NOTE: This headliner is current through the publication date. Since changes may have occurred, no guarantees are made concerning the technical accuracy after the publication date.
Headliner Volume 230
March 25, 2008
The IRS continues to receive many inquiries from tax professionals and taxpayers about the appropriate use of the Power of Attorney (POA). The following questions and answers should help clarify several POA issues.
What is a POA and when is it necessary?
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A POA is a legal instrument authorizing an individual to act as a representative for either an individual or entity. Subject to the authority granted, a representative can generally perform any acts the individual or entity can perform.
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To protect taxpayer privacy, some form of authorization is necessary for disclosure purposes before an IRS employee can provide information to any third party (certified public accountant, attorney, enrolled agent, family, friend or employee).
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IRS cannot disclose details of a tax return unless the practitioner has a valid POA or has filed a Form 8821 which specifically authorizes such disclosure.
How do I notify the IRS about a POA?
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Form 2848 is not necessary when an individual only needs to receive tax information. For that purpose, a Form 8821, Tax Information Authorization, may be used. Please note that the Form 8821 is not a POA and should not be confused with one.
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IRS employees are permitted to accept information from practitioners and preparers without having a POA or other authorization on file.
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Tax professionals who are active participants in the IRS e-file program and who e-file five or more accepted individual or business returns in a season, are eligible to use the e-Services disclosure authorization application. Eligible tax professionals may complete authorization forms, view and modify existing authorization application forms, and receive acknowledgement of accepted submissions immediately.
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Disclosure authorization allows tax professionals to electronically submit both Form 2848 and Form 8821. Processing is expedited and the representative receives a real-time acknowledgment of accepted submissions.
What does CAF mean?
The Centralized Authorization File (CAF) is a computerized system of records that houses authorization information from: Powers of Attorney (POA); Tax Information Authorizations (TIA), and Estate Tax Returns.
What is an unenrolled preparer?
An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required to sign the return.
What are unenrolled preparers’ limitations on representation?
An unenrolled preparer’s ability to practice before the IRS is limited. An unenrolled return preparer is only permitted to represent a taxpayer only before customer service representatives, revenue agents, and other examiners with respect to a tax liability regarding a return they prepared. An unenrolled return preparer cannot:
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Represent before other offices of the IRS such as Counsel, Appeals or Collection, including the Automated Collection System (ACS) unit;
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Execute closing agreements;
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Extend the statutory period;
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Execute waivers;
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Execute claims for refund;
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Negotiate and execute installment agreements; or
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Receive refund checks.
If the unenrolled return preparer does not meet the requirements for limited representation, as stated above, Form 8821, Tax Information Authorization, should be used. Form 8821 allows an appointee to inspect and/or receive confidential tax information and is generally limited to the specific tax matter described on the form. An appointee can be an individual, corporation, firm, organization or partnership.
For additional information on guidelines related for unenrolled preparers and related topics see Publication 947, Practice Before the IRS and Power of Attorney, and Publication 470, Limited Practice Without Enrollment (PDF).
Will the IRS accept POAs in other formats?
Form 2848 must be attached as a transmittal form to any non-IRS POA. For more information on the specifics of using a non-IRS POA, refer to page 8 of Publication 947, Practice Before the IRS and Power of Attorney.
I called about a client’s account and was told that my POA was not on the CAF system even though I recently sent it in. What happened?
A faxed POA is usually processed within 48 hours from receipt by the CAF unit. If the POA is mailed, then it may take up to five days after receipt to be in the system. There is a 2:00 p.m. cut-off time to allow for processing of each day’s receipts. Therefore, a POA received after 2:00 p.m. is considered received the following day.
Can I fax my POA directly to a Practitioner Priority Service (PPS) assistor?
Yes. Authorizations can be faxed using Form 2848, Power of Attorney and Declaration of Representative, when the PPS assistor receives the call and determines a POA or other authorization form is needed. This can be done without disconnecting while the assistor holds. If, for some reason, the practitioner is unable to fax authorization during the call, the PPS assistor will advise the practitioner to either fax it directly to the CAF unit or when the practitioner has authorization, he may call the PPS line back and fax the authorization at that time.
Unenrolled return preparers can use Form 2848 if they prepare the return in question; however, if they did not prepare the return in question, then Form 8821, Tax Information Authorization, should be used. Forms 8821 being used for “specific use request” are not recorded on the CAF and will not be forwarded to the CAF unit.
What is a “specific use request?”
A specific use request is when the Form 8821 is used to verify information such as an EIN or address. Specific use refers to items not recorded on the CAF. Other examples include: income verification; small business elections; deceased taxpayers; Form 56; Non resident Alien Issues; 843 claims; 1096 issues; etc. Generally, PPS assistors do not forward these POAs to the CAF unit. Therefore, practitioners should send them directly to the CAF Unit to be placed on file.
Note: This information can be found in IRM 21.3.7.11, Specific Use Authorizations.
Can the IRS consider extending the time the Checkbox Authority (Third Party Designee Authority) is effective?
The IRS cannot extend third-party designations beyond 12 months at this time. The original intent of allowing 12 months was for use during the initial return processing. After a year, generally outstanding matters involve audit or collection activities rather than processing issues.
The Checkbox Authority expires at the one-year anniversary of the due date of the tax return (excluding extensions). The Checkbox Authority does not allow the designee to represent or otherwise practice on behalf of the taxpayer. It also does not allow the designee to receive IRS refund checks nor sign on behalf of the taxpayer.
References/Related Topics
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