EA Part 3 Quick Facts
| Detail | Info |
|---|---|
| Number of Questions | 100 multiple-choice questions |
| Time Limit | 3 hours 30 minutes |
| Passing Score | Scaled score of 105 out of 150 |
| Prerequisites | None — any person can sit for the exam |
| Exam Fee | ~$206 per attempt (2024–2025 fee) |
| Pass Rate | ~75–80% (easiest of the three EA parts) |
| Typical Study Time | 50–80 hours over 4–6 weeks |
| Testing Format | Prometric test centers nationwide |
| Exam Window | May 1 – February 28 annually (closed in March–April for updating) |
| Validity | Passing score valid for 2 years; must pass all 3 parts within 2-year window |
What the EA Part 3 Exam Tests
EA Part 3 tests your knowledge of practice before the IRS — the rules, rights, procedures, and ethical obligations that govern enrolled agents, CPAs, and attorneys who represent taxpayers in dealings with the IRS. This includes Circular 230 ethics standards, how IRS examinations (audits) work, the collection due process framework, penalty structures, the offers in compromise program, installment agreements, taxpayer rights, appeals procedures, and tax court basics.
Unlike Parts 1 and 2, Part 3 is relatively calculation-light. The vast majority of questions are knowledge-based and procedural: Who may practice before the IRS? What sanctions can the Office of Professional Responsibility impose for specific Circular 230 violations? What are the requirements to qualify for an Offer in Compromise based on doubt as to collectibility? What must a power of attorney (Form 2848) specify to be valid?
This procedural focus makes Part 3 more approachable for candidates who struggled with the math-heavy content of Parts 1 and 2. However, do not mistake "calculation-light" for "easy." The exam tests specific procedural rules, deadlines, and statutory requirements that are easy to confuse with each other. The difference between a CDP hearing and an equivalent hearing, the exact requirements to qualify for first-time penalty abatement, the specific grounds for disbarment versus suspension under Circular 230 — these are not intuitive, and candidates who study superficially will miss them.
Topic Breakdown with Percentages
Practices & Procedures — 25%
This domain covers who is authorized to practice before the IRS and under what conditions.
Who may practice: Attorneys, CPAs, enrolled agents, enrolled retirement plan agents (ERPAs), enrolled actuaries, and — in limited ways — unenrolled preparers (annual filing season program participants have limited representation rights for returns they prepared). Non-credentialed individuals generally cannot represent taxpayers, with limited exceptions (the taxpayer themselves, immediate family members in certain situations, full-time employees representing their employer).
Enrolled Agent status: How to become an EA — either by passing the three-part SEE or by qualifying on the basis of prior IRS employment (5 years of work in a position requiring regular interpretation of the IRC). Annual continuing education requirements: 72 hours per three-year enrollment period (minimum 16 hours per year, including 2 hours of ethics). Renewal of enrollment (Form 8554) every three years. Inactive enrollment and inactive retirement status.
Power of Attorney and Disclosure: Form 2848 (Power of Attorney and Declaration of Representative) — what it must specify (taxpayer's name and TIN, the representative's information, the tax matters and years covered, specific acts authorized). Form 8821 (Tax Information Authorization) — allows a third party to receive tax information but does NOT authorize representation. The IRS's Centralized Authorization File (CAF) system. Withdrawal of POA. Third-party designee (checkbox on 1040) — limited authority for one tax year.
Written tax advice: Covered opinions under Circular 230 Section 10.37 — requirements for written opinions that taxpayers rely on to avoid penalties. Marketed opinions, reliance opinions, and the standards that apply to each.
EFTPS and electronic filing requirements: Mandatory e-file requirements for preparers who file more than 10 returns.
Representation before the IRS — 24%
The mechanics of representing clients through examination, collection, and appeals.
IRS Examination (Audit) Procedures: Types of examinations — correspondence exam (most common — conducted by mail), office exam (taxpayer brings records to IRS office), field exam (IRS examines records at taxpayer's home, business, or representative's office). How returns are selected for examination: discriminant function (DIF) score, information document matching, related examinations, manual selection, IRS compliance campaigns.
