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What is an Enrolled Agent?
 
An Enrolled Agent (EA) is licensed under the United States Department of the Treasury to represent taxpayers before the IRS in all administrative levels for audits, collections and appeals without the taxpayer being present. EAs are the only federally licensed tax practitioners as opposed to CPAs and Attorneys who are state licensed. Only EAs, CPAs and Attorneys may represent taxpayers before the IRS.
 
Congress created the Enrolled Agent profession in 1884 because of questionable claims for Civil War losses. Congress wanted to regulate persons who represented citizens in their dealings with the Treasury Department.
 
The EA credential is earned by passing a two-day examination administered by the IRS, which covers taxation of individuals, corporations, partnerships, estates and trusts, procedures, and ethics. Employees of the IRS may receive the credential based on a minimum of five years’ employment in a position where they regularly applied and interpreted the provisions of the Internal Revenue Code and its regulations.
 
EAs are required to complete 72 hours of continuing education, reported every three years, to maintain their status. Members of the National Association of Enrolled Agents have a 90-hour minimum over three years.
 
Because of the difficulty in becoming an EA and keeping up the credential, there are approximately 40,000 EAs in the United States.
 

What is an Offer in Compromise?
 

IRS will consider an OIC in cases where a taxpayer is unable to pay the liability in a lump sum or through an installment agreement. The purpose for an Offer in Compromise is to come to an agreement with the government that is in the best interests of both the taxpayer and the government. One of the main objectives is to bring the taxpayer back into compliance and to promote voluntary compliance in the future.

 
An OIC is not for everyone. Two things the government will consider before allowing an OIC are net worth and ability to pay. Net worth would be the equity in your house, your car, your business, investment property, stocks, savings accounts, etc. Your ability to pay is based on how much money you have left at the end of the month after your necessities are paid. Credit cards do not generally count in this equation. Necessities include mortgage or rent payments, utilities, transportation, medical insurance and co-payments, prescriptions, food, clothing, etc. If the IRS determines you have the ability to pay the tax, they will not accept the OIC and would recommend an installment agreement.
 

What is an Installment Agreement?
 
Installment agreements are offered when you cannot pay your tax in full whether it is for your current tax return or prior unpaid taxes. If you prepare your tax return and there is a balance due, you can file Form 9465 “Request for Installment Agreement” with the tax return and request a specific due date and amount to be paid monthly. Installment agreements for amounts under $25,000 are streamlined. For amounts over $25,000, a Collection Information Statement Form 433F may need to be completed. All future refunds will be applied to the debt until it is paid off.
 
You may find that because penalties and interest continue to be charged on the unpaid portion of the installment agreement, it would be less expensive to pay the balance due by a credit card or line of credit.

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2008 Eli Tax Service