A few weekends ago I spent time in Kansas City, at a conference for school counselors. During my time there I was able to educate them on what an Enrolled Agent is and how it may be a viable career path for some of their students. I spoke with elementary, middle, and High School counselors as well as those overseeing their district's counselors.
I wasn't surprised by how many people did not know what an Enrolled Agent is. It shocked me how many didn't know the different areas of opportunity for a career in the tax industry that are not directly connected to having an accounting degree.
I recognized this knowledge gap for college students. But I figured they weren't listening to their advisors and counselors. I didn't realize that some advisors and counselors were unaware of the opportunity. That's why I am going to share a brief, "Who is Who" in the tax industry to bring awareness to the options that are out there for those interested in pursuing a career as a tax professional in the industry.
PTIN Holder - having a PTIN is a requirement for all paid tax professionals and anyone who touches a tax return for pay. It is a preparer tax identification number. No one doing a tax return for pay can prepare taxes without having a PTIN. You can apply for this number online at the Internal Revenue Service website. It costs $19.95, and the tax professional needs to renew it each year. The IRS uses the number to track how many tax returns the preparer files.
It is like a tax professional's "tax" Social Security number. It is also used to track the continuing education credits that the tax professional earns throughout the year. There are no education or continuing education requirements to obtain and maintain a PTIN.
It is the bare minimum for someone to be a tax professional but a stepping stone for all other tax licenses and credentials. The only barrier to entry is filling out an application and paying a fee.
AFSP - these tax professionals have put a bit more effort into showing taxpayers that they know their stuff. The Annual Filing Season Program is a certificate earned by tax professionals who do IRS-approved continuing education each tax year.
These courses involve Federal updates and ethics. Once these approved courses are taken there is an exam that the tax professionals must pass. Once they pass this exam they are awarded an AFSP certificate.
The certificate gives them limited practice rights before the IRS. That means they can discuss returns that they have prepared with the IRS. But nothing else. This is good for tax professionals who want to show they know the tax law updates but they're not interested in being credentialed.
EA - these tax professionals have earned the highest credential awarded by the IRS to tax professionals. Enrolled Agents have unlimited practice rights before the IRS. This means that they can stand in the gap for taxpayers who are being audited, levied, or owe a balance they cannot pay in full. By filing a 2848, Tax Power of Attorney they can represent taxpayers whose returns they did not file. EAs can represent taxpayers in all 50 states.
After obtaining a PTIN, they have to go through a background check and pass a 3 part exam known as the Special Enrollment Exam. Each one is 100 multiple choice questions and focuses on a specific area of tax - Individuals, Business, and Tax Representation. Enrolled Agents must have a minimum of 16 IRS-approved continuing education hours each year, and 72 continuing education hours before they can renew their license every 3 years.
Enrolled Agents must have a high school diploma or its equivalent.
An accounting or college degree is not required to sit for the 3 part exam to obtain this license. However, I would recommend an Accounting certificate such as the FMAA, associate degree, or Accounting 101 class for those interested in working with businesses.
Certified Public Accountants - these are accountants who are licensed through their state. They have the most recognized credentials in the tax and accounting industries, but they may not necessarily work in the tax world.
As trusted financial advisors, they are well-versed in financial accounting. They may serve individuals, businesses, or other organizations. This designation gives them the flexibility to work in the tax and accounting world or specialize in one. A college degree is required to sit for the 4 part CPA exam.
The exam recently received an overhaul, which allows those taking it to choose an area of specialization - Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), or Tax Compliance and Planning (TCP) in addition to the 3 core sections.
Each state decides on how many college hours are required to sit for the exam and how many relevant work hours. If a CPA moves states they have to get their license in that state to be able to open a CPA firm and or work. They don't have to retake the exam but there are requirements they have to fulfill to have their license recognized in the other state.
CPAs are 1:3 credentialed tax professionals whose license gives them unlimited representation rights before the IRS. This means they can represent any taxpayer on any matter before the IRS.
U.S.T.C.P. - a United States Tax Court Practitioner has earned the right to represent a taxpayer in tax court. They are non-attorneys, although attorneys may also earn this designation. Non-attorney Circular 230 professionals (EAs and CPAs) may represent taxpayers before the IRS but not against the IRS in court.
USTCPs c
an sign petitions or represent clients in the Tax Court. To earn this designation the professional must:
Pass a written admission exam
Complete an application for admission to practice for non-attorneys
Pass the character and fitness review
Be sponsored by 2 members of the Tax Court Bar
Adhere to an oath and affirmation
Pay a fee
The sponsors are not needed until after the exam. The exam is only given once, every other year. The last exam was taken in November of 2023. The anticipated 2025 exam will take place in November of 2025. The official date and time will be announced by the Tax Court 6 months before the exam.
The exam is difficult. In 2021 161 people took the exam and only 19 passed. Before that, in 2018, 143 people took the exam and 22 passed. If you consider this designation studying for the exam is not something to take lightly. The exam must be taken in one sitting. It is a 4-hour exam testing competence in Federal Taxation(40%), Legal Ethics(10%), Tax Court Rules for Practice and Procedure (25%), and Evidence (25%).
Tax Attorney - this professional has taken the time to attend law school and pass the bar to obtain their license. They specialize in tax and can perform a variety of functions such as:
Tax preparation
Tax planning
Tax representation
Consulting
A tax attorney may also represent their clients in tax court when battling the IRS. They have unlimited representation rights before the IRS. A tax attorney may be called into play when a business deal needs to be analyzed from a tax perspective.
Some tax attorneys can specialize in a certain area of tax such as Federal, Individual, Business, State, and Local Tax (SALT), Sales Tax, etc.
Other professionals can do this as well but with an Enrolled Agent their license is from the IRS so Federal tax specialization is assumed. The same could be said about a CPA, since their designation is through the state one could assume them to be a SALT expert. With a tax attorney, their license gives them the flexibility to specialize in a variety of different areas.
Conclusion
There is no glass ceiling when it comes to the tax world. It's okay to have multiple designations or just one. It depends on what makes sense for your career path and your goals. No matter what designation you decide to pursue, commit to being the best one that you can be.
Keep up with your continuing education. Do what you can to take the best CE but then implement it so you can become better at your craft. Did you learn something new in this article?
What else would you like to know about these designations? I can't wait to talk about it with you in the comments.
Timalyn S. Bowens EA is America's Favorite EA and Tax Expert who will work hard to find a customized legal solution for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states. As the host of Tax Relief with Timalyn Bowens and a YouTube content creator she empowers taxpayers to make educated decisions about their tax situation.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information.
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