Examination timeline: Statute of limitations on assessment — generally 3 years from the later of the filing date or the return due date. Extended to 6 years for omitting more than 25% of gross income. No limit for fraudulent returns or failure to file. A taxpayer (or representative) may consent to extend the assessment statute by signing Form 872 (Consent to Extend the Time to Assess Tax) — always discuss the implications before consenting.
Documentation and representation rights: Taxpayer's right to have a representative present. The right to record examination proceedings. Providing records. Summons authority of the IRS. Confidentiality for federally authorized tax practitioners (Kovel agreements with attorneys, Section 7525 privilege for non-attorneys).
Notices and responses: Statutory Notices of Deficiency (90-day letter / 150-day letter for taxpayers abroad) — the trigger for Tax Court petition. Notice of Proposed Adjustments. 30-day letter (opportunity to request Appeals conference before statutory deficiency).
Collection Procedures: The collection process — assessment, notice and demand, lien, levy. Federal tax lien: arises upon assessment, notice and demand, and failure to pay. Lien certificates (discharge, subordination, withdrawal, nonattachment). Tax levy: IRS can seize and sell property to satisfy a tax debt. Exempt property from levy. Collection Statute of Expiration (10 years from assessment date — CSED).
Installment Agreements: Types — guaranteed installment agreement (balance ≤ $10,000, conditions met), streamlined installment agreement (balance ≤ $50,000, can be set up online), non-streamlined (larger balances, full financial disclosure). User fees for installment agreements. Default and reinstatement. Effect of installment agreement on levy.
Specific Representation Issues — 18%
Collection Due Process (CDP) Hearings: Taxpayers who receive a Notice of Federal Tax Lien Filing or a Final Notice of Intent to Levy have the right to request a CDP hearing with the IRS Independent Office of Appeals within 30 days of the lien notice and within 30 days of the levy notice. At the hearing, the taxpayer may raise collection alternatives (installment agreement, OIC, currently not collectible status) and may challenge the appropriateness of the collection action. If the taxpayer disagrees with the CDP determination, they have 30 days to petition the Tax Court for review. A taxpayer who misses the CDP request deadline can request an Equivalent Hearing within one year, but loses the right to Tax Court review.
Offer in Compromise (OIC): Three grounds for an OIC:
- Doubt as to Liability (DATL): Legitimate dispute as to whether the tax is owed or owed in the assessed amount.
- Doubt as to Collectibility (DATC): Taxpayer cannot pay the full amount before the collection statute expires. The IRS calculates the taxpayer's Reasonable Collection Potential (RCP) — the sum of net equity in assets plus the present value of future income available to pay the tax.
- Effective Tax Administration (ETA): Taxpayer could pay the full amount, but doing so would create economic hardship or would be inequitable given exceptional circumstances.
OIC calculation: The minimum acceptable offer under DATC equals the Reasonable Collection Potential (RCP). Lump-sum offer (paid within 5 months): net asset equity + 12 months of future monthly disposable income. Periodic payment offer (paid over 6–24 months): net asset equity + 24 months of future monthly disposable income. Dissipated assets — amounts the taxpayer transferred or wasted to avoid payment — are added back to the RCP.
OIC application: Form 656 + Form 433-A (for DATC/ETA offers). Application fee $205 (waived for low-income taxpayers). 20% down payment required for lump-sum offers. The IRS has 24 months to act; no action within 24 months = deemed accepted.
Innocent Spouse Relief: Three types — traditional innocent spouse relief (Section 6015(b)), separation of liability (Section 6015(c)), equitable relief (Section 6015(f)). Request via Form 8857. Must generally be filed within 2 years of the first IRS collection activity for Section 6015(b) and (c) (the 2-year limitation has been removed for equitable relief). Spouse seeking relief must not have known or had reason to know of the erroneous item.
Currently Not Collectible (CNC) Status: The IRS suspends collection when a taxpayer has no assets or income above allowable living expenses. CNC status is not permanent — the IRS periodically reviews cases and resumes collection when the taxpayer's financial situation improves. Interest and penalties continue to accrue.
Completion of the Filing Process — 7%
Due dates and extensions: Filing deadlines for individuals, corporations, partnerships, and other returns. Extension requests and procedures. Amended return procedures (Form 1040-X — 3-year deadline for refund claims). Superseding returns. Delinquent return procedures.
