Pack of twelve number two pencils: $2. Desktop pencil sharpener: $1. College-ruled notepaper: $4. Actually being prepared for the Enrolled Agent Exam (which, for the record, is given by computer): Priceless.
It is been said that tests gauge how much a person knows on a given subject. But that’s not entirely true. In reality, tests— including the Enrolled Agent Exam— measure preparedness. While knowing the material is crucial, it is important to note that smarts do not necessarily translate into higher test scores. Even if you could memorize the entire tax code, it is possible to fail without an understanding of how to take the exam.
The IRS EA exam, officially known as the SEE Exam (Special Enrollment Examination), is a three-part test administered by Prometric on behalf of the IRS. Each part consists of 100 questions, which you’ll have three and a half hours to complete, and a passing score on each part is required before the IRS will allow an enrolled agent to practice. The three parts of the EA test include a section on Individual tax laws, a middle section on Business tax laws, and a third on Representation, Practices and Procedures. The entire SEE test consists of multiple-choice questions, which fall into one of the following formats:
Format 1 – Direct question
Example: Which of the following entities are required to file Form 709, United States Gift Tax Return?
A. An individual
B. An estate or trust
C. A corporation
D. All of the above
Format 2 – Incomplete sentence
Example: Supplemental wages are compensation paid in addition to an employee’s regular wages. They do not include payments for:
A. Accumulated sick leave
B. Nondeductible moving expenses
C. Vacation pay
D. Travel reimbursements paid at the Federal Government per diem rate
Format 3 – All of the following except
Example: There are five tests which must be met for you to claim an exemption for a dependent. Which of the following is not a requirement?
A. Citizen or Resident Test
B. Member of Household or Relationship Test
C. Disability Test
D. Joint Return Test
Each EA test is given via computer, which allows examinees to mark questions and review their answers at the end. One hundred questions in three and a half hours gives test takers approximately two minutes for each question— so if an average time of one and a half minutes is taken on each question, you will have time to go over your answers at the end of the test.
The EA exam score depends solely on the number of questions answered correctly. Incorrect answers and unanswered questions do not count against a score— meaning that, on difficult questions, guessing is a better strategy than skipping. Rather than agonizing over a difficult question, a guess will allow you to focus on easier questions, as well as giving you more time to go over “guessed” answers at the end. Moreover, a guess has a 25% chance of being correct, whereas a blank question has a whopping 0% chance.
SEE statistics indicate that roughly half of the test takers will not pass on the first attempt. While difficult, the test is not impossible. The best way to prepare for the exam is to take as many SEE sample questions as possible leading up to your first SEE test date.
Now, there certainly exists a person out there with an inexplicable ability to memorize tax information, or with thousands of hours of tax experience, or with a very well-hidden cheat sheet, who can walk into a Prometric test center with no preparation and a bundle of number two pencils and still manage to pass the Special Enrollment Exam. But even the most seasoned tax preparers can be humbled by the test, so it is important to make sure you are well-prepared for the task at hand. (And leave the pencil sharpener at home.)