As a tax preparer, you might wonder, can I represent my client in an IRS audit? Or, do I need to be an enrolled agent (EA) to negotiate with the IRS on my client’s behalf?
The short answer is that your representation rights may be limited without having an EA designation.
EAs possess unlimited rights to represent any taxpayer before the IRS, whereas noncredentialled tax preparers face more restrictions.
Let’s explore why client representation matters and how becoming an EA expands your services.
Who can represent clients before the IRS?
Not all tax professionals have the same authority.
- PTIN holders (no AFSP or credentials): Can only prepare returns – no representation rights for returns prepared after Dec. 31, 2015.
- AFSP participants: Can represent clients only for returns they prepared and signed, and only before revenue agents, customer service reps and similar IRS employees, including the Taxpayer Advocate Service.
- CPAs and attorneys: State-licensed professionals with unlimited rights, but may not have expertise in taxation or tax disputes.
- Enrolled agents (EAs): Federally enrolled with unlimited rights to represent any taxpayer before the IRS.
Unlike CPAs and attorneys, who may not specialize in taxes, all EAs specialize in taxation. They are the only professionals required to prove competence in taxation, representation and ethics before earning unlimited IRS representation rights.
Where an EA’s expertise is needed
1. IRS audits
EAs can assist in audit and letter responses, addressing all issues the IRS has raised, regardless of whether the EA prepared the examined returns.
2. Collections and payment plans
Clients with tax debt face liens, levies or wage garnishments. EAs can negotiate installment agreements, penalty abatements and settlements.
3. Appeals and IRS disputes
If the IRS makes an unfair ruling, an EA can file an appeal and advocate for their client. While generally only attorneys argue in Tax Court, EAs can handle most pre-court negotiations.
How an EA helps taxpayers
Your client, Sarah, receives an IRS audit letter. If you’re a PTIN holder without AFSP credentials, the help you provide would be very limited.
Sarah would either be alone or need to find other assistance.
As an EA, you would be able to:
- Communicate directly with the IRS on Sarah’s behalf
- Challenge any incorrect audit findings
- Negotiate any potential penalties
Instead of facing the IRS alone, Sarah now has a pro defending her.
If you’re not an EA, you can only go so far for your clients. When the stakes are high – like audits, appeals or collections – the limitation could cost your client… and you.
Why becoming an EA is a good idea
- Defend clients in serious IRS matters
- Expand beyond tax prep into representation and resolution
- Increase your income
- Represent clients in all 50 states
EAs have advantages and privileges with the IRS that unenrolled tax preparers don’t.
With unlimited representation rights, EAs can fully advocate, negotiate and defend any client.
Want to grow your skills and your tax business?
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About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.