agent

What It Is

An enrolled agent (EA) is person who is authorized to represent a taxpayer before the Internal Revenue Service (IRS).

How It Works

To become an EA, a person has to pass a three-part comprehensive IRS test of individual and business tax returns or be a former IRS employee with appropriate experience. To maintain the credential, EAs must obey ethical standards and complete 72 hours of continuing education every three years.

The EA designation is the highest one the IRS confers, and EAs have the authority to represent any taxpayer for any tax matter.

Why It Matters

Tax advisors can be CPAs, attorneys, or other people, but not all tax advisors are EAs. Treasury Department Circular No. 230 sets forth the requirements for who can practice before the IRS.

EAs and other tax advisors might help a client structure his assets such that his estate taxes are lower. They might help a company organize itself so that its shareholders pay less in taxes or so that an acquisition does not generate a large tax liability.

Source: Investing Answers

What It Is

A transfer agent manages and maintains records of who owns a corporation's or mutual fund's stock or bonds. Most transfer agents are banks or trust companies, although some companies act as their own transfer agents.

How It Works

Let's assume Company XYZ is a publicly traded corporation that has 10,000,000 shares outstanding. If the shares trade all day, how does Company XYZ know who owns its shares? The answer lies with the transfer agent.

The transfer agent has three big jobs: 1) to issue and cancel stock certificates (including when a company pays a stock dividend or has a stock split); 2) to be an intermediary that makes the dividend or interest payments, sends out and keeps track of proxy materials, exchanges the company's stock or bonds if a merger occurs, tenders shares when necessary, and mails the company's financials and other reports; and, 3) to deal with replacing lost, stolen, or destroyed certificates.

Why It Matters

Transfer agents are crucial behind-the-scenes entities in the business world because they maintain important information and protect even the smallest shareholder or bondholder's right to information disclosure. Without transfer agents, companies would have to find other ways to manage the incredible, time-consuming tasks of keeping track of the constant changes in shareholder and bondholder information.

Source: Investing Answers