a presentation to the irs on behalf of a taxpayer

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Representing Clients Before the IRS: Power of Attorney

Written by Mike D'Avolio, CPA, JD

Modified May 20, 2020

At some point in your tax practice, you’ll no doubt have clients who need representation before the IRS, or you may want to expand your practice to include this service. Here’s what you need to know with regard to IRS representation and power of attorney.

The following acts can be performed by attorneys, certified public accountants (CPAs) and enrolled agents (EAs):

Represent a taxpayer before any office of the IRS.
Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund.
Sign a consent to extend the statutory time period for assessment or collection of a tax.
Sign a closing agreement.

An unenrolled return preparer is an individual other than an attorney, CPE or EA who prepares and signs a return as a paid preparer. Unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives and the Taxpayer Advocate Service during an examination of the taxable period covered by the return they prepared and signed. For returns prepared and signed after Dec. 31, 2015, an unenrolled preparer must also possess a valid Annual Filing Season Program Record of Completion for the calendar year the return was prepared and signed, and for the year the representation occurs. Taxpayers may authorize an unenrolled preparer to inspect and request tax information by filing Form 8821 (see below).

Signing a Tax Return

A power of attorney does not grant the representative the authority to sign a tax return unless the signature is permitted under the tax code and regulations, and the client specifically authorizes providing the signature in the power of attorney.

Representatives are allowed to sign the return if the taxpayer is not able to due to the following circumstances:

Disease or injury.
Continuous absence from the United States, including Puerto Rico, for a period of at least 60 days before the date required to file the return.
Other good cause if specific permission is requested and granted by the IRS.

Note that Form 2848, Power of Attorney and Declaration of Representative , authorizing the signature, must accompany the tax return.

Form 2848 and Other Related Forms

Form 2848, Power of Attorney : A power of attorney is given when the taxpayer authorizes someone in writing to receive their confidential tax information from the IRS and perform certain actions on their behalf in front of the IRS. Some examples include representing the taxpayer at a meeting with the IRS, and preparing and filing a written response to an IRS inquiry. If the authorization is unlimited, the representative can generally perform all acts a taxpayer would perform, except negotiating a check. The authorized individual must be eligible to practice before the IRS.

A power of attorney is not required when the third party is not dealing with the IRS as the taxpayer’s representative, such as the following:

Providing information to the IRS.
Authorizing the disclosure of tax return information using Form 8821 , Tax Information Authorization, or other written or oral disclosure consent.
Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document.
Allowing a tax matters partner to perform acts for the partnership.
Allowing the IRS to discuss return information with a fiduciary.

Form 8821, Tax Information Authorization : Use this form to authorize an individual or organization to request and inspect the taxpayer’s confidential tax return information when the taxpayer does not want to authorize an individual to represent them before the IRS.

Form 4506-T , Request for Transcript of Tax Return : Use this form to authorize an individual or organization to request and inspect transcripts of the taxpayer’s confidential return information when the taxpayer does not want to authorize an individual to represent them before the IRS. This form is typically used by third parties to verify tax compliance.

Form 56 , Notice Concerning Fiduciary Relationship : This form is used to notify the IRS of the existence of a fiduciary relationship (trustee, executor, administrator, receiver or guardian). The fiduciary stands in the position of the taxpayer or entity, and does not act as a representative.

Disclosure of Return to a Third Party

A representative is not allowed to consent to the IRS disclosing the tax return or related information to a third party unless this authority is specifically provided for on line 5 of Form 2848.

Incapacity or Incompetency

A power of attorney is generally terminated once the taxpayer becomes incapacitated or incompetent. However, the power of attorney may continue if there is authorization on line 5 of Form 2848 and the non-IRS durable power of attorney meets IRS requirements.

Retention and Revocation of Prior Power of Attorney

A newly filed power of attorney will revoke a previously filed power of attorney if it involves the same matter. A new power of attorney will not revoke a prior power of attorney if it is stated so and either of the following documents are attached to the new power of attorney: a copy of the unrevoked prior power of attorney, or a statement signed by the taxpayer listing the name and address of each representative authorized under the prior power of attorney.

Revocation of Power of Attorney by Taxpayer

To revoke a previously executed power of attorney without naming a new representative, the taxpayer must write “REVOKE” across the top of the first page of the Form 2848, along with a current signature and date immediately below the annotation. A copy of the revoked power of attorney is then mailed or faxed to the IRS.

Withdrawal by Representative

For the representative to withdraw, they must write “WITHDRAW” across the top of the first page of the Form 2848 with a current signature and date below the annotation, and provide a copy of the withdrawn power of attorney to the IRS.

Substitute to Form 2848

Form 2848 is used to appoint a recognized representative to act on the taxpayer’s behalf in front of the IRS. Representatives are listed and must complete Part 2 of the form. The IRS will accept a non-IRS power of attorney, but Form 2848 must be completed and attached as well.

A taxpayer can use a substitute document, other than Form 2848, to authorize a representative, but it must contain the following information:

Name and mailing address.
Social security number and/or employer identification number.
Employer plan number (if applicable).
Name and mailing address of representative.
Types of tax involved.
Federal tax form number.
Year(s) or period(s) involved.
Decedent’s date of death (for estates).
Expression of intention concerning the scope of authority granted to representative.
Signature and date.

The taxpayer also must attach to the non-IRS power of attorney a signed and dated statement made by the representative (Declaration of Representative, Part II of Form 2848). The statement should read:

I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority.
I am subject to regulations contained in Circular 230 (31 C.F.R., Subtitle A, Part 10) as amended, governing practice before the Internal Revenue Service.
I am authorized to represent the taxpayer(s) identified in the power of attorney.
I am a (naming the capacity in which representation is undertaken, as set forth in the list of eligible representatives at Part II of Form 2848).

The IRS has a centralized computer database (CAF) system that contains information about the authority of taxpayer representatives. The process enables IRS personnel to verify the authority of the taxpayer’s representative and the IRS to automatically send copies of notices and other IRS communications to their representative. A non-IRS power of attorney can be entered in the CAF system by attaching it to a completed Form 2848.

IRS Publication 947 , Practice Before the IRS and Power of Attorney (excerpts included above).
Circular 230 , Regulations Governing Practice before the Internal Revenue Service .

Editor’s note: This article was originally published in CPA Practice Advisor and is the second article in a new series by Mike D’Avolio, CPA, JD, focusing on ethics for tax practitioners.

TaxProTalk: Thank You Notes

5 Key Tax Changes for Your Individual Clients in 2018

Mike D’Avolio, CPA, JD, is a tax law specialist for Intuit® ProConnect™ Group, where he has worked since 1987. He monitors legislative and regulatory activity, serves as a government liaison, circulates information to employees and customers, analyzes and tests software, trains employees and customers, and serves as a public relations representative. More from Mike D'Avolio, CPA, JD

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You've received an audit notice from the Internal Revenue Service and panic sets in. You don't want to deal with the matter without a tax representative by your side. You need to know who can represent you and your business at the audit meeting and in any future dealings with the IRS. If your case goes beyond the IRS, you'll need to consider who can represent you before a tax court.

The IRS says you need someone with experience at "practicing before the Internal Revenue Service." According to the IRS, this includes

"all matters connected with a presentation to the IRS on behalf of the taxpayer. Examples include preparing and filing documents, communicating with the IRS, and representing a client at meetings."

Who Qualifies as a Tax Representative?

Technically, anyone can practice before the IRS. You can appear on your own behalf or that of an immediate family member. Any of your full-time employees or -- if you've formed a partnership -- a general partner can represent your business. A bona fide officer or regular full-time employee of a corporation, association or organized group can represent these entities. An individual may represent any other individual or entity which is outside the U.S. before IRS personnel when this representation takes place outside the country.

You know what they say about fools representing themselves in court. With so much at stake, you won't want to entrust the future of your business to anyone less qualified than a tax professional or tax attorney.

Unenrolled Preparers as Tax Representatives

An unenrolled preparer is anyone you pay to prepare your business's tax return who is not a CPA, an attorney or an enrolled agent. He may only represent you with respect to a return he prepared before December 31, 2015. He can represent you before revenue agents and IRS customer service representatives, but not appeals officers, revenue officers or counsel. He can't sign any documents on your behalf.

The Best Tax Representatives at an Audit

You may not want your uncle or your full-time secretary appearing as your tax representative at an IRS audit, and with good cause, if they're not experienced and properly trained.

