24.3 Background & Compliance Checks
Key Takeaways
The IRS Office of Enrollment conducts a tax compliance review (all required returns filed, no unresolved liabilities) and a criminal background check.
Form 23 processing generally takes about 60 days (90-120 days for former IRS employees).
Unfiled returns or unresolved tax debts can result in denial; an active Installment Agreement is generally acceptable.
Character and fitness review evaluates prior OPR sanctions and disciplinary history.
Crimes involving dishonesty, fraud, or tax violations are weighted most heavily.
False statements on Form 23 trigger denial and potential criminal liability.
Why This Matters for the Exam
The IRS Office of Enrollment (not the Office of Professional Responsibility, which handles discipline) conducts tax compliance and suitability checks before granting EA status. The exam tests whether you understand what can cause denial of enrollment and the importance of tax compliance.
Overview of the Vetting Process
Submitting Form 23 (with the $140 fee via Pay.gov or mail) initiates a review by the Office of Enrollment:
| Check | What the IRS Reviews |
|---|---|
| Tax compliance | All required returns filed; debts resolved or in an active payment plan |
| Criminal background | Criminal history review (federal and state) |
| Character and fitness | Professional conduct; prior OPR sanctions; state-license discipline |
| Suitability determination | Overall fitness to practice before the IRS |
Typical Processing Time: about 60 days (90-120 days for former IRS employees).
Tax Compliance Check
The IRS verifies that you are in full tax compliance:
| Requirement | Consequence of Non-Compliance |
|---|---|
| All returns filed | Unfiled returns = likely denial |
| No outstanding balance | Unresolved debt = possible denial |
| Payment plan in place | Acceptable (shows good faith) |
| Currently compliant | Required for approval |
Key Point: Before applying, ensure all returns are filed and any tax debts are resolved or in a formal Installment Agreement.
What Causes Denial?
| Issue | Likely Result |
|---|---|
| Unfiled tax returns | Denial |
| Outstanding tax debt (no payment plan) | Denial or delay |
| Recent criminal conviction | Denial (depending on nature) |
| Fraud or dishonesty conviction | Strong grounds for denial |
| Prior OPR sanction | May cause denial |
| False statements on Form 23 | Denial + potential criminal charges |
Criminal Background Check
The IRS reviews your criminal history as part of the suitability determination:
| Factor | Consideration |
|---|---|
| Type of offense | Crimes of dishonesty (fraud, embezzlement) more serious |
| Recency | Recent offenses weighted more heavily |
| Frequency | Pattern of misconduct more serious |
| Relevance | Tax-related crimes very serious |
| Rehabilitation | Evidence of rehabilitation considered |
Not Automatic Denial: Having a criminal history does not automatically disqualify you, but crimes involving dishonesty, fraud, or tax violations are especially problematic.
Character and Fitness Evaluation
The IRS evaluates your overall suitability to practice:
| Factor | What the IRS Considers |
|---|---|
| Professional history | Prior disciplinary actions |
| OPR sanctions | Prior Circular 230 violations |
| State licensing issues | CPA/attorney suspensions or revocations |
| Integrity | Honesty in application and practice |
What To Do Before Applying
| Action | Purpose |
|---|---|
| File all returns | Clear compliance flag |
| Pay or arrange debt | Show good faith |
| Resolve outstanding issues | Remove barriers |
| Gather documentation | Prepare for IRS questions |
| Be honest on Form 23 | False statements = denial |
Real-World Scenario
Scenario: You passed the SEE in 2026 at a PSI testing center but have an unfiled 2023 tax return and owe $5,000 from 2022.
- Before applying: File the 2023 return and enter into an Installment Agreement for the $5,000.
- On Form 23: Disclose the debt honestly and indicate you are on a payment plan.
- Likely result: With returns filed and an Installment Agreement in place, approval is likely (but processing may take longer than 60 days).
On the Exam
Question types to practice on background checks:
- Denial Questions: "What can cause denial of EA enrollment?"
- Compliance Questions: "What type of check does the IRS conduct?"
- Remedy Questions: "What should you do before applying if you have unfiled returns?"
- Authority Questions: "Which IRS office conducts EA suitability reviews?" (the Office of Enrollment; OPR handles discipline)
The key is to remember: The Office of Enrollment conducts tax compliance + criminal background checks (about 60 days). Resolve issues before applying. Be honest on Form 23.
What can cause denial of EA enrollment?
Low SEE scores
Unfiled tax returns
Less than 5 years experience
No college degree
What type of check does the IRS conduct on EA applicants?
Credit check only
Tax compliance and criminal background
Employment verification only
Reference check
What should you do if you have outstanding tax debt before applying for EA status?
Wait until debt is fully paid
Apply anyway without mentioning it
Enter into an Installment Agreement and disclose on Form 23
File for bankruptcy
Approximately how long does Form 23 processing generally take?
1-2 weeks
30 days
About 60 days
6-12 months
Sections you finish are checked off in the contents.