Estimated taxes and penalties for underpayment: When the failure-to-pay and failure-to-file penalties apply, rates, and how they interact.
Information returns: Filing requirements, penalties for failure to file (penalty tier system based on days late — up to $630 per return for large businesses in 2024), intentional disregard penalty.
Preparer responsibilities at filing: Signing returns as paid preparer, PTIN requirements, e-file mandates.
Tax Preparer Ethics — 26%
This is the largest domain — more than a quarter of the exam. It is entirely based on Treasury Circular 230 (31 C.F.R. Part 10), which governs practice before the IRS.
Circular 230 — Key Sections:
| Section | Rule |
|---|---|
| 10.21 — Client omissions | Advise the client of noncompliance and consequences. No duty to inform the IRS. |
| 10.22 — Diligence | Exercise diligence in return preparation and representations; positions must have realistic possibility of being sustained. |
| 10.23 — Prompt disposition | Do not unreasonably delay matters before the IRS. |
| 10.24 — Assisting suspended/disbarred persons | Cannot knowingly assist someone who is under suspension or disbarment. |
| 10.27 — Fees | No contingent fee for original returns or administrative proceedings where IRS has audit rights; contingent fees allowed for refund claims and Appeals matters. |
| 10.28 — Return of records | Must promptly return original client records even if there is a fee dispute. |
| 10.29 — Conflicts of interest | Cannot represent a client with a conflict (adverse clients, personal interest) unless all affected clients give informed written consent after full disclosure. |
| 10.30 — Solicitation | Advertising is permitted; uninvited direct solicitation of a prospective client known to need representation is not. |
| 10.34 — Tax positions | Undisclosed positions: must be "more likely than not" to be sustained. Disclosed positions: "reasonable basis" standard. No frivolous positions. |
| 10.35 — Competence | Must be legally, technically, and ethically competent; may achieve competence by associating with a competent practitioner. |
| 10.36 — Firm compliance procedures | Practitioners with principal authority over a firm must establish procedures ensuring firm-wide Circular 230 compliance. |
| 10.37 — Written advice | Must be based on reasonable assumptions, consider all relevant facts and law, and not rely on implausible representations. |
Circular 230 — Sanctions (Section 10.50–10.82):
The Office of Professional Responsibility (OPR) enforces Circular 230. Sanctions in increasing order of severity:
- Censure — Public reprimand. The practitioner may continue to practice.
- Suspension — Prohibited from practicing before the IRS for a specified period.
- Disbarment — Prohibited from practicing before the IRS indefinitely. Subject to reinstatement after 5 years on petition.
- Monetary penalty — Can be imposed in addition to or instead of other sanctions.
Expedited suspension (Section 10.82): Available when a practitioner's CPA or attorney license has been revoked/suspended by state authority, they have been convicted of specified crimes, or have abandoned clients. Bypasses the usual hearing process for rapid removal.
Duty to supervise: Practitioners are responsible for supervising employees and agents. Willful failure to supervise — even without personally committing the violation — can result in sanctions.
Who Needs the EA Part 3 Credential (and the Full EA)
Part 3 is the final piece of the EA designation and is required for anyone completing the full credential. The subject matter is most valuable for tax resolution specialists (OICs, liens, levies), enrolled agents at audit defense firms, tax attorneys and CPA firm staff who handle IRS procedural matters, and anyone advising clients on IRS notices, examinations, or collection actions.
The full EA designation grants unlimited representation rights before the IRS — the same practice scope as attorneys and CPAs — without requiring a law degree or state CPA license.
Difficulty and Pass Rate
Part 3 has the highest pass rate of the three parts at approximately 75–80%. This reflects its procedural rather than quantitative nature. Most candidates find that if they study the material systematically, Part 3 is genuinely more approachable than Parts 1 or 2.
Why candidates still fail Part 3:
- Circular 230 section confusion. Ethics sections have similar-sounding language; "which section covers conflicts of interest?" is harder than it looks without scenario-based practice.
- CDP vs. Equivalent Hearing distinctions. The 30-day deadline and the loss of Tax Court review for equivalent hearings are commonly missed.
