Tax attorneys and enrolled agents are two types of tax professionals who are permitted by the Internal Revenue Service to assist taxpayers. The scope of each professional’s ability to help clients is virtually the same, so, when considering whether to become a tax attorney or enrolled agent, also consider the costs of education and licensing, as well as the general public perception of each professional’s abilities.
Tax attorneys must complete a 4-year undergraduate degree, plus a graduate program to earn a juris doctor (J.D.) degree and designation. These degrees earn an attorney the option of sitting for the state bar exam. An attorney may not practice until he passes the bar exam and complies with all licensing requirements of the state bar association. An enrolled agent does not need a degree to become licensed; however, he must demonstrate extensive knowledge of all tax laws and competency in applying tax laws in order to represent taxpayers and prepare tax returns. This knowledge is tested by the IRS thorugh a comprehensive examination process.
In addition to passing the licensing exam, a tax attorney or enrolled agent must also meet other requirements to obtain a license to practice. Tax attorneys are admitted to practice by the state they practice in. Each state operates independently and establishes its own rules for admission to practice. Therefore, each state may have varying licensing requirements. An attorney must adhere to the rules set by the state that licenses him. Enrolled agents are overseen by the IRS. The IRS requires that an enrolled agent is compliant with his own tax obligations and that he does not have any felony convictions.
Areas of Practice
Tax issues can extend beyond return preparation matters and audits. The IRS and state tax authorities also utilize collection remedies to collect tax debts, which can include asset seizures, bank and wage levies and the filing of tax liens. However, each activity initiated and processed by a tax agency must adhere to certain procedures that are in place to protect taxpayer rights. Both tax attorneys and enrolled agents are permitted by the IRS to prepare tax returns and represent taxpayers before all divisions of the IRS. A tax attorney may find he is better suited for negotiation and representation cases because of his legal training and background, and an enrolled agent may find he is better suited for return preparation, but the professional may specialize in whichever area he chooses.
Since each state establishes separate rules that govern practicing attorneys, tax attorneys will have different requirements to maintain an active license, depending on the state they practice in. For example, attorneys in Colorado are required to pay an annual license registration fee, earn continuing legal education credits in professionalism and carry liability insurance to maintain an active status. Enrolled agents must complete 24 hours of continuing education credits and two continuing education credits in ethics each year. These credits may only be completed through courses that cover taxation topics. Enrolled agents must pay a renewal fee once every 3 years, as well as maintain good tax and criminal histories. Since tax attorneys are not required to complete continuing education in tax courses, in some instances, an enrolled agent may have a more extensive knowledge of current tax laws than a tax attorney.
- National Federation of Independent Business: Choosing a Tax Professional - Tax Attorney, CPA or Enrolled Agent
- American Bar Association: Bar Admissions Basic Overview
- IRS: Publication 947 - Practice Before the IRS and Power of Attorney
- IRS: Maintain Enrolled Agent Status
- Colorado Supreme Court: Attorney Registration Rules