The best person to represent your business in tax matters is your CPA or your tax attorney , but ideally, you'll seek representation by an enrolled agent. This is an individual who is authorized by the federal government to represent taxpayers in audits, appeals, and collection matters. Enrolled agents aren't run-of-the-mill CPAs -- they specialize in taxation and the IRS grants them certain unlimited rights because they have either passed an IRS examination or they have worked for the IRS for at least five years in a role that involves interpreting and enforcing the tax code. They are subject to background checks.

Tax Representatives in Court

You have a right to go to tax court in most cases if an IRS audit produces an unfavorable result and you want to appeal the decision. Tax court is specifically devotedly to reviewing IRS matters, specifically tax deficiencies (you didn't pay as much tax as the IRS says you should have). You can take anyone with you or appear alone, but it's best to hire an experienced tax attorney who has appeared before this court before. The person who represents you must be an attorney who has been admitted to the bar for the Tax Court. You can have more than one person with you, but an experienced attorney will lead the team.

Back to Questions and Answers About IRS Tax Audits

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Circular 230

Irs definition.

Circular 230 contains the regulations governing practice before the Internal Revenue Service. Practice before the IRS includes all matters connected with a presentation to the IRS relating to a taxpayer’s rights, privileges or liabilities under laws or regulations administered by the IRS. Practice includes, but is not limited to, preparing or filing documents, corresponding and communicating with the IRS, rendering written tax advice and representing a client at conferences, hearings and meetings. Tax return preparation is not “practice” as currently defined by case law.

More from H&R Block

Circular 230 is a publication that provides guidance on practicing before the IRS. Examples of practice before the IRS include:

Corresponding and communicating with the IRS on behalf of a taxpayer
Representing a taxpayer at conferences, hearings, or meetings with the IRS
Preparing and submitting a response to an IRS notice or inquiry
Signing agreements, such as those in which the taxpayer agrees to extend the statute of limitations for the assessment of tax
Providing tax advice

Under Circular 230, power of attorney authorizations ( Form 2848 authorization ) are reserved for individuals authorized to practice before the IRS. These professionals mainly fall into these categories:

Enrolled agents
Annual Filing Season Program (AFSP) Record of Completion

The AFSP designation has limited representation rights. If your tax preparer has the AFSP designation he or she can represent you during an audit of a return he or she prepared and signed. However, he or she cannot represent you for issues regarding an unpaid balance or before the IRS Office of Appeals. Only CPAs, enrolled agents, and attorneys can represent you before any department of the IRS.

Learn about the benefits of obtaining a tax professional.

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Related tax terms

Power of Attorney (POA)

Enrolled Agent

IRS Representation

Related IRS notices

IRS Letter 2673C - Representative/Taxpayer Response

IRS Letter 2675C - Power of Attorney Termination

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Representing Clients Before the IRS: Power of Attorney

Mar. 13, 2018

The following acts can be performed by attorneys, certified public accountants (CPAs) and enrolled agents (EAs):

Represent a taxpayer before any office of the IRS.
Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund.
Sign a consent to extend the statutory time period for assessment or collection of a tax.
Sign a closing agreement.

Signing a Tax Return

Representatives are allowed to sign the return if the taxpayer is not able to due to the following circumstances:

Disease or injury.
Continuous absence from the United States, including Puerto Rico, for a period of at least 60 days before the date required to file the return.
Other good cause if specific permission is requested and granted by the IRS.

Note that Form 2848 , Power of Attorney and Declaration of Representative , authorizing the signature, must accompany the tax return.

Form 2848 and Other Related Forms

A power of attorney is not required when the third party is not dealing with the IRS as the taxpayer’s representative, such as the following:

Providing information to the IRS.
Authorizing the disclosure of tax return information using Form 8821 , Tax Information Authorization, or other written or oral disclosure consent.
Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document.
Allowing a tax matters partner to perform acts for the partnership.
Allowing the IRS to discuss return information with a fiduciary.

Form 8821, T ax Information Authorization : Use this form to authorize an individual or organization to request and inspect the taxpayer’s confidential tax return information when the taxpayer does not want to authorize an individual to represent them before the IRS.

Disclosure of Return to a Third Party

A representative is not allowed to consent to the IRS disclosing the tax return or related information to a third party unless this authority is specifically provided for on line 5 of Form 2848.

Incapacity or Incompetency

Retention and Revocation of Prior Power of Attorney

Revocation of Power of Attorney by Taxpayer

Withdrawal by Representative

Substitute to Form 2848

A taxpayer can use a substitute document, other than Form 2848, to authorize a representative, but it must contain the following information:

Name and mailing address.
Social security number and/or employer identification number.
Employer plan number (if applicable).
Name and mailing address of representative.
Types of tax involved.
Federal tax form number.
Year(s) or period(s) involved.
Decedent’s date of death (for estates).
Expression of intention concerning the scope of authority granted to representative.
Signature and date.

I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority.
I am subject to regulations contained in Circular 230 (31 C.F.R., Subtitle A, Part 10) as amended, governing practice before the Internal Revenue Service.
I am authorized to represent the taxpayer(s) identified in the power of attorney.
I am a (naming the capacity in which representation is undertaken, as set forth in the list of eligible representatives at Part II of Form 2848).

IRS Publication 547 (excerpts included above).
Circular 230 , Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service.

Editor’s note: This is the second in a new series by Mike D’Avolio focusing on ethics for tax practitioners. Read his first article “ Practicing Before the IRS: What You Need to Know .”

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April 12, 2023

Several months have passed since your first contact with the Appeals Officer. You’ve had several calls with her. She’s read your well-written protest. (It’s well-written because you took to heart the first of this five-part series on effective Appeals.) You know about her background, who will attend the pre-conference on behalf of Compliance, and how she will conduct the conference. You’ve even built a good working rapport. (This is thanks to your review of part two of this series.) The Appeals conference is in a few weeks. Here are a few points about how to have an effective conference.

Attitude toward compliance personnel . As we’ve mentioned previously, most Appeals Officers were examiners earlier in their careers. Moreover, the examiners in your case may be acquaintances, former colleagues, or even friends of the Appeals Officer. Be respectful when speaking about the examiner and be courteous in their presence. To the extent you can, challenge the position and not the person. If you must speak strongly, try “The IRS position is baseless and contrary to the statute and published guidance” rather than “The auditor is a(n) [insert your favorite pejorative for a person acting less than intelligent and less than ethical].” Trust us: The latter never works.

Have we ever come across an examiner who merits such pejoratives? Yes, but rarely. If the examiner is off base technically and it should be obvious, let the Appeals Officer discover that herself. Her own opinion is much more persuasive than your invective. You may have to help the Appeals Officer. In a call with her preparing for the conference, you might say something like: “I’m looking forward to the pre-conference. We’ve tried to understand the government’s position but have failed. Perhaps, you’ll be able to get them to explain it clearly.” Of course, only say this if it’s true. If the Appeals Officer responds by saying that the position is easy to understand, then you’ve lost credibility.

How effective is this strategy? On one occasion, the Appeals Officer asked Compliance very pertinent questions and then told them that he would not be able to sustain their position. (He even asked if they had consulted IRS counsel. They hadn’t.) Compliance conceded the case in the pre-conference. We didn’t even have to speak.

We have had less than ethical auditors, but that is extremely rare. If you receive information indicating that an examiner’s ethics are compromised, handle such information like gasoline. It’s powerful, but it could explode in your face. You must have the facts before acting. In one case, an examiner held the taxpayer to an unreasonable burden of proof, despite receiving detailed information proving the taxpayer’s position. In a call before the conferences, we explained to the Appeals Officer where she could find this information. We even met with the Appeals Officer weeks before the conference to walk through the three binders that proved the taxpayer’s treatment of the item. She asked us why the examiner did not accept the extensive documentation. We then carefully and reluctantly told her. We had discovered late in the exam that the examiner had applied for the VP of Tax position at the taxpayer when he was in private practice and that he was denied the position. Many times during the exam, he told the taxpayer that when he was “in industry” he would have ample proof for the examined issues. The Appeals Officer did not immediately react. She went ahead with the conferences as planned. She respectfully listened to Compliance’s presentation and asked about the quality of the taxpayer’s substantiation. Apparently, she did not find his explanation persuasive because in the taxpayer’s conference she conceded the main substantiation in full.

Behavior during the preconference . To this point, we’ve used the singular “conference.” For LB&I cases, there are typically two conferences: a pre-conference meeting between Compliance and Appeals and the Appeals conference between the taxpayer and Appeals. This pre-conference meeting often occurs immediately before the taxpayer’s formal conference. Appeals Officers use this pre-conference to allow Compliance to relate information that may not be in the file, to present exam’s findings, and to answer questions that she may have. The taxpayer is offered an opportunity to attend the pre-conference. Although the taxpayer’s presence is not required, we can’t think of a situation they wouldn’t attend.