- OIC calculation mechanics. Candidates who know the concept but not the RCP formula — especially involving dissipated assets or lump-sum vs. periodic payment multipliers — drop points here.
- Penalty abatement distinctions. FTA, reasonable cause, administrative waiver, and statutory exceptions have specific requirements that are easy to confuse.
- Superficial study. Part 3's shorter recommended study time tempts some to under-prepare — the exam rewards genuine mastery of procedural rules.
Step-by-Step Study Timeline (4–6 Weeks)
Week 1: Circular 230 Ethics
Circular 230 is 26% of the exam — start here. Work through every section listed in the key sections table above. Build a "sanctions chart" mapping violations to outcomes (censure, suspension, disbarment). The exam tests what a practitioner must do in a specific scenario — study with fact patterns, not just rule summaries.
Week 2: Practices & Procedures and Examination
Who may practice (EAs, attorneys, CPAs vs. unenrolled preparers). Form 2848 vs. Form 8821 distinctions. EA CE requirements and renewal. IRS exam types (correspondence, office, field). Exam selection methods. 30-day letter vs. 90-day letter. Assessment statute of limitations (3 years, 6 years, unlimited).
Week 3: Collection — Liens, Levies, and Installment Agreements
Federal tax lien mechanics. Levy process and exempt property. The 10-year CSED and what tolls it. Installment agreement types (guaranteed ≤ $10K, streamlined ≤ $50K, non-streamlined) and their user fees. Effect of installment agreement on active levy.
Week 4: CDP Hearings, OIC, Innocent Spouse, and Penalty Abatement
The highest-difficulty week. Master the CDP vs. Equivalent Hearing distinction (30-day request deadline; Tax Court review available only for CDP). Master all three OIC grounds and the RCP calculation (including dissipated assets). Innocent spouse relief — three types, Form 8857. Penalty abatement: FTA requirements, reasonable cause standard, administrative waiver, statutory exceptions.
Week 5–6: Practice Exams and Targeted Review
Two full timed practice exams. Build your deadline matrix (see strategy section). Focus any remaining study time on your lowest-scoring domains from practice. Review the Circular 230 sanctions chart. Confirm deadlines are memorized cold.
Study Strategy: How to Actually Pass
Learn Circular 230 as Rules With Consequences — Not as Abstractions
Ethics sections are easy to skim and hard to actually know. For each major section, ask yourself: "What does this rule require? What happens if a practitioner violates it? What is a reasonable versus unreasonable interpretation of this rule?" Treat ethics preparation as scenario practice, not memorization.
Master the Deadline Matrix
Part 3 has a cluster of important deadlines that candidates confuse. Build a table:
| Event | Deadline |
|---|---|
| Request CDP hearing (lien) | 30 days from Notice of Lien Filing |
| Request CDP hearing (levy) | 30 days from Final Notice of Intent to Levy |
| Petition Tax Court after CDP | 30 days from CDP determination |
| Request Equivalent Hearing | 1 year from CDP notice date |
| Petition Tax Court after Notice of Deficiency | 90 days (150 days if abroad) |
| File amended return for refund | 3 years from filing date or 2 years from payment, whichever is later |
| IRS general assessment statute | 3 years |
| IRS assessment statute (25%+ omission) | 6 years |
| Collection statute | 10 years from assessment |
| Innocent spouse claim (6015(b)/(c)) | 2 years from first collection activity |
| OIC deemed accepted if no IRS action | 24 months |
Procedural Rules Over Tax Rules
Unlike Parts 1 and 2, Part 3 rewards candidates who understand process and sequence rather than technical tax law. If a taxpayer receives a levy notice, what must happen before the IRS can actually seize property? What rights does the taxpayer have, and in what order must they exercise them? Walking through these procedural sequences and understanding where each right or option inserts into the process is the key skill.
Know What an EA Can and Cannot Do
A recurring exam theme is defining the scope of EA practice rights. Know which categories of individuals can represent taxpayers (EAs, attorneys, CPAs, enrolled retirement plan agents, enrolled actuaries) and which cannot (unenrolled preparers have only limited rights). Know which IRS proceedings EAs may participate in (examinations, collection proceedings, appeals, Tax Court — EAs are qualified to appear in Tax Court as non-attorneys). Know the consequences of practicing while suspended or disbarred.
