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Power of Attorney

Weekly IRS Roundup September 19 – September 23, 2022

by McDermott Will & Emery | Sep 26, 2022 | IRS Guidance, Tax Reform, Tax Refunds

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 19, 2022 – September 23, 2022.

September 19, 2022: The IRS updated information on the Work Opportunity Tax Credit (WOTC), including information on the pre-screening and certification process. The WOTC is available to employers who hire designated categories of workers facing significant barriers to employment. Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, must be completed by the job applicant and the employer on or before the day of the job offer to satisfy the pre-screen requirement.

September 19, 2022: The IRS released Tax Tip 2022-143, reminding people that every taxpayer has the right to retain representation when they work with the IRS, including the right to seek assistance from the Low Income Taxpayer Clinic.

September 20, 2022: The IRS announced that it has selected eight new members for the Electronic Tax Administration Advisory Committee. The committee’s main goal is to promote paperless filing of tax and information returns. The following individuals have been appointed for three-year terms on the committee, starting in September:

Austin Emeagwai, CPA, Ph.D.; Collierville, Tennessee
Jerry Gaddis, EA, MBA; Winter Haven, Florida
Nikia Gainey; Orlando, Florida
Robert Gettemy;Marion, Iowa
Argi O’Leary; Voorheesville, New York
Hallie Parchman; Austin, Texas
RaeAnn Pilarski; Tucson, Arizona
Keith Richardson; Philadelphia, Pennsylvania

September 20, 2022: The IRS announced that Hurricane Fiona victims in Puerto Rico now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments. The relief is available in all 78 Puerto Rican municipalities, which are designated by the Federal Emergency Management Agency.

September 20, 2022: The IRS released Notice 2022-40, which provides updates on the corporate bond monthly yield curve and corresponding spot segment rates and the 24-month average segment rates for September 2022. The notice also provides guidance as to interest rates on 30-year Treasury securities and the 30-year Treasury weighted average rates.

September 20, 2022: The IRS released Tax Tip 2022-144, recommending that people use caution when choosing a tax preparer since tax preparers have different levels of skill, education and expertise.

September 21, 2022: The IRS released Tax Tip 2022-145, describing the different types of authorizations for third-party representatives. The options include:

Power of Attorney: This allows someone to represent a taxpayer in tax matters before the IRS. The representative must be an individual authorized to practice before the IRS.
Tax Information Authorization: This allows a taxpayer to appoint anyone to review or receive a taxpayer’s confidential tax information for a specified type of tax for a specified period.
Third-Party Designee: This designates a person on a taxpayer’s tax form to discuss that specific tax return and year with the IRS.
Oral Disclosure: This authorizes the [...]

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Revoking Your Power of Attorney Status

by Kevin Spencer and McDermott Will & Emery | Jan 28, 2022 | IRS Audits, IRS Guidance

To represent a taxpayer before the Internal Revenue Service (IRS), you need a valid power of attorney (POA). This is accomplished by preparing and submitting a properly completed Form 2848, Power of Attorney and Declaration of Representative pursuant to the Instructions for Form 2848. At some point, the representation will end (or it ends for certain matters and years but not for others). However, absent affirmative steps by the representative prevents the IRS from knowing that you no longer represent the taxpayer, and you may continue to receive IRS correspondence. This creates a potential issue because representatives should not be receiving taxpayer information if they no longer represent or provide legal advice to said taxpayer.

To avoid this, a representative can notify the IRS that they no longer represent the taxpayer and do not wish to receive any further correspondence, either for all matters and years or just certain ones. This is done by revoking your POA with the IRS. Revocation can be done in one of two ways. The first way is to mail or fax a copy of the POA to the IRS with the word “REVOKE” written across the top of the first page with a current signature and the date below this annotation. Alternatively, if the representative does not have a copy of Form 2848 or wishes to revoke several POAs at the same time, they can send the IRS a statement of revocation that indicates that the authority granted by the POA is revoked, lists the matters and years and lists the name and address of each recognized representative whose authority is revoked. If the representative is completing revoking authority, they can write “revoke all years/periods” instead of listing the specific matters and years.

For representatives who represent multiple taxpayers before the IRS, it may be difficult to recall all of the POAs they have filed with the IRS. However, a listing of all your POAs can be obtained by submitting a Freedom of Information Act request for a copy of the Centralized Authorization File (CAF)/Representative/Client listing. It’s a simple process, and the IRS provides the following Sample CAF Client Listing Request on its website:

Sample CAF Client Listing Request

Practitioner or company name Practitioner or company address Phone number (optional)

Date

Dear Disclosure Manager:

This is a request under the Freedom of Information Act. I request that a copy of the CAF Representative/Client Listing be provided to me. I do not wish to inspect the documents first.