This pre-conference proceeding is a result of the prohibition on ex parte communication found in the IRS Restructuring and Reform Act of 1998. Pub. L. No. 105-206, § 3463, 112 Stat. 685. Congress was concerned that examiners and Appeals Officers would have discussions outside of the hearing of the taxpayer. They believed such “ex parte” discussions prejudiced taxpayers – unless the taxpayer had an opportunity to be present. That led to the development of the practice of the pre-conference.

Unless the Appeals Officer says otherwise, the pre-conference belongs to Compliance and the taxpayer should just listen and not speak. Typically, the only questions to the taxpayer are clarifications: “Is that a fair description of the taxpayer’s position?” or “Do you agree with the facts as stated by Compliance?”

As we mentioned in the last article, sometimes Appeals Officers ask for more substantial participation by the taxpayer. They may even ask that Compliance remain in the room during the taxpayer’s presentation. Again, it’s important to know how your Appeals Officer will conduct the conferences well BEFORE the date.

Between the conferences . The pre-conference and the taxpayer’s conference are held typically on the same day – often back-to-back. We recommend that you incorporate a meaningful break between the two. Use the break to tweak the taxpayer’s Appeals conference presentation to address issues or concerns raised by the Appeals Officer during the pre-conference. How long should you break? It depends on the complexity of issue. On simple issues, 15-30 minutes may be sufficient. When Compliance has a detailed presentation – we’ve had some go for hours including almost 100 slides – an extended lunch break is more appropriate.

Most likely, you’ve prepared a detailed presentation and are ready to give a convincing exposition. Being technically correct is interesting, but it’s often not compelling. An effective advocate must be prepared to address the concerns of the adjudicator – here the Appeals Officer. The pre-conference (and your earlier conversations) are opportunities to understand how she views the issue. Use the break to discuss what you heard and prepare how to weave your responses into your presentation. On occasion, we’ve worked with Appeals Officers who were very prepared and asked very pertinent questions during the pre-conference. It was clear how she viewed the issue. We knew precisely what she wanted to hear. We elected to scrap the presentation – or at least table it – and speak directly to the Appeals Officer’s concerns.

Taxpayer’s presentation . Frankly, this is our favorite part. It’s part advocate, part storyteller, and part director. Who should lead the presentation? Typically, it should be the representative; however, we recommend including several presenters as appropriate. Generally, Appeals Officers like to hear directly from the taxpayer regarding its business or complex industry issues. A well-prepared taxpayer can be very effective. On tax technical matters, the representative should be presenter. If the presentation is long, use several presenters.

Appeals conferences are typically informal with the participants seated around a conference table. The conference is a presentation, not a courtroom-type argument at a lectern. Provide the Appeals Office with slides, talking points, or an outline. We’ve used a projector but found printed materials more effective. They allow the Appeals Officer to take notes and focus on the presenter rather than the projected slides. In turn, they allow the presenter to maintain eye contact with the Appeals Officer and better understand her reaction to the presentation. On a side note, this is a major challenge for “virtual” conferences. Given the choice, an in-person meeting is preferred. However, when that’s not a choice, the presenter and extended team must be sensitive to the Appeals Officer’s reaction to what she is hearing.

An engaged Appeals Officer will stop the presentation and ask questions. This should be welcomed. Again, answering her concerns is more important than getting through all the slides. Note the questions and her apparent reaction to the response. As we prepare for the next step, it’s important to constantly evaluate the effectiveness of your presentation and the potential for settlement.

In our next installment, we will discuss next steps and how to move the process along to “yes.” This will take persistence.

Article by Mark Mesler and Ethan Vernon

Mark Mesler, Esq.

Senior Counsel at Asbury Law Firm. He is a retired Principal at Ernst & Young where he led the firm’s Tax Controversy practice.

Ethan J. Vernon, J.D., MTX

Associate at Asbury Law Firm, Tax Counsel. Ethan focuses his practice on federal and state tax controversies, tax litigation, business tax planning, and corporate organization.

Asbury Law Firm

133 Peachtree Street, NE Suite 4900 Atlanta, Georgia 30303

Tel. (404) 382 – 9942 Fax (404) 565 – 1103

Formerly Carnahan, Evans, Cantwell & Brown, P.C.

CALL US: 417.447.4400

Representation Before the IRS

Effective representation before the Internal Revenue Service (“IRS”) can be crucial, and finding an experienced attorney to stand by your side is advisable when you’re involved in a tax controversy, such as a complex examination (audit), a legal matter that could result in criminal prosecution, a dispute with the IRS collection office or Appeals Office, applying for an offer in compromise, or filing a claim for a refund. Securing qualified tax counsel can improve the presentation of your case, the protection of your interests, and the building of the case’s legal record. The last is especially true if further judicial action is necessary. Representation in these cases is also known as practice before the IRS, and it is detailed in IRS Publication 947 ( download Pub 947 pdf ) and Circular 230 . This process and who is authorized to represent you at various stages with the IRS is highly regulated, so you should review Publication 947 and the tips and directives below before getting started.

What does practice before the IRS cover? The IRS refers to a person’s representation of you before the IRS as “practice before the IRS,” which covers all of the following activities ( source IRS publication 947 ) :

Communicating with the IRS on a taxpayer’s behalf regarding the taxpayer’s rights, privileges, or liabilities under laws and regulations administered by the IRS
Representing a taxpayer at conferences, hearings, or meetings with the IRS
Preparing, filing, or submitting documents, or advising a taxpayer on the preparation, filing or submission of documents with the IRS on behalf of a taxpayer, including tax returns
Providing a taxpayer with written tax advice on one or more Federal matters

Who may practice before the IRS? An individual can represent him or herself, and family members can represent members of their immediate family, including their spouse, child, parent, brother, or sister. A variety of professionals can practice before the IRS, including attorneys, appraisers, CPAs, enrolled actuaries, enrolled agents, low income taxpayer clinic student interns, and unenrolled return preparers. Unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar IRS officers and employees. Unless you are present during the communication, the person representing you must be designated as your representative with a written declaration, typically Form 2848: Power of Attorney and Declaration of Representative . This document must be filed with the IRS and requires the following information:

Your contact information (name, address, ID number, telephone number)
Your representative’s information (name, address, CAF number, PTIN, telephone number, fax number)
The acts they are authorized to perform (description of matter, tax form number, year/period if applicable)
The signature of the representative (with professional designation, licensing jurisdiction, bar, license, certification, registration, or enrollment number if applicable, and date)

A power of attorney authorizes the representative to receive your confidential tax information and to perform specific related actions on your behalf. If no restrictions are imposed, the individual can do anything that you can perform, including representing you before the IRS, signing waivers, signing consents, agreeing to audit assessments, closing agreements, appeals settlements, etc. You should complete Form 2848 fully and accurately to prevent unnecessary delays and difficulties. You should also carefully consider which acts you will authorize your representative to perform in section 3 and specific acts that you do NOT authorize the representative to perform in section 5. What are the duties required of a representative? You can view a representative’s responsibilities in full at irs.gov/ , but the most important duties during representation before the IRS include:

Act within the rules of practice, found in Treasury Department Circular No. 230
Swiftly submit requested records or information, unless they conclude the information is privileged
Advise you of noncompliance, errors, or omissions and their consequences
Perform due diligence throughout the process, including during the preparation, approval, and filing of documents (returns, affidavits, etc.)
Use due diligence when relying on others
Not unreasonably delay arranging matters before the IRS
Not knowingly accept assistance from disbarred or suspended persons or former IRS employees

How can a representative be disbarred or suspended from practice? A representative that engages in conduct that is considered disreputable may be disbarred, suspended, censured, or even fined. Examples include:

Conviction of a criminal offense
Any offense involving dishonesty or breach of trust
Knowingly providing false or misleading information
Solicitation of employment by prohibited means
Failure to file a tax return
Misappropriation of funds received from clients for payment of taxes
Attempting to influence an IRS employee through threats, gifts, favors, etc.
Disbarment or suspension from practice
Abusive language or false accusations
Circulation or publication of libelous matter

Why should I hire an attorney before an audit? If you have never dealt directly with the IRS, hiring an experienced tax attorney may be to your advantage. The attorney will understand the law and have experience with audits. Their expertise will help you successfully prepare for the audit and will likely lower your stress levels and bolster your confidence. Before the audit begins, your attorney can review your records to spot and prevent or prepare to deal with potential problems. You can consult with your attorney at any point during the audit if you have questions or concerns. Your attorney can contact the auditor on your behalf. Why should I hire an attorney for a tax controversy? When confronting a tax controversy, hiring a reputable and knowledgeable representative may be in your best interest. Tax matters can be complex and financially critical. Having a legal representative on your side will bolster your confidence and ensure that the IRS does not take advantage of your naiveté. A legal representative can help you navigate complicated tax laws, avoid penalties and criminal actions, and perhaps achieve a more favorable resolution.