The Hardest Topics Explained
1. Circular 230 Sanctions: What Gets You Censured, Suspended, or Disbarred
The key to Circular 230 sanction questions is understanding the severity framework — and recognizing that the exam will often present scenarios where the sanction is not obvious.
Disbarment is the most severe sanction and is typically reserved for: conviction of a crime involving dishonesty or breach of trust; knowingly giving false testimony before the IRS; willfully taking positions with no basis; fraud; or engaging in other conduct that fundamentally undermines the ability to practice honestly. Disbarment is not time-limited by default, but a disbarred practitioner may petition for reinstatement after 5 years.
Suspension can be for a specific period and is used for serious violations that fall short of disbarment-level conduct: willful failure to file tax returns, pattern of negligent conduct, providing assistance to a suspended practitioner, willful violation of e-file rules, charging unconscionable fees.
Censure is a public reprimand — the practitioner continues to practice but has a formal mark on their record. Censure is appropriate for isolated violations where the conduct was careless but not dishonest, or where the practitioner has otherwise shown good character.
Monetary penalty can be imposed on individuals or on firms. The amount is based on the benefit derived from the violation or capped at specific dollar amounts.
Expedited suspension (Section 10.82) applies when: a practitioner's CPA or attorney license has been revoked or suspended by state authority; the practitioner has been convicted of specified crimes; or the OPR has credible evidence that the practitioner has abandoned their clients. This bypasses the usual administrative hearing process for rapid removal from practice.
2. Collection Due Process Hearings vs. Equivalent Hearings
This distinction is tested frequently because the consequences of the two differ meaningfully.
CDP Hearing: Upon receiving a Notice of Federal Tax Lien Filing or a Final Notice of Intent to Levy, the taxpayer has 30 days to request a CDP hearing with IRS Appeals. At the hearing, the taxpayer may challenge the collection action, raise collection alternatives (installment agreement, OIC, CNC status), and challenge the underlying liability if they had no prior opportunity to do so. If the taxpayer disagrees with the CDP determination, they have 30 days to petition the U.S. Tax Court.
Equivalent Hearing: A taxpayer who misses the 30-day CDP deadline can request an Equivalent Hearing within one year. It has the same procedural features as a CDP hearing — except the taxpayer loses the right to petition Tax Court. The determination is administratively final.
Key exam point: If the 30-day window has passed, only an Equivalent Hearing is available, and Tax Court review is gone.
3. Offer in Compromise: Calculating Reasonable Collection Potential
For a DATC offer, the minimum acceptable offer equals the taxpayer's Reasonable Collection Potential (RCP):
RCP = Net Asset Value + Future Income Component
- Net Asset Value: Assets at quick sale value (approximately 80% of FMV) minus encumbrances.
- Future Income: For a lump-sum offer (paid within 5 months) — 12 × monthly disposable income. For a periodic payment offer (6–24 months) — 24 × monthly disposable income.
- Monthly Disposable Income = gross income minus allowable expenses per IRS National and Local Standards (not actual spending).
- Dissipated Assets: Value of assets the taxpayer transferred or wasted to avoid payment is added back to RCP. This is a frequent exam trap.
Low-income exception: Taxpayers at or below 250% of the federal poverty level are exempt from the application fee and the 20% down payment.
4. Penalty Abatement: FTA vs. Reasonable Cause vs. Administrative Waiver
First-Time Abatement (FTA): Available for failure to file, failure to pay, or failure to deposit penalties when the taxpayer has no penalty history in the prior three tax years. No need to show reasonable cause. Must be requested — the IRS does not apply it automatically.
Reasonable Cause: The IRS abates penalties when the taxpayer exercised ordinary business care and prudence but still failed to comply. Accepted grounds: death or serious illness, natural disasters, inability to obtain records, and reliance on erroneous IRS advice. Ignorance of the law and financial hardship alone are generally insufficient for failure-to-file abatement.
Administrative Waiver: IRS-issued penalty relief for specific situations (e.g., pandemic-era relief notices). Automatic in some cases; must be requested in others.
