Graduate Certificate in Professional Tax Practice

Graduate CertificateProfessional Tax Practice

Proposal for a new Graduate Certificate in Professional Tax Practice at Central Washington UniversityStatement of RationaleOnly enrolled agents (EA), certified public accountants, and attorneys have unlimited representation rights in taxmatters before the Internal Revenue Service (IRS). Tax professionals with these credentials may represent theirclients on any matter including audits, payment and collection issues, and appeals.1The practice of tax is inherently multidisciplinary and roughly evenly divided between attorneys and accountants.While in some cases their respective roles in the profession overlap, most times their services complement eachother. Yet, traditionally tax education has been reserved for law graduates and has been provided primarily bylaw schools to students who already possess a first law degree.The ever increasing complexity of tax laws has sharply heightened the demand for tax services by accountantsand non-accountants. In addition, the increased supply of tax-trained attorneys and the lack for corresponding taxeducation available to business students has exacerbated the critical educational and professional gap in taxcompetency between attorneys and non-attorneys.Each year, AccountingToday publishes a statistical supplement titled “Top 100 Firms.” The publication containsa host of market data concerning the accounting industry, the most telling of which is a list of the fastest growingniche areas in accounting. For the last six consecutive years, at least three of the top six fastest growing nicheareas in accounting were tax services.2Since 1981, the insufficiency of tax accountants coupled with the need for non-attorney tax professionals has beenfilled with ‘unenrolled’ tax return preparers. This was made possible by IRS Revenue Procedure 81-38, whichessentially allowed anyone to prepare tax returns without any formal qualification and that person even enjoyedsome representative rights before the IRS with respect to the tax returns he/she prepared. The wave ofunderqualified tax professionals caused the IRS to amend its previous position and issue a new RevenueProcedure3 in 2014, which severely restricts practice privileges of unenrolled preparers.The anticipated impact of the new Revenue Procedure will be to push many persons who were previously contentwith the limited practice privileges of “unenrolled” status to pursue the Enrolled Agent credential, whicheffectively eliminates all barriers and restrictions in their tax practice.Despite the ever increasing demand for tax professionals, only nine institutions nationally (table below) offer acertificate in taxation aligned with the Enrolled Agent Exam Body of Knowledge4. Of this nine institutions, one1 https://www.irs.gov/tax-professionals/understanding-tax-return-preparer-credentials-and-qualifications2 2017 Top 100 Firms. AccountingToday, p. 22; 2016 Top 100 Firms. AccountingToday, p. 16; 2015 Top 100 Firms.AccountingToday, p. 12; 2014 Top 100 Firms. AccountingToday, p. 12; 2013 Top 100 Firms. AccountingToday, p. 12; 2012 Top 100Firms. AccountingToday, p. 12.3 IRS Revenue Procedure 2014-42.4 The Enrolled Agent Exam Body of Knowledge is available under Appendix A.Page 1 of 16

offers a graduate certificate while the remaining eight offer undergraduate certificates. Seven of the nineinstitutions have no business accreditation, while the remaining two are ACBSP accredited. There is currently noinstitution nationwide which offers a tax certificate aligned with the Enrolled Agent Body of Knowledge, at thegraduate or undergraduate level, and which is accredited by AACSB.School Business Accreditation Type DeliveryCollege of San Mateo None Und Cert OnlineGolden West College None Und Cert CampusAims Community College None Und Cert CampusUCLA Extension School None - Cont Ed Exam Prep Course OnlineGuilford Technical Community College None Und Cert CampusStark State College ACBSP Und Cert CampusMcHenry County College None Und Cert CampusTroy University ACBSP Grad Cert OnlineColorado Mountain College None Associate Degree Campus Table: Current Certificate Programs aligned with the Enrolled Agent Body of KnowledgePage 2 of 16

The Enrolled Agent Credential5Enrolled Agent status is the highest credential the IRS awards. Enrolled Agents, like attorneys and certified publicaccountants, have unlimited practice rights before the IRS. This means that they are unrestricted as to whichtaxpayers they can represent, what types of tax matters they can handle, and in which IRS offices they canrepresent clients. Unlike CPAs or attorneys, Enrolled Agents become nationally certified, allowing them topractice in any state with the same certification. Enrolled Agents may even seek admission to the United StatesTax Court under 26 U.S.C. §7452, a rare case in which a non-attorney may represent someone before a federaltrial court.The key component of becoming an Enrolled Agent is passing a Special Enrollment Examination (SEE), oftenreferred to as the EA Exam. The EA Exam consists of the following three parts, which may be taken in any order.Each part consists of 100 multiple-choice questions to be answered within 3.5 hours. • Part 1 – Individuals • Part 2 – Businesses • Part 3 - Representation, Practices and ProceduresThe EA Exam may be taken at any Prometric6 site from May 1 to the end of February of the following year. Thetest is not offered during the annual blackout period, namely March and April, in which the exam is updated withnew tax law changes. The exam fee is $111.94 per section.Examination results are printed immediately upon completion of the examination. Scaled scores are determinedby calculating the number of questions answered correctly and converting it to a scale that ranges from 40 to 130.The IRS has set the scaled passing score at 105. An applicant may retake failed exam sections up to four timeseach testing period. The applicant has two years from the time he/she passes the first part to pass the other twoparts of the exam.The table below shows exam pass rates from 2009 to 2015. Source: http://ipasseaexam.com/enrolled-agent-exam-pass-rate/5 https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agents-frequently-asked-questions6 https://www.prometric.com/Page 3 of 16