Contact the attorneys at Carnahan, Evans, Cantwell & Brown, P.C., if you’re seeking representation before the IRS. It is easier for an attorney to represent you if you are both in the same geographic area, but we may still be able to assist you even if do you not live in southwest Missouri. Our experienced lawyers are well equipped to represent clients before federal and state agencies. We can help you challenge or seek redress of an agency action. Whether you need help communicating with the IRS or the Missouri Department of Revenue, Carnahan, Evans, Cantwell & Brown, P.C., is here to help. Let us provide you with the sound legal counsel you need to manage the situation and navigate the regulations of the IRS or Missouri Department of Revenue. To get started, telephone us at 417-447-4400 or contact us online . We look forward to hearing from you!

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What if I need to call the IRS on behalf of someone else?

The IRS will request paperwork to prove that you are legally designated to call on someone else’s behalf.

Calling for someone else

Here's what the IRS requires:

Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Your filing status (Single, Head of Household, Married Filing Joint, or Married Filing Separate).
Your prior-year tax return (they may ask you questions about it to verify your identity).
Verbal or written authorization from the third party to discuss the account.
The taxpayer’s name, SSN/ITIN, tax period, and tax form(s) filed.
Preparer Tax Identification Number (PTIN) or PIN if a third-party designee.
A current, completed, and signed Form 8821 , Tax Information Authorization.
A completed and signed Form 2848 , Power of Attorney and Declaration of Representative.

Calling for someone who is deceased If you've lost someone, we know that the paperwork seems unending. We're sorry you have to deal with more of it, but the IRS may require that you fax:

The death certificate.
Copies of Letters Testamentary approved by the court.
IRS Form 56 , Notice Concerning Fiduciary Relationship (for estate executors).

Related Information:

What do I need if I call the IRS?
How do I contact the Internal Revenue Service (IRS)?
What if somebody already claimed my dependent?
What is the TurboTax phone number?
Can I deposit my tax refund into someone else's account?

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Court Says Unenrolled Agents Can’t Represent Taxpayers Before IRS

The IRS limits those that are entitled to “practice” before it. Generally, “practice before the IRS” is defined as including all matters connected with a presentation to the IRS on behalf of the taxpayer. Examples include preparing and filing documents, communicating with the IRS, and representing a client at meetings. Any attorney, CPA, enrolled agent or enrolled actuary who is not under suspension or disbarment from practice before IRS may “practice” before the IRS. Also, there are some exceptions made for other persons, such as the following:

An individual may appear on their own behalf;
An individual may represent an immediate family member;
A regular full-time employee of an employer may represent the employer;
A general partner or a regular full-time employee of a partnership may represent the partnership;
A bona fide officer or a regular full-time employee of a corporation, association, or organized group may represent the corporation, association, or organized group;
A regular full-time employee of a trust, receivership, guardianship, or estate may represent the trust, receivership, guardianship, or estate;
An officer or a regular employee of a governmental unit, agency, or authority may represent the government unit, agency, or authority in the course of his or her official duties;
An individual may represent any individual or entity, which is outside the United States, before personnel of the IRS when such representation takes place outside the United States; and
An individual who prepares and signs a taxpayer’s return as the preparer (or who prepares a tax return but is not required to sign the tax return) may represent the taxpayer only with respect to the return he or she prepared and signed. Such an individual may represent the taxpayer before revenue agents and customer service representatives, but not appeals officers, revenue officers, or Counsel.

But, what about an unenrolled preparer? That’s an individual who prepares and signs a tax return as the preparer, or who prepares a tax return but is not required to sign the tax return. Can they practice before the IRS? That was the issue presented in this case.

The plaintiff, a non-lawyer and non-CPA, had been an IRS revenue officer, but then became a self-employed tax consultant. He registered with the IRS as an unenrolled preparer. He provides various services to clients, but beginning in 1998, IRS officers and employees began refusing him permission to represent clients in matters before the IRS because he is not a “practitioner” as that term is defined by 31 C.F.R. §10.2(a). Eventually, the plaintiff sued, seeking a declaratory judgment challenging the pertinent IRS regulations as invalid and a violation of his constitutional due process rights. Specifically, 31 C.F.R. §10.7(c)(1)(viii) states:

[an] individual who prepares and signs a taxpayer’s tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or regulations) to sign the tax return, may represent the taxpayer before revenue agents, customer service representatives or similar officers and employees of the Internal Revenue Service during an examination of the taxable year or period covered by the tax return, but, unless otherwise prescribed by regulation or notice, this right does not permit such individual to represent the taxpayer, regardless of the circumstances requiring representation, before appeals officers, revenue officers, Counsel or similar officers or employees of the Internal Revenue Service or the Department of the Treasury.

So, an unenrolled preparer’s ability to practice before the Service is very limited. Generally, it is limited to the examination function of the Service, and only with respect to a return he or she prepared. Consequently, an unenrolled preparer cannot practice before appeals officers, revenue officers, and Counsel. Also, an unenrolled preparer cannot execute claims for refund, receive refund checks, execute consents to extend the statutory period for assessment or collection, execute closing agreements, or execute waivers of restriction on assessment or collection of a deficiency in tax.

In addition, federal law provides that only attorneys and CPAs may represent a person before the IRS. 5 U.S.C. §500(b)-(c). No one else has been granted a statutory right to do so. See 5 U.S.C. §500(d)(1). But, the Congress has never said who cannot represent a taxpayer before the IRS. So, the precise issue before the court was whether 31 C.F.R. §10.7(c)(1)(viii) was a reasonable interpretation of federal law. On that point, the deck is stacked in the government’s favor – to win, the plaintiff had to show that the regulation was arbitrary, capricious, or manifestly contrary to statute. The court said the plaintiff failed to clear that hurdle. IRS had provided valid reasons for placing limits on who may practice before it, and the court noted that the regulation balanced the need for affordable yet competent representation. In addition, the court noted that the plaintiff, to be able to fully represent clients before the IRS, only needed to demonstrate his knowledge to the IRS and become an enrolled agent. Wright v. Everson, No. 07-13167, 2008 U.S. App. LEXIS 17418 (11th Cir. Aug. 15, 2008).

Note: (1) To become an enrolled agent, the plaintiff (or any other person) would have to file an application with the IRS Office of Professional Responsibility and pass the Special Enrollment Examination or present evidence of qualifying experience as a former IRS employee. IRS will then perform a background check including a review of the applicant’s tax compliance record. That process typically takes about 120 days and the applicant would then be issued an enrollment card. (2) On September 24, 2008, the court vacated its prior opinion and filed a revised opinion again upholding the regulation and denying the plaintiff's petition for rehearing. Wright v. Everson, No. 07-13167 (11th Cir. Sept. 24, 2008), vac'g 2008 U.S. App. LEXIS 17418)(11th Cir. Aug. 15, 2008), pet. for rehearing denied.

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Dealing with the IRS On Behalf of Your Clients

Let me tell you a story about a client you are bound to have. His name is Ed. One day, post tax season, Ed opens his mailbox to find a letter from the IRS.

“Oh the horror!”

Not wanting to face the bad news, Ed places the letter on his kitchen counter to “deal with later”.

Then another letter comes… kitchen counter.

…and another… kitchen counter.

At some point Ed realizes that the IRS is not going to go away. Here’s where you come in. That pile of unopened IRS letters? Ed comes waltzing into your office with several months later.

Invariably, some of these letters will have required action by a certain date. But by this time, the action dates are long past and a relatively simple matter has become a more serious affair.

The IRS contacts taxpayers for various reasons but for the most part, it usually has to do with an error on their return. As a tax preparer, you will need to deal with the IRS on behalf of your clients. It’s not always going to be easy so here are some tips to make the painful and often time-consuming task a little easier.

Procrastination is never the answer

The first thing you should know about dealing with the IRS: procrastination and failure to adhere to IRS deadlines are not a good approach. When a taxpayer comes to you with a letter, it’s best to handle it right away. Upon receiving the letter, you should first look for any deadlines stated.