In order to determine my status for the applicability of fees, you should know that I am an “Other” requester seeking information for non-commercial or personal use. I am a tax professional and my CAF number is XXXXXXX. (This is not your Enrolled Agent Number)

I am including a valid photo identification which includes my signature as proof of identity.

Send listing as a paper document. I am willing to pay [...]

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Weekly IRS Roundup July 19 – July 23, 2021

by McDermott Will & Emery | Jul 26, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 19, 2021 – July 23, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 19, 2021: The IRS issued a news release announcing an enhancement to its online account systems, specifically that tax professionals and taxpayers may now initiate and execute a Power of Attorney or Tax Information Authorization online in lieu of using Forms 2848 and 8821, respectively.

July 20, 2021: The IRS issued a news release urging tax professionals to use multi-factor authentication technology to protect taxpayers’ information from identity and data theft.

July 21, 2021: The IRS issued proposed regulations expanding electronic filing requirements with respect to various business tax returns and statements, pursuant to the Taxpayer First Act of 2019 provisions and related legislation.

July 21, 2021: The IRS issued a news release announcing that, in partnership with local civic organizations, events will be held in several cities across the country on July 23 – 24, 2021, to assist eligible families in registering for advance payments of the Child Tax Credit.

July 21, 2021: The IRS issued a news release announcing the disbursement of more than 2.2 million Economic Impact Payments worth more than $4 billion, bringing the total amount of disbursements under the American Rescue Plan Act of 2021 to more than 171 million payments worth more than $400 billion.

July 23, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Le Chen in our Washington, DC, office for this week’s roundup.

Form 2848 Power of Attorney – Important Practice Tip

by McDermott Will & Emery | Sep 15, 2017 | IRS Audits, IRS Guidance, Uncategorized

Forms 2848 Power of Attorney and Declaration of Representative are intended to authorize the Internal Revenue Service (IRS) to discuss a taxpayer’s confidential tax matters with a designated representative. Generally, the form requires the taxpayer to identify the tax form number (where applicable), a description of the matter and specify the applicable tax year(s) for the authorization to be valid. If the IRS determines that an issue is beyond the scope outlined in the Form 2848 they will not discuss that item with the representative. It is important to understand how the IRS interprets these restrictions.

Importantly, on September 8, 2017, the IRS released TAM 201736021, dated August 1, 2017, which expresses a narrow view of whether certain civil penalties are related to certain tax returns for purposes of a Form 2848 authorization. The TAM notes that “merely listing ‘civil penalties’ on Line 3 of the Form 2848” may no longer be sufficient authorization if the civil penalty relates to a return that is not otherwise enumerated within the Form 2848. For example, the TAM concluded that a Form 2848 only identifying an income tax return, such as a Form 1120 or Form 1040, would not constitute authorization for the IRS to discuss civil penalties related to international information returns that may have to be filed with the income tax return, such as a Form 5471. Under the IRS’s view, the civil penalty would be related to the Form 5471 but not the Form 1120.

The TAM provided a second example, reaching a similar conclusion regarding the relationship between a Form 1040 and a Form 3520. In short, authorization would not exist for the IRS to discuss with a representative whether an IRC section 6677 civil penalty for failure to file Form 3520 is applicable if the Form 2848 only identifies the Form 1040. This result may be more intuitive since the Form 3520 is not attached to the Form 1040 and is required to be filed separately. However, it is still more demanding than having a broader application of the “civil penalties” designation on the Form 2848.

Practice Point 1: Forms 2848 are generally executed at the outset of a matter when it may not be readily apparent in what direction the audit will progress or what issues the IRS may focus on. While we disagree with the IRS’s position as stated in the TAM, taxpayers and practitioners need to be cognizant of the IRS’s position and may need to revisit their Forms 2848 during the course of an audit.

Practice Point 2: As a general matter, the IRS agent handling an audit will tell the practitioner if the agent believes that a current Form 2848 is not sufficient, but that does not always happen. So it is good practice for taxpayers to send the practitioner any correspondence or notices that they receive from the IRS and not merely rely on the presumption that the IRS also mailed a copy to the practitioner listed on the Form 2848.