After passing all three parts of the EA exam, an applicant must apply for enrollment within one year of the datehe/she passes the last examination part. The application is made on IRS Form 23 and requires a $30 applicationfee. The application consists of a background check and a tax compliance check. Applicants with delinquent taxpayment or filing obligations may be denied enrollment.Individuals who obtain EA status must adhere to ethical standards and complete 72 hours of continuing educationcourses every three years.Page 4 of 16

Graduate Certificate in Professional Tax Practice Program ProspectusOnly enrolled agents (EA), certified public accountants, and attorneys have unlimited representation rights in taxmatters before the Internal Revenue Service (IRS). Tax professionals with these credentials may represent theirclients on any matters including audits, payment/collection issues, and appeals.7 . Unlike CPAs or attorneys,Enrolled Agents become nationally certified, allowing them to practice in any state with the same certification.Enrolled Agents may even seek admission to the United States Tax Court under 26 U.S.C. §7452, a rare case inwhich a non-attorney may represent someone before a federal trial court.The Graduate Certificate in Professional Tax Practice specifically caters to the growing industry need forcompetent tax professionals. The program is composed of four courses, which embed one foundation course andthree core courses. Students entering the program who already took one or more tax courses at an accreditedinstitution may seek waiver of the foundation course. Core courses may not be waived under any circumstances.Prospective StudentsThose with or without industry experience are encouraged to apply. Applicants must be comfortable with the useof computers and office applications, such as Microsoft Word and Microsoft Excel (or comparable officeapplications). Students with a business background and/or undergraduate business degree are strongly encouragedto apply. Interested students will be: • Graduates interested in pursuing the IRS Enrolled Agent credential • Accounting graduates fulfilling CPA credit hour requirements • Graduates in any other discipline who want to expand their knowledge of taxation • Sponsored students such as those eligible for military benefits looking for a second career after retirementAdmission Prerequisites • Bachelor’s degree from an accredited institution by the time of matriculation or enrollment • Evidence of English language proficiency for ESL students (such as TOEFL)Program StructureSince the three parts of the Enrolled Agent exam are not consecutive and can be taken in any order, the programwill likewise be cyclic and can admit students at any time. The program is designed to be delivered part-timethrough evening classes in the Seattle area campuses. The program could be delivered to Ellensburg studentssynchronously or asynchronously via distance learning. While the program requires four courses, the foundationcourse, ACCT 346, is an existing course for which no additional resource or planning is needed. The three newcourses could each be offered once or twice during the academic year, depending on student enrollment. Theprogram could also be delivered 100% online. A hybrid format is not recommended. The current College ofBusiness faculty are academically prepared to teach the courses in this program. Adjuncts could be hired to teachindividual courses as needed in the future to cover temporary staffing gaps.7 https://www.irs.gov/tax-professionals/understanding-tax-return-preparer-credentials-and-qualificationsPage 5 of 16

CourseworkFoundation Course (waived for graduates who completed similar course at an accredited institution) (5quarter hours)ACCT 346: Income Tax Accounting I (5 quarter hours)Core Required Courses: (15 quarter hours)ACCT 5X1: Advanced Federal Individual Income Tax (5 quarter hours)ACCT 5X2: Federal Taxation of Business Entities (5 quarter hours)ACCT 5X3: Federal Tax Practice and Procedure (5 quarter hours)Course DescriptionsACCT 346: Income Tax Accounting ICourse Description: Introduction to income taxation of corporations, partnerships, and individuals with anemphasis on tax compliance, planning, and computer-based tax research.ACCT 5X1: Advanced Federal Individual Income TaxCourse Description: Study of concepts and principles of federal income taxation of individuals. Coverage focuseson every aspect of substantive individual income tax compliance, such as gross income, deductions, credits,property transactions, retirement income, alternative minimum tax, and self-employment tax. Includes surveycoverage of wealth transfer taxes and FBAR compliance. Course content matches at large the Body of Knowledgeof Part 1 of the Enrolled Agent Exam.ACCT 5X2: Federal Taxation of Business EntitiesCourse Description: Study of concepts and principles of federal income taxation of corporations and theirshareholders, including entity formation, treatment of distributions, and dissolution. Analyzes the unique factorsinvolved in taxation of pass-through entities (partnerships and S corporations), including entity formation,treatment of distributions, withdrawals, and dissolution. Includes survey coverage of income tax issuesconcerning estates, trusts, exempt organizations, retirement plans, and farmers. Course content matches at largethe Body of Knowledge of Part 2 of the Enrolled Agent Exam.ACCT 5X3: Federal Tax Practice and ProcedureCourse Description: Study of professional rules of conduct impacting Enrolled Agents and ethical standards intax representation, such as competency, conflicts of interest, penalties, and sanctionable acts. Detailed coverageof federal tax procedure, including tax research, statute of limitations, notions of evidence, and recordmaintenance. Course content matches at large the Body of Knowledge of Part 3 of the Enrolled Agent Exam.Page 6 of 16