You should also coach your clients not to ignore IRS letters. As frightful as it may be for them, they should bring them to your attention right away.

The IRS is not always right.

In many cases, a taxpayer will receive a notice proposing an adjustment in taxes because of some income that cannot be located on the tax return. Surprisingly, a number of taxpayers will assume the agency is correct and send in the requested additional tax, along with the penalty and interest assessments that accompany the letters, without question. Besides fear, another reason for this action is certainly related to the format of the correspondence, which is difficult for many taxpayers to understand, since they do not deal with these situations on a regular basis.

It’s important to communicate with your clients that the IRS is not always correct, and reviewing the information thoroughly before forking over a payment to the IRS is a best practice.

Don’t count on talking to a person

Don’t expect to be able to phone an employee. Their telephone system is designed to allow or force the taxpayer to obtain information from a recorded message. The system certainly does not allow for quick or easy access to an IRS employee. One can only imagine the number of callers who get lost in the seemingly endless myriad of menus and “give up” in frustration.

When you do get to speak to a person, take good notes on the information they gave you and don’t leave the conversation with unanswered questions because it is rare that you will get to speak to the same person a second time.

It is also not uncommon to end up speaking to someone who is very unhelpful. If you encounter an incompetent or less than helpful employee, request to speak to a supervisor.

Use the Practitioner Hotline

One avenue of assistance to the tax practitioner is the “Practitioner Hotline”. While these individuals are not able to handle all problems, they can be a great help to you.

Know Your Notices

Many of the notices that are sent to taxpayers are computer-generated. While they follow certain formats, they can be difficult to understand. Becoming familiar with the more common notices generated and the action (if any) that is required will make your life easier.

The most common notices sent to taxpayers are known as “CP” notices. Each type of CP notice has a CP Number and a title. The most common notices can be found on the IRS website page: “ Understanding your IRS Notice or Letter ”.

The Non-Filer

Believe it or not there are people out there who do not file. It often happens when a person has an unusual situation and finds it difficult to get their return filed on time or by the required extension date. The situation could be an illness of either the taxpayer or a family member that puts a high demand on his time, or some other situation. After missing one year and nothing happens, the non-filer will sometimes miss another year or two. In the meantime, records are lost or misplaced, and the non-filer continues to procrastinate.

If the needed documents for filing an accurate tax return are missing or incomplete, taxpayer transcripts can be obtained from the IRS prior to completing the return to insure all income is reported. In many cases, the IRS will send transcripts to non-filers when they are notified that tax returns are needed for previous years.

Delinquent Taxes

If the taxes owed exceed $10,000, an Offer in Compromise might be considered. An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS will generally accept an OIC if it is unlikely that the tax liability can be collected in full. The offer must reflect the full collection potential of the taxes owed.

An IRS Examination of a tax return is not something to be taken lightly, especially if it is a comprehensive examination. When a taxpayer receives a notice of an impending audit, there are certain preparations that should be made.

Here are some tips for dealing with audits:

Have the taxpayer gather all relevant documentation on the issue being questioned.
Examine thoroughly the items that are likely to be brought up.
Make sure there is documentation to prove all deductions or items of income.
Be thoroughly familiar with the entire tax return being examined.
For “gray area” items, have a basis in tax law to explain the reasoning behind the handling of the items.
Provide records to the auditor in an organized manner.
Establish good rapport with the examiner.
If the examiner turns out to be uncooperative, abusive or unfair, request a different one.

As a tax preparer, you are the expert. Be sure you are prepared to deal with the IRS on your client’s behalf no matter what the situation. If you’re interesting in gaining more training in dealing with the IRS or filing complicated returns, check out our Chartered Tax Professional Certificate Program or our Advanced II Tax Course .

2021 Objectives Report to Congress Preface

National Taxpayer Advocate’s Introductory Remarks

On March 30, 2020, I had the honor and privilege of being sworn in as the third National Taxpayer Advocate. Starting amid a pandemic and witnessing IRS offices closing one by one was not the way I envisioned my role when I accepted the position. I, like many others, have been working remotely, and my communications with the Commissioner, other IRS leaders, and TAS employees have been conducted by phone and email. This has presented obvious challenges, but there also has been a silver lining in this experience. As I have participated in conference calls with members of my leadership team, TAS employees, and the IRS’s COVID-19 response team, I have been extraordinarily impressed by their commitment and focus on the health and safety of all employees during this pandemic while still doing as much as possible to assist taxpayers. Despite our limitations, I am proud to say the spirit of TAS employees is strong. We are making the best of the situation and continuing to work our cases as best we can. IRS personnel were in similar situations and sheltering at home, including virtually all IRS telephone assistors and many IRS campus employees. Because of these IRS staffing challenges, many TAS cases could not be resolved and will remain outstanding until campus employees can safely return to their IRS facilities. I appreciate the patience and understanding I have experienced as we all work through these unprecedented circumstances.

I want to acknowledge the tremendous job the IRS has done under these constraints. On March 25, 2020, the IRS provided taxpayers with broad relief from compliance actions under its “People First Initiative.” This relief, which currently extends through July 15, 2020, provides peace of mind to many taxpayers during this national crisis by postponing certain payments related to installment agreements and offers in compromise and by limiting certain enforcement actions. In addition, the IRS has postponed over 300 filing, payment, and other time-sensitive deadlines while undertaking to quickly disburse the Economic Impact Payments (EIPs) authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. It is clear from my conference calls and the guidance the IRS is releasing that the IRS is putting taxpayers first and making meaningful efforts to provide relief to the extent possible. On behalf of taxpayers, I applaud the IRS’s efforts.

I also want to acknowledge the tremendous contributions of my predecessors — Val Oveson, who led TAS from 1998-2000, and Nina E. Olson, who led TAS from 2001-2019. Over the past 20 years, TAS has successfully assisted over 4.5 million taxpayers by helping them resolve their tax problems and protecting their rights, and it has made hundreds of administrative recommendations adopted by the IRS and some 45 legislative recommendations enacted by Congress. TAS is a great organization because of its leadership and the remarkable employees who dedicate their professional careers to compassionately advocating for taxpayers every day.

As I have been settling into my job, I am mindful of the importance of balancing my internal role and my external role. IRC § 7803(c) provides both that the National Taxpayer Advocate “shall report directly to the Commissioner” (the internal role), and that the National Taxpayer Advocate shall submit two annual reports to the House Ways and Means and Senate Finance committees each year “without any prior review or comment from the Commissioner, the Secretary of the Treasury, the Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget” (the external role).

This dual-reporting responsibility provides both opportunities and challenges. The biggest opportunity is that the National Taxpayer Advocate is effectively given “two bites at the apple” to bring about systemic change on behalf of taxpayers. I can try to resolve problems internally, and if a problem doesn’t get fixed, I can bring it to the attention of Congress and the public. The related challenge is creating a relationship of trust with IRS leaders. If IRS leaders believe comments they make or documents they share during internal discussions will be publicly disclosed, they may be reluctant to trust the National Taxpayer Advocate and to work collaboratively with TAS. This is a nuanced and ongoing tension, as I am sure my predecessors know well, but as I start the position, my approach will be to work issues internally as best I can and to raise concerns publicly only after the IRS and TAS have reached an impasse. Based on my early discussions with Commissioner Rettig and other leaders, I am optimistic we can find solutions to many taxpayer problems by working together as much as possible.

During my 35 years of tax advocacy, I have come to understand and appreciate the wisdom of Commissioner Mortimer Caplin’s principles for effective tax administration, which he set forth 56 years ago in Revenue Procedure 64-22.3. It is an eloquent articulation of the IRS’s role to perform its work in a fair and impartial manner, with neither a government nor a taxpayer point of view and with the responsibility to apply and administer the law in a reasonable, practical manner with great courtesy and consideration. While proper tax administration is key to ensuring a tax system that is fair and impartial to taxpayers, it is the job of the National Taxpayer Advocate and TAS to advocate for taxpayers to ensure their rights are protected. The Taxpayer Bill of Rights and the Taxpayer First Act (TFA) underscore the guiding principle that taxpayer rights are the cornerstone for an effective tax administration. I am proud to advocate for taxpayers’ rights and to work toward improving the taxpayer experience to ensure a fair and just tax administration.

Read the Full Preface ->

“The effects of COVID-19 will continue to be felt for the foreseeable future… We will continue to identify areas where taxpayers’ needs are not being met and will continue to advocate for alternative approaches to meet those needs.”

Publications

Irs guidance clarifies when company employees are subject to circular 230, requiring a power of attorney in lb&i examinations.

