in which them may find themselves. They have to know the proper way to prepare clients, obtain power of attorney if necessary, and understand penalties, fines, and repercussions.
Applicants who do not pass all three parts can carry over the parts they did pass for up to two years. The tests are closed book, and each section takes about four hours to complete. Approved agents must take continuing education courses to maintain their credentials. They also have to adhere to a code of ethics and professional conduct and are bound by the Department of Treasury provisions.
These special agents can save businesses and individuals thousands of dollars every year. They have specialized experience and expertise. They are certainly worth the fees they charge.
It is more common for corporations, partnerships, trusts, estates, and individuals with valuable assets to employ these professionals. They not only use them to prepare their taxes, but rely on the agents to present them in front of the IRS if the occasion arises. In fact these are the only individuals, with the exception of accountants and lawyers, who are permitted to negotiate on their client's behalf with government agents. They are even more qualified than most lawyers and CPAs, because taxes are their entire focus.
Agents who specialize in taxes make significantly more money, and often have more benefits, that those without the designation. Individuals interested in working toward such a designation need to know how long it takes and what it involves. Anyone who prepares taxes professionally must have a preparer identification number. To receive an enrollment designation, applicants must take and pass a three part examination. Once they have successfully completed the test, the IRS will check to make sure they do not have any unpaid taxes or returns outstanding.
The first of the three part test concerns individuals. Agents must answer multiple questions regarding gathering personal information necessary for returns, itemizing assets, deductions, and credits. They must be able to review and assist individuals with financial matters.
Financial expertise in the business sector is the heart of their test's second section. Applicants will be asked to explain how they differentiate between the various kinds of business entities. They must explain how S corporations and partnerships work and how the taxes differ between the two. Agents must have a clear understanding about farming operations and what constitutes taxation exempt status.
The final section of the examination focuses on practices and procedures. The applicants have to understand what representation before the IRS entails in any situation in which them may find themselves. They have to know the proper way to prepare clients, obtain power of attorney if necessary, and understand penalties, fines, and repercussions.
Applicants who do not pass all three parts can carry over the parts they did pass for up to two years. The tests are closed book, and each section takes about four hours to complete. Approved agents must take continuing education courses to maintain their credentials. They also have to adhere to a code of ethics and professional conduct and are bound by the Department of Treasury provisions.
These special agents can save businesses and individuals thousands of dollars every year. They have specialized experience and expertise. They are certainly worth the fees they charge.
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