Gain Tax Experience While Pursuing An Online Accounting Degree

Becoming an enrolled agent enables accounting students to apply their knowledge in real-world settings.

You don't have to wait until you complete your online accounting degree to start building experience in the field if you have a talent for taxes and are willing to put in a little extra work.

By passing a three-part test, you can become an enrolled agent and start practicing even before you graduate.

Enrolled agents (EA) are tax experts who are authorized by the U.S. Department of the Treasury to represent taxpayers before the Internal Revenue Service. Anyone can prepare taxes, but only three types of professionals are permitted to represent clients if the IRS comes calling — attorneys, certified public accountants (CPAs) and enrolled agents.

"It's an interesting concept for accountants and people who want to do taxes," says Emil Koren^∗, an accounting instructor at Saint Leo University who is a CPA and a certified management accountant (CMA). "It's a great opportunity to do something professionally before you finish your college career."

Koren outlined the steps to become an enrolled agent, what makes it different from a CPA and why professionals pursue the designation.

Why become an enrolled agent

It takes a long time and a certain level of schooling to become a CPA or attorney, but if you're eager to start applying your tax knowledge in a real-world setting and build your resume, an enrolled agent authorization will give you a boost. As an enrolled agent, you can go all the way through tax court with clients who run into problems rather than turning your clients over to attorneys or someone else to represent them.

Steps to becoming an enrolled agent

It's a straightfoward process, costing about $400 to complete, Koren estimated. The first step is to obtain a Preparer Tax Identification Number (PTIN) so you are easily identified. Once you have your PTIN, you apply to take the Special Enrollment Examination (SEE). It's a three-part test, and you must achieve a passing grade on each part.

After you pass the test, apply for enrollment and consent to a background check that includes a review of your tax history. If you have not paid your own taxes or failed to file on time, you can be denied enrollment.

Potential applicants who have worked for the IRS for five years may be eligible to become an enrolled agent without taking the SEE, depending on the type of work they did.

Taking the SEE

The SEE is not an easy test. You're going to need to prepare to make sure you understand taxes thoroughly, says Koren.

The test consists of three parts and is given between May and February at Prometric testing centers. "You don't have to take all three parts on the same days or even consecutive days, and you can take each part up to four times during the testing window," says Koren. "You must pass all three parts within two years of passing the first part."

Each section of the SEE contains 100 multiple-choice questions and lasts about 3.5 hours. Part 1 covers individuals, Part 2 is about businesses and Part 3 includes representation, practices and procedures.

The difference between a CPA and an EA

Enrolled agents know taxes inside and out. The SEE is 11 hours solely on taxation, whereas only about a third of the CPA exam focuses on the topic.

"The EA says, 'I know my taxes,'" Koren says. "The CPA says, 'I know my accounting.'"

One is not a better career path than the other; it all depends on your goals. If you want to work for H&R Block, for example, or prepare taxes for part of the year, becoming an enrolled agent may be all you need. CPAs, on the other hand, may deal with taxes or the broader financial health of a business, such as financial statements, managerial accounting or auditing.

Continuing Professional Education (CPE)

Tax laws change every year, so even if you become an enrolled agent you still need to commit to ongoing education in taxes. Enrolled agents need a minimum of 72 hours of continuing education every three years, with a minimum of 16 hours earned each year. Two of those hours annually must focus on ethics or professional conduct.

Start building your credentials

In addition to gaining real-world experience that you can add to your resume and applying your knowledge in real-world situations – and making some money – there's one more benefit to becoming an enrolled agent.

 Strengthening your credentials.

 "It's another way to add some initials after your name," says Koren, "even before you graduate."

^∗ Is becoming an enrolled agent for you? Listen to Emil Koren's webinar on the topic to learn more about it by clicking here.

Image credit: topseller on Shutterstock.com

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