Statutory Exception: Built into the IRC — for example, estimated tax penalty safe harbors (100% of prior year tax or 90% of current year tax).
Exam tip: Use FTA first if the client has a clean three-year record. For failure-to-file, financial hardship alone does not rise to reasonable cause — physical inability to file does.
Practice Question Strategy
50–80 Hours Is Enough — But Use Them Well
Part 3 has the highest pass rate for a reason. The material is learnable with focused study in a relatively short time. Candidates who do 400–500 well-reviewed practice questions (not just going through them mechanically) are typically well-positioned to pass.
Simulate Strict Timed Conditions at Least Once
Even though Part 3 is procedural, time pressure is real. 100 questions in 210 minutes means you cannot afford to spend 4–5 minutes on every uncertain question. Practice full timed exams to build speed.
Use the Diagnostic Report If You Fail
If you need to retake, the diagnostic report by content area is your roadmap. Part 3 has five domains — identify your weakest one or two and target remediation there. Most retakers who fail by a small margin fail because of weak Circular 230 ethics knowledge, CDP/OIC procedural details, or both.
Read Each Question for What It Is Actually Asking
Part 3 questions often have plausible-sounding wrong answers. The difference between "what must the practitioner do" and "what may the practitioner do" is significant. Pay attention to who is asking the question — is it asking about the taxpayer's rights or the practitioner's obligations? Read carefully.
Exam Day Logistics
Registration: Register at prometric.com. Select EA SEE Part 3. The same testing window (May 1 – February 28) and format apply as for Parts 1 and 2.
What to Bring: Government-issued photo ID that exactly matches your registration name. No calculators, notes, or personal items in the testing room. Prometric provides scratch paper and pencils.
No Calculator Needed: Part 3 is the one EA exam part where you are very unlikely to need to do significant calculation. The rare quantitative question (OIC minimum offer, penalty calculation) uses simple arithmetic.
Pacing: With 100 questions in 210 minutes, you have just over 2 minutes per question. For procedural knowledge questions (which most Part 3 questions are), 60–90 seconds per question is typical for prepared candidates. This gives you time to return to flagged questions.
Scoring: Immediate score report at the testing center. 105/150 or above is passing. If you fail, the diagnostic report by domain will guide your remediation before retaking.
Frequently Asked Questions
Q: Can I take Part 3 without passing Parts 1 and 2 first? Yes. You can take the three parts in any order. Many candidates take Part 3 last because it is the easiest, but there is no requirement to do so.
Q: Does passing Part 3 mean I am an enrolled agent? No. You become an enrolled agent only after passing all three parts, applying for enrollment (Form 23), paying the enrollment fee, and passing a suitability check (the IRS reviews your tax compliance history). You cannot use the EA designation until you have received your enrollment card from the IRS.
Q: How does Circular 230 apply to me before I am an enrolled agent? If you are a paid tax return preparer, you are governed by Treasury Circular 230 even as an unenrolled preparer — specifically the sections relating to standards for positions taken on returns. The representation-before-the-IRS sections apply once you are credentialed.
Q: What is the difference between the OPR and the IRS Appeals office? The Office of Professional Responsibility (OPR) handles disciplinary matters against practitioners who violate Circular 230 — it imposes censure, suspension, and disbarment. The IRS Independent Office of Appeals handles disputes between taxpayers and the IRS about tax liability or collection actions. They are entirely separate functions.
Q: Do I need to memorize Circular 230 section numbers? Not necessarily the exact section numbers (10.21, 10.29, etc.) — but knowing them helps you organize the rules mentally. The exam tests the substance of each section, not whether you can recite its number. That said, some candidates find memorizing the section numbers helpful as an organizational framework.
Q: Does passing the EA exam make me automatically enrolled? No. After passing all three parts, you must separately apply for enrollment using Form 23 (Application for Enrollment to Practice Before the Internal Revenue Service) and pay the enrollment user fee. The IRS then conducts a suitability check that includes reviewing your personal tax compliance history. Candidates who have unfiled returns or outstanding tax debts may be denied enrollment.
Part 3 is your final step. Study the procedures, know your Circular 230, and master the deadlines — and the full EA designation is within reach.