The History of Enrolled Agents (E.A.)
The history of Enrolled Agents dates back to 1884 when Congress authorized the Enabling Act of 1884, also known as the Horse Act of 1884. Congress recognized a need to regulate individuals representing citizens dealing with the Treasury Department about their claims against the U.S. This act gave the Secretary of the Treasury the authority to regulate who can represent these individuals.
Many people had claims for losses from the Civil War. The Treasury Department was being overwhelmed by some of the most dubious claims you can imagine. Horses were the number one reason for this act. It seemed as most of the horses in America were thoroughbreds. If the horses weren't thoroughbreds, then they were show horses. To make matters worst, there were more claims for horses, than there were horses lost in the Civil War.
These comparisons weren't just limited to livestock. It seems as if suddenly and miraculously, everything turned from junk to perfection. Timber used for log cabins, became milled black walnut. If it was made pot metal, it became disguised silver. Row boats were turned into yachts. And the claims became more and more ridiculous.
Congress recognized that a person wasn't making these claims, it was their agents who represented them. These agents would seek out people who might have a claim, right or wrong and for a percentage of what they could collect from the government, they would represent you. Most of these agents were confidence men or scam artists. Congress decided that these agents had to be regulated hence the Enabling Act of 1884. President Chester Arthur responded by signing the Act which was known as the Horse Act of 1884. A standard was created, suitability checks, criminal records, moral character, all of these factors along with testing. The people who passed the requirements were known as Enrolled Agents.
Back in the 1880's, you didn't have to go to college or even graduated from high schools to be a Doctor or Lawyer. You simply applied to the school of your choice and if accepted, off you went. No regulations. CPA's were non existent. Again, because the standards for practice as a Attorney were so lax, they and CPA's, as they became evolved, were required to take and pass the enrolled agents exam, in order to practice before the IRS until 1936. Since 1965, with the strict State guidelines and regulations for members of the Bar & CPA's, the Treasury department automatically recognizes members of the Bar and legitimate CPA's. Only Enrolled Agents, CPA's and Attorney’s at Law can represent you before the IRS.
Today, Enrolled Agents must pass a difficult two-day examination given annually by the IRS. Less than 1/3 of test-takers pass this test and become Enrolled Agents. They are required to obtain at least 24 hours of continuing education credits to maintain their status, yearly. They must complete 72 hours during a 3 year cycle.
Here is a interesting note concerning the E.A. exam. The exam was originally written by American Society of CPA's. It has become a controversy into itself. The controversy is it's failure rate. Many critics think that the test was stacked so that very few would pass it regardless of the their background. They are quick to point out that most CPA's would fail the test, lacking the necessary tax knowledge. When you look at the logic behind that, it may make since. Eliminate the completion from the beginning. Some critics go as far to say they think there was collusion between the IRS and the CPA. IRS Agents, after a period of time in service are exempt from taking the test. Again the competition is eliminated. Regardless of who you believe, the IRS is committed to make change, to make it more fair for all who take it. (If your curious as to what I think; I passed it the first time, I like it just the way it is. As a matter of fact, I would make all income tax preparers take part one of the test. Maybe part four too.)
In 1994, the initials E.A. were finally designated by the Treasury Department, as that of Enrolled Agent.
What is a Enrolled Agent
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