Graduate Certificate in Professional Tax Practice Other ConsiderationsProspective Graduate Employment and SalarySalary data for Enrolled Agents is difficult to obtain because that of an Enrolled Agent is a credential, rather thana profession. Enrolled Agents may work in several tax-related professions, such as accountants, auditors, and taxreturn preparers, just to name a few.Salary and employment data for accountants, auditors, and tax return preparers may be obtained through the U.S.Bureau of Labor Statistics Occupational Outlook Handbook8, the U.S. Department of Labor CareerOneStop9, andProjections Central10. None of these data sources yields data specific to persons who hold the Enrolled Agentcredential.The closest salary data on point comes from the commercial websites listed below: • Payscale11, which reports the following salary data for the categories “Enrolled Agent,” “Tax Accountant,” and “Tax Manager:”Enrolled Agent Low HighTax Accountant $29,475 $75,287Tax Manager $40,814 $85,162 $64,861 $125,983• Work Chron12, which reports the following salary data for the category “Enrolled Agent:”1-3 years of experience Low HighSenior level $51,450 $85,800 $61,950 $107,800• Salarylist13, which reports the following salary data for the category “Tax Accountant:”Tax Accountant I Low Average Median HighTax Accountant II $44,000 $67,276 $67,664 $89,773Tax Accountant III $51,999 $57,949 Not reported $63,898 $60,683 $62,514 Not reported $64,3448 https://www.bls.gov/ooh9 https://www.careerinfonet.org10 http://www.projectionscentral.com11 http://www.payscale.com/research/US/Certification=Enrolled_Agent_(EA)/Salary12 http://work.chron.com/certified-public-accountant-vs-enrolled-agent-salary-26658.html13 https://www.salarylist.com/jobsPage 7 of 16

Assurance of LearningData on students’ performance on the Enrolled Agent exam can be used as a form of assurance of learning and,as needed, as evidence of curricular loop closures.Professional AssociationsThere is only one professional association specific to Enrolled Agents: the National Association of EnrolledAgents (NAEA).14 NAEA has a local Washington Chapter called the Washington State Society of EnrolledAgents (WSSEA).15 Enrolled Agents are typically members of other professional association, such as theAmerican Institute of Certified Public Accountants, the National Association of Tax Professionals, the NationalSociety of Tax Professionals, and the National Society of Accountants.Current Commercial EA Exam Review ProvidersMany commercial exam preparation providers offer EA exam review courses, such as Gleim, Surgent, Gryfin,Lambers, WiseGuides, and PassKey. These are typically self-taught, online modules with multiple practice testsets. The textbooks published by PassKey are very affordable ($250 retail for all three books with six full practiceexams). They are perfectly aligned with the EA Exam Body of Knowledge and could be adopted as textbooks forthis certificate program at a low wholesale price.Needed ResourcesSuccessful delivery of the program requires access to a tax preparation software, such as TaxAct Professional,and a tax research database, such as RIA Checkpoint or LexisNexis. A student license to both databases combinedshould cost approximately $200 per student for the entire duration of the program. It is possible to negotiate alower price institutional license.Alignment with Mission StatementsThe mission of Central Washington University is “to prepare students for enlightened, responsible, and productivelives; to produce research, scholarship, and creative expression in the public interest; and to serve as a resourceto the region and the state through effective stewardship of university resources.”The mission of the CWU College of Business is “[to] launch students toward a better future by engaging them inindustry-relevant and student-centered programs driven by strong partnerships between students, faculty, andbusiness professionals.”The proposed certificate program embraces both mission statements by preparing students with industry-relevantknowledge that will allow them to be productive in the tax marketplace and a better future for themselves andtheir families.14 http://www.naea.org15 http://wssea.orgPage 8 of 16

Appendix A Enrolled Agent Exam Body of KnowledgePage 9 of 16

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