The Internal Revenue Service (IRS) Office of Professional Responsibility (OPR) published guidance this week in response to uncertainty relating to the interaction of (1) Form 4764, Large Business and International (LB&I) Examination Plan (Examination Plan), (2) Form 2848, Power of Attorney and Declaration of Representative (Power of Attorney), and (3) Circular 230. This guidance explains when an employee of a company that is involved in an LB&I audit must provide the IRS with a Power of Attorney, executed by an authorized officer of the company, in order to represent the company in its dealings with the IRS about the audit. The Examination Plan usually lists by name the company's employees who will be involved in an IRS audit and authorizes such employees to take certain actions. However, the OPR guidance explains that the Examination Plan operates as an authorization to receive tax information, similar to a Form 8821 (Tax Information Authorization), but that a Power of Attorney must be provided to the IRS in order to enable the more involved interactions that these employees may have with IRS personnel pursuant to the Examination Plan, such as when an employee advocates, negotiates, or disputes IRS positions on behalf of the company.

An Examination Plan is designed to set forth the ground rules for interactions between a taxpayer (and its personnel) and the IRS personnel conducting the audit. The Examination Plan typically includes: identification of IRS personnel involved in the examination, procedures governing the examination, timeframes for the taxpayer to provide the IRS with information and documentation, and a schedule for providing IRS examination personnel with access to the taxpayer's records. In addition, an Examination Plan includes a "Communications Agreement," which sets forth the contact information for the taxpayer's employees who are allowed to: (1) provide information to the IRS, (2) discuss tax matters or adjustments, and (3) receive information and adjustments from the IRS.

A taxpayer that chooses to be represented before the IRS must execute a Power of Attorney in favor of the designated representative. An executed Power of Attorney authorizes the IRS to communicate with the representative and allows the representative to act on the taxpayer's behalf relating to matters described in the Power of Attorney. A Power of Attorney executed on behalf of a corporate taxpayer must be signed by a duly elected officer or director of the corporation, as set forth in the corporation's articles of incorporation or by-laws.

A corporation's officers and full-time employees are allowed to represent the corporation before the IRS; however, officers or employees who choose to represent the corporation are subject to Circular 230 regulations. Circular 230 regulates representatives who "practice" before the IRS. The term "practice" includes "all matters connected with a presentation to the Internal Revenue Service … relating to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service." This broad definition also includes individuals who communicate with the IRS or represent a taxpayer at a conference, hearing, or meeting.

Circular 230 and LB&I Examination Plan Guidance

Circular 230's broad definition of "practice" created uncertainty for both the IRS and LB&I taxpayers because it was unclear whether an employee who communicated with the IRS, as authorized by an Examination Plan but without a Power of Attorney, was "practicing" before the IRS. In the recent guidance, OPR addressed this uncertainty and provided clarification for both the IRS and LB&I taxpayers. First, OPR determined that an Examination Plan does not replace a Power of Attorney, and that depending on the level of interaction pursuant to the Examination Plan, a Power of Attorney may be necessary. At one end of the spectrum, an employee who communicates with the IRS pursuant to an Examination Plan but only provides information to, or receives information from, the IRS, is not "practicing" before the IRS, according to OPR, because the employee does not perform any "representation activity." Therefore, an employee only acting within these parameters would not be subject to Circular 230 and would not need a Power of Attorney. At the other end of the spectrum, an employee whose discussions with IRS personnel can be characterized as advocating, negotiating, disputing, or otherwise going beyond "mere delivery of facts, general explanation, or acceptance of materials," would be, according to OPR, "practicing" before the IRS and would be subject to the provisions of Circular 230. In that event, the authority to act on behalf of the company set forth in the Examination Plan would be insufficient and the company would have to execute a Power of Attorney authorizing the employee to interact with the IRS on the company's behalf.

OPR's guidance clarifies that employees of LB&I taxpayers whose activities pursuant to an Examination Plan are limited to submitting or receiving tax information will not be treated as "practicing" before the IRS and will not be subject to Circular 230 or need a Power of Attorney. Stated differently, the guidance clarifies that the authority granted solely by an Examination Plan ( i.e. , in the absence of an accompanying Power of Attorney) is limited to providing and receiving information. When an employee engages in the discussions envisioned by the Examination Plan and those discussions become involved enough to be advocating, negotiating, or disputing ( i.e. , more than mere submission or receipt of tax information), the guidance provides that the employee is "practicing" before the IRS, would be subject to Circular 230, and would need a Power of Attorney. Company tax personnel involved in IRS audits will wish to review the provisions of present and future Examination Plans to determine the permissible scope of their activities in interacting with IRS examination personnel during the audit without a Power of Attorney and to determine when a Power of Attorney will be required. In addition, company personnel acting pursuant to a Power of Attorney to represent the company during an IRS audit will wish to determine the scope of the provisions of Circular 230 that may thereby become applicable to them.

For additional information, please contact any of the following lawyers: Larry Gibbs, [email protected] , 202-626-6005

George Hani, [email protected] , 202-661-6428

Patricia Sweeney, [email protected] , 202-626-5926

Nicholas Metcalf*

* Former Miller & Chevalier attorney

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing. This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.

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TAX PRACTICE RESPONSIBILITIES

Taxpayer Representation in the Shadow of Preparer Discipline

Practice Management & Professional Standards
IRS Practice & Procedure
Circular 230 Guidance

Tax practitioners at times must balance client interests and their own professional interests. This issue takes on even greater import when the CPA is representing a client before the IRS. Whether the CPA was the tax return preparer or was engaged as a successor CPA to represent the client in an examination of a return prepared by another professional, the potential exists for imposition of penalties or sanctions against the CPA.

This column primarily concerns engagements by a CPA where the IRS is investigating the client’s return preparer for possible sanctions, but the CPA representative was not the return preparer. The preparer needs to be aware of special issues the CPA faces when representing a client regarding a return when the representative also prepared the return. Most of these issues are beyond the scope of this column.

A successor CPA needs to be aware of some common preparer penalty and sanction considerations that may apply as well. The CPA needs not only to represent and advocate on behalf of the taxpayer in the examination but also to prepare the taxpayer for a potential role as a witness in the IRS investigation of the preparer’s possible misconduct. Except where otherwise mentioned, this column assumes that the CPA representative did not prepare the return the IRS is examining.

CPAs are subject to statutory and regulatory oversight as tax preparers. The IRS can subject preparers to penalties under Sec. 6694 and subject preparers and representatives to administrative discipline and sanctions under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10) . Sanctions vary depending on the severity and frequency of a preparer or representative’s violations. The IRS may subject tax practitioners who do not meet minimum standards of conduct to disciplinary action, including penalties, reprimand, censure, suspension, or disbarment.

In every IRS examination, the examiner uses a number of fact-finding techniques to inquire into whether the preparer adhered to tax law and procedural requirements. For example, IRS interview questions concerning the preparer cover Circular 230 requirements, such as whether the preparer signed the original return, whether the taxpayer received a copy, and whether the preparer was paid for the services. At the conclusion of every IRS examination, the examiner’s work papers need to document whether assessing preparer penalties for the return was considered. All information on the assertion of preparer penalties is separated from the taxpayer’s case file (Internal Revenue Manual (IRM) §4.10.6.7.4).

Return preparer penalties are a key enforcement vehicle for discipline of noncompliant preparers. The IRS Penalty Handbook (IRM §20.1) discusses procedures for assessing preparer penalties for improper tax return preparation and abusive transaction promoters (IRM §20.1.6). The examiner must determine whether a separate preparer penalty examination is warranted, and the examiner’s group manager must approve the penalty investigation. The IRS implements additional examination procedures if the dual goals of the examination are to review the taxpayer’s returns and to examine the former tax return preparer’s practices.

Source of Preparer Penalties

Once the IRS establishes a pattern of preparer noncompliance (IRM § 4.11.51.2), the IRS Return Preparer Program (RPP) allows for broader examination of re turns prepared by that particular preparer beyond those of the taxpayer that is also under examination. Noncompli ant pre parers are primarily identified from information obtained from examiners and their group managers, preparer penalty records, and referrals from other governmental and private entities. An IRS area return preparer coordinator (RPC) maintains files on return preparer activities (IRM §4.11.51.3). The IRS can also appoint a steering committee to determine whether there should be further investigation into whether the preparer made widespread and material errors or if the preparer’s misconduct was intentional. Another referral source for IRS investigation is Form 14157, Complaint: Tax Return Preparer , which generally is filed by a taxpayer. The decision to examine other tax returns prepared by the same preparer must be approved by the IRS area director (IRM §4.11.51.5).

