Enrolled Agents and the Practice of Tax Law

By Stevenson, William | The National Public Accountant, July 2001 | Go to article overview

Enrolled Agents and the Practice of Tax Law


Stevenson, William, The National Public Accountant


In May 2, 2001, the Department of the Treasury held hearings to discuss proposed regulations of Circular 230, the document that controls the practice of federally authorized tax practitioners (FATPs) before the Internal Revenue Service. One group of FATPs consists of enrolled agents who must pass a sixteen hour test on tax law before being granted a Treasury Card that is their ticket to the representation game.

One of the issues that was reviewed at the hearing was the right of enrolled agents to use the phraseology, "licensed by the Department of Treasury to represent taxpayers before the Internal Revenue Service." At the conclusion of the hearings and in subsequent discussions, it appears that while Treasury does not object to the proposed use of the term "licensed," it is considering including a statement in Circular 230 that will prohibit enrolled agents from stating affirmatively that they are licensed to practice tax law.

While I agree with Treasury in principle, making such a statement will not change reality. The straight forward fact is that enrolled agents play an important role in the administration of the tax policy of this nation in both the administrative and judicial milieus. By tinkering with the enrolled agents role, Treasury runs the danger of being responsible for slowing down or eliminating completely the wheels of justice for a large percentage of taxpayers who desire to take advantage of our system of conflict resolution. While this article will shed light on the role of enrolled agents, it could apply to CPAS as well.

Since 1943, about 250 non-attorneys have been admitted to practice before the bar of the United States Tax Court. During the past ten to fifteen years, many of these individuals hold the enrolled agent credential. If Treasury prohibits enrolled agents from stating that they can practice tax law, will this apply to those of us who have been admitted to the hallowed practice before the Court? Or, if these folks are grand-fathered, would such a provision prevent enrolled agents from aspiring to achieve this honored and respected distinction in subsequent years? Or, will Treasury include an exception to the proposed rule? Of course, the simple answer is that Treasury does not enjoy jurisdiction in the United States Tax Court and the Court can admit any person it judges worthy.

The real sticky matter has more to do with what is actually happening with the normal Tax Court process. Court records will show that approximately 30 percent of the cases that come before the Court are represented by attorneys admitted to practice before the Court. The other 70 percent of the cases are pro se, which means that petitioners theoretically are representing themselves. The shocking fact is that more than half of all the petitions that are filed with the Court in Washington, DC are actually prepared by either enrolled agents or CPAs. While these cases are characterized as pro Se, in fact, they are not unrepresented.

Our conflict resolution system winks at the concept of represented/pro se behavior for several reasons:

1. The Tax Court is very kind to those seeking justice. It makes it very easy for taxpayers to gain entry to its judicial process. The "Small Case" rules are simple and informal.

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