The Internal Revenue Service has outsourced the Special Enrollment Examination to Thomson Prometric. The Special Enrollment Examination is a gruelling 3-part test covering all aspects of federal taxation. Test-takers who pass the test can apply with the IRS to be an enrolled agent and to represent taxpayers before the IRS in tax preparation, collection, and audit matters. Not only did the IRS outsource the EA exam, but the format, structure, and content of the exam are changing. Here's what you need to know.
Thomson Prometric will administer the Special Enrollment Examination. Thomson Prometric administers other computer-based tests, such as the well-known CPA Exam and the Graduate Record Examination (GRE).
The new Special Enrollment Examination will be a computer-based test. Unlike previous tests, you will not receive a test booklet, and you will not have your test questions and notes you took during the exam mailed back to you. Also, Thomson Prometric will provide test-takers with an on-screen calculator. Neither Thomson nor the IRS have annouced how you can challenge a question. With previous tests, you could submit a challenge to the IRS if a question was worded awkwardly or if none the multiple-choice answers were right.
The old Special Enrollment Examination contained four parts, taken over a 2-day period. The new exam will have three parts:
- Part 1 - Individual Taxation
- Part 2 - Business Taxation
- Part 3 - Representation, Practice, and Procedures
Under the old format, business tax topics were covered in two separate parts. Now, all topics related to sole proprietors, partnerships, corporations, estates, trusts, and gifts will be covered in a single test. I personally anticipate that Part 2 will be by far the hardest portion of the new exam.
The number of test sections isn't the only formatting change. All questions will now be multiple choice questions. Gone are the true/false questions from the previous exams. When studying, you can use the true/false questions from previous exams to help re-inforce your tax knowledge, but you will need to focus on how to answer multiple choice questions.
New Study Topics
After conducting a survey of tax professionals (yes, I participated in the survey), Thomson Prometric issued a new study guide of topics to be covered by the Special Enrollment Exam. There will likely be a change of emphasis on certain topics. Some tax topics will receive more emphasis, and other topics less emphasis. As a result, preparing for this year's Special Enrollment Examination is going to be particularly difficult given the uncertainty around the actual test questions.
Scheduling the Test
You can register for the Special Enrollment Exam and schedule your test date online. Also, the Exam will be given in multiple locations and at various dates. You will not need to take all three parts at the same time. You can schedule each section of the test for a time and location that is convenient for you. This change by itself will make the exam less stressful, as you will be able to focus on studying for each section of the exam, instead of stressing out about the entire exam. Also, you will not need to wait an entire year before taking the test again. Thomson Prometric has specified waiting periods to re-schedule any portion of the exam you missed in their Licensing Information Bulletin.
You will need to have a preparer tax identification number (PTIN) before registering for the exam. This is the only way that Thomson Prometric will be able to identify you. You can obtain a PTIN using the IRS E-services Web site.
You will no longer receive a detailed score report from the IRS. Instead, you will receive a summarized grade report from Thomson Prometric indicating that you passed or failed a test section. Thomson Prometric will also provide test-takers with a diagnostic summary indicating areas you need to focus on for your next test.
If you took the exam in previous years, you might be able to carryover your test scores. You will need to read the Licensing Information Bulletin published by Thomson Prometric to determine the status of your previous test results.
After Passing the Exam
You will still need to apply with the IRS for enrollment using Form 23 and pass an IRS background check.
Studying for this year's exam is going has the potential to be very stressful, since none of the test prep publishers know what the new test will look like. However, much of the stress is alleviated by the fact that you can re-take the exam at a time and place convenient to you. Gleim Publications, the publishers of the EA Review study materials, has told me that they will re-format their books, CD-ROMs and online study aids into the new 3-part format by late August 2006. The first test date will be October 5, 2006, so you will have plenty of time to study using the new format. In the meantime, you firm up your tax knowledge by reviewing previous exams, using online study aids from various publishers, and signing up for a test prep class.
The Special Enrollment Exam is hard. You should rely on proven study materials and classes, and you should practice test questions using a computer. These study methods will help ensure that you are prepared for the Special Enrollment Exam.
- Special Enrollment Examination (IRS)
- Thomson Prometric
- Licensing Information Bulletin (Thomson Prometric, PDF file, 24 pages)
- List of Study Topics (Thomson Prometric, PDF file, 9 pages)
- IRS Form W-7P, Application for a Preparer Tax Identification Number (PDF file, 1 page)
- IRS Form 23, Application for Enrollment to Practice (PDF file, 4 pages)
- IRS E-Services (you can use e-services to obtain a PTIN)
- National Association of Tax Professionals Online Study Course
- Eva Rosenberg's Online Study Course
- How to Prepare for the EA Exam
Additional study materials and classes are listed on the National Association of Enrolled Agents web site.