If a practitioner is suspected of misconduct, the IRS examiner or other parties can also make referrals directly to the IRS Office of Professional Responsibility (OPR). The examiner will also contact the RPC to assist with OPR referral issues (IRM §1.25.1.3). OPR will investigate to determine the seriousness of the alleged misconduct and appropriate disciplinary action. OPR also can seek a monetary penalty against the practitioner and, in some circumstances, the practitioner’s employer (IRM §1.25.1.3).

The Representation Engagement

Decide whether to accept the engagement.

The first step in any representation is to determine whether to accept the engagement and, if so, to document the representation with an engagement agreement. Should the preparer represent a taxpayer in an IRS audit of the return that he or she prepared? A strict reading of Circular 230, Section 10.29, indicates that this could cause a conflict of interest that would cause OPR to inquire into a violation of this provision:

[A] practitioner shall not represent a client . . . if the representation involves a conflict of interest . . . [or] the representation . . . will be materially limited by . . . a personal interest of the practitioner.

This is further supported by Statement on Standards for Tax Services (SSTS) No. 6, Knowledge of Error: Return Preparation and Administrative Proceedings , paragraph 10. However, this strict interpretation does not take into consideration many other factors associated with the representation and could cause absurd results (see Horwitz, “Conflicts of Interest: IRS Rules Differ From AICPA Professional Standards,” 42 The Tax Adviser 776 (November 2011)).

Circular 230’s conflict-of-interest rule and the CPA’s responsibilities under the SSTS need to be assessed each time a CPA considers an advocacy role with a client. As a best practice, a CPA who was also the preparer should err on the side of caution.

If the CPA is not also the preparer, additional considerations arise. The successor CPA representative needs to interview the taxpayer to determine whether the client meets the firm criteria for acceptance. The original return may have been incompetently prepared, and the client needs to understand that there may be audit adjustments. If the return has many deficiencies, the representative CPA may be placed in a position of proposing audit changes to correct gross errors or omissions. If the client does not approve of this approach, the representative CPA may need to decline the engagement (see SSTS No. 6, ¶¶4 and 6).

If the client interview leads the representative CPA to believe that the taxpayer may have known and approved of the preparation of a grossly inaccurate return that could result in allegations of fraud or other criminal misconduct, the representative CPA should consider referring the client to a tax attorney (see SSTS No. 6, ¶11). A CPA has limited rights to privileged communication with the taxpayer, and this should be discussed and explained in the client engagement letter (see Sec. 7525), even if the representative was not also the preparer.

The representative CPA’s engagement letter should outline the scope and terms of the representation. The AICPA provides a sample tax examination engagement letter as part of its portfolio of practice management forms on the AICPA website. The sample AICPA letter states that it is in the taxpayer’s best interest not to talk directly to the examining agent, and that the client will refer any attempts by the IRS to contact the client directly to the authorized representative. The engagement letter may need to be modified to conform to a specific situation. For instance, it may be in the taxpayer’s best interests to limit any conversation with the original preparer, especially if the IRS may assert preparer penalties.

Define Representation Goals

Representing a taxpayer before the IRS requires the CPA to set clear goals from the outset. Sometimes the representative is far along in the engagement before the specter of a preparer penalty arises. Other times, the representative can identify it as an issue at the outset and can address it in the engagement letter.

For example, a focused IRS audit of a taxpayer who deducted 50% of his adjusted gross income as a charitable deduction might not at first raise any red flags for a preparer penalty. However, as the representative builds a case to advocate the position taken on the return for the taxpayer, he or she may learn that the preparer failed to make disclosures associated with the more-likely-than-not standard required under Circular 230 or failed to withdraw from an insistent client. The preparer also may have failed to follow SSTS No. 3, Certain Procedural Aspects of Preparing Returns , paragraph 2, which requires the preparer to make further inquiries as to the deduction. If the representative faces a situation where the taxpayer could have never substantiated the deduction, then damage control becomes a primary representation goal. One way the representative can protect a client from a penalty assessment is by building a reasonable-cause defense, which could result in flipping the preparer penalty switch to the “on” position.

In the other extreme, a representative’s client may admit to a failure to report income or other indiscretions of a criminal nature, immediately triggering the question of why the preparer failed to take actions necessary to stop this from happening in the first place. In such a situation, the representative can quickly set as a primary goal of the representation to apply the necessary resources to keep the examination at a civil exam level. This may require the cooperation of the preparer, who may also be under investigation for the preparer penalty.

In either of these extremes, the goal of the representation is not to punish the preparer but rather to advocate the best result for the client, following all the applicable regulations and rules of professional responsibility. However, the IRS examiner’s goal may be different. Often, the IRS examiner is looking to the taxpayer as a fountain of information to make a case against the preparer.

“Self-Prepared” Returns

A CPA may be engaged to represent a taxpayer in the examination of a return that the taxpayer maintains was self-prepared. It may seem at first that a self-prepared tax return should not have the shadow of a preparer penalty associated with it. However, the term “preparer” is not just limited to the signing preparer evidenced in the signature block of the return. Attorneys, CPAs, enrolled agents, enrolled retirement plan agents, registered tax return preparers, and other persons representing taxpayers before the IRS fall within the scope of Circular 230, Section 10.0. A self-prepared return under examination may still be subject to IRS inquiry into who assisted the taxpayer in preparing it (Circular 230, §10.8(c)).

Techniques for Conducting the Engagement

While many of the techniques for advocating on behalf of client interests are not affected by the threat or potential threat of a preparer penalty, the following techniques may take on some unique nuances when a CPA who is not also the preparer represents a client:

Establishing representation: As with any client representation, Forms 2848, Power of Attorney and Declaration of Representative , and 8821, Tax Information Authorization , are used to formally position the practitioner and the practitioner’s firm as the taxpayer’s representatives. In addition, serious consideration should be given to employing an engagement letter that clearly specifies the scope of the practitioner’s representation. In cases where there is reason to believe the preparer penalty may be asserted, a privity-of-contract clause in the engagement agreement can clearly distinguish subsequent representation responsibilities from those of the return preparer. It may be advisable to obtain a retainer for this service. The first client meeting, conducted properly, may take several hours, particularly if conflicts of interest need to be addressed.

Form 2848 instructions allow a representative’s power of attorney to extend to tax periods up to three years beyond the current year. Because of issues associated with potential carryforwards, good practice suggests that up to three years should be included, depending on the scope of the examination. The theory is that the examination scope may be increased, depending upon information the IRS learns from the preparer that the client may or may not have known. The IRM contains excellent references to terms that are prohibited (e.g., “all years”) and allowable for specifying the tax issues being faced by the taxpayer.

Additional care must be taken in completing line 6 of Form 2848 if there is potential for a preparer penalty and the client wants to revoke any previous power of attorney the preparer might have for the client’s returns. Line 6 automatically revokes all prior powers of attorney, including those granted to individuals within the same firm. An opt-out box, if checked, retains existing powers of attorney. (Form 2848 further requires attaching copies of previous powers of attorney that are to remain in effect.) Retaining existing powers of attorney may be problematic for the current representative, depending on who holds the prior powers. By ascertaining who holds any prior powers and consciously choosing whether to check the box, representatives can clarify their rights and responsibilities as well as avoid the potential embarrassment of inadvertently revoking authorizations of members of the same firm.

Other potential conflicts of interest may be present. Line 5 of Form 2848 enables the client and representative to address these issues. Of special concern is the ability to accept or negotiate refund checks.

Responding to document requests: Most of the time, the flow of information between the representative and the IRS is controlled through the use of written document requests. However, some nuances are important to consider if the preparer penalty is, or is likely to be, asserted. The first issue is the relevance of the document requests. While the IRS is entitled to obtain information relevant to completing its examination of the taxpayer’s return, it is tempting for the examiner to use the taxpayer’s return as a fishing expedition to obtain facts in asserting potential preparer penalties. As a result, information not relevant to the taxpayer’s return may be included in a document request. To deal with requests for superfluous information, the representative may need to communicate with the examiner’s supervisor or file Form 911, Request for Taxpayer Advocate Service Assistance .

Verbal requests for information create problems and opportunities for misunderstanding. A representative should ask the examiner to always use written document requests.

Interviews: While the IRS is entitled to obtain information from the taxpayer about the issues under consideration, it does not have carte blanche access to the taxpayer for unrelated information. In a preparer investigation, a taxpayer interview is often used in conjunction with an affidavit to make a preliminary determination of the scope of the preparer’s responsibility associated with the return being examined. The authors are aware of at least one situation in which the initial contact with the examiner by the representative led to the examiner’s insisting that the taxpayer attend the initial interview. In this instance, the examiner was traveling hundreds of miles for the examination.

However, Sec. 7521(c) states that examiners “ may not require a taxpayer to accompany the representative in the absence of an administrative summons .” (Sec. 7602 specifically authorizes the IRS to issue three types of summonses for: (1) documentary data, such as books and records; (2) testimony of a person; and (3) testimony of third parties. While different from other forms of summonses, the IRS summons is one way the IRS can ensure enforcement without direct judicial oversight.) The IRM specifies that examiners cannot require the taxpayer’s presence at the initial interview (IRM §4.10.2.7.5). In this instance, a compromise was worked out without a summons, whereby the rep resentative met with the examiner without the taxpayer. After that initial meeting, the taxpayer was produced for the interview, and no summons was issued.

When it becomes apparent that the preparer is under IRS investigation for Circular 230 violations, the following approaches should be considered with respect to conducting taxpayer interviews:

One compromise may be to grant the taxpayer interview, but after the representative’s initial meeting with the examiner. This allows the books and records to be examined without the taxpayer present.
Another option might be to allow an interview with the taxpayer without a summons, to allow the taxpayer to answer preparer-related questions but not to answer specific return examination questions. In this instance, the representative needs to be prepared to end the interview if the questions stray from the preparer-related questions. If a compromise cannot be reached, the taxpayer representative has a duty to protect the client by not allowing a taxpayer interview unless the examiner can produce a summons.
Sec. 7521(b)(2) says that if the taxpayer clearly states to an IRS employee at any time during any interview (other than an interview initiated by an administrative summons) that the taxpayer wishes to consult with an attorney or other authorized representative, the employee must suspend the interview. The representative must be alert to the possibility that the taxpayer may need to consult with an attorney during an interview.
It is possible at a meeting that an examiner may coerce the taxpayer to sign an IRS-prepared questionnaire in the form of an affidavit (presumably impugning the preparer) without advance notice. Prior to allowing the taxpayer to sign, the representative should request a copy of the affidavit for the taxpayer to consider the consequences of the answers and to consult an attorney if appropriate. The taxpayer should not comment on the affidavit in the examiner’s presence. The IRM advises that if an affidavit is used, the IRS is to request that the taxpayer examine and sign the document. If the taxpayer refuses to sign, then the examiner is to insert a notation that the statement or affidavit was true and correct but that the taxpayer refused to sign it (IRM §4.16.1.3.2.1).

In the authors’ experience, some of the following questions have been used:

After the return was completed, did you ask any questions regarding the return?
After the return was completed, did the preparer explain to you what was on the return? If so, what was said?
When you initially met with the preparer, what discussion took place?
How did you choose the preparer (advertisement, friend, church member, etc.)? Please specify which paper, friend, or name of church.
What did the preparer specifically tell you to do to prepare for the examination?

The answers to the foregoing questions could become problematic in a representation engagement for a taxpayer’s (1) own case before the IRS or (2) defense for any retaliatory action the preparer may bring if the affidavit is not absolutely correct. A preparer whose involvement in the preparation of an income tax return for a client is mischaracterized by false statements about the nature of that preparation engagement may have a cause of action against the publisher of that false statement under various tort actions of libel, slander, trade disparagement, etc., assuming that all of the elements of that cause of action are provable.

The representative should be aware that while the examiner inquiries may be designed to elicit responses regarding the former preparer, the taxpayer’s responses may describe the representative’s statements.

This type of questioning by examiners should be distinguished from the types of protected activities promoted by a recent memorandum for Taxpayer Advocate Service (TAS) employees (TAS-13-0212-008 (2/7/12)). In it, the TAS stated that, when preparers are suspected of fraud, a TAS case advocate should secure written statements from the taxpayer to identify information such as the bank account to which a portion of a refund was deposited where that account did not belong to the taxpayer (see also IRM §13.1.10).

Another question arises regarding recording interviews. Taxpayers have the right to record the interview, as long as 10 days’ advance notice is given to the examiner. The taxpayer may make a recording of any in-person interview using the taxpayer’s own equipment. As a practical consideration, however, the IRS will also have the right to record the interview if a proper request is made of the taxpayer. This is a rarely used technique, but it is something to consider if questions may be asked that are superfluous to the underlying return.

Freedom of Information Act requests: During the examination, it is well-known that information document requests (IDRs) are used to determine the taxpayer’s reliability and cooperation. However, it is less well-known that Form 9984, Examining Officer’s Activity Record , is used by the examiner to record information requested from the taxpayer and contacts to and from the taxpayer, third parties, and the representative. Although Form 9984 is an internal IRS document, it can be discovered by filing a Freedom of Information Act (FOIA) request (5 U.S.C. §552; see the IRS’s Freedom of Information webpage ). In situations where a preparer penalty is suspected, representatives should maintain an independent contact sheet to record attempts to contact the examiner or others at the IRS. Included in the information recorded should be the date, time, and name of the IRS employee with whom the conversation took place and a summary of the conversation. This information may be needed in situations where the representative thinks the information that the IRS is gathering may be mischaracterized to assert or support penalties or sanctions against the preparer and are outside the scope of the taxpayer’s return examination.

In these situations, however, the examination record may not be complete until after the examination is completed. T herefore, at the end of each meeting with an examining agent, the representative may need to request a copy of the examination work papers and/or computer worksheets generated. This not only accelerates the discovery of the interpretation of the facts but also helps to shorten delays that are inherent in formal FOIA requests.

The taxpayer has a right to all information used in determining the tax liability. The representative can ask for a copy of the examiner’s work papers. The IRS does not need to turn over any work papers to the representative that may involve reprisal against another person or jeopardize a pending criminal investigation (IRM §4.2.5.7).

CPAs may be called on to represent taxpayers in an IRS examination where the preparer might be at risk for sanctions. To effectively represent the taxpayer, the CPA representative needs to consider the unique nuances of the representation that may be motivated by the preparer penalty assertion. When the representative is not also the preparer, the representative must focus on the client’s best interests in all phases of the representation, which means the representative’s actions and decisions may not be in the preparer’s best interests. In such a situation, a CPA can follow the best practices presented in this column.

Recent developments in Sec. 355 spinoffs

The research credit: documenting qualified services, income tax treatment of loyalty point programs, tax court rules cancellation of debt is part of gain realization, listing of reportable transactions under the apa.

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.

PRACTICE MANAGEMENT

CPAs assess how their return preparation products performed.

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New IRS Rules for Reporting Non-Employee Compensation

July 7, 2020

On July 6, 2020, the IRS issued Tax Tip 2020-80 to remind business taxpayers that, commencing with payments made in 2020, they must report any payments of over $600 per year for services by non-employees on Form 1099-NEC (for Non-Employee Compensation), a form last used by the IRS in 1982. Box 7 of the pre-2020 Form 1099-MISC was used in the intervening years to report these types of payments, but the resurrection of the Form 1099-NEC indicates that the IRS may be focusing on individuals who likely owe self-employment taxes on the income. The payments that must be reported only include payments made in the course of a taxpayer’s trade or business, but do include amounts attributable to parts and materials incidental to the provision of the services, as well as state and local sales taxes that are imposed on the service provider but which the service recipient pays to the service provider. The instructions provide that non-profit organizations and state, local, and federal agencies are all considered businesses that are subject to the Form 1099-NEC reporting requirements.

As is customary for Form 1099 reporting, payments to corporations (which includes limited liability companies that are taxed as S or C corporations) are exempt from Form 1099-NEC reporting; however, the instructions explicitly require cash payments to purchase seafood for resale and payments for attorneys’ fees to be reported on the Form 1099-NEC even if the seafood vendor or attorney is a corporation. With respect to payments to attorneys or law firms, only the portion of the payment that is for the attorneys’ fees is reported on Form 1099-NEC; gross proceeds paid to attorneys continue to be reportable on Line 10 of the Form 1099-MISC (even though that means that the attorneys’ fees are potentially reported twice). Similarly, payments made with a credit card or payment card and payments in the nature of third-party network transactions must be reported on Form 1099-K by the payment settlement entity, and are not subject to reporting on Form 1099-NEC.

The instructions to the new form include reminders of the types of payments that must be reported in Box 1. Directors’ fees, both made while the director is actively serving and those made after retirement, must be reported here. Also, if a business makes a payment on behalf of another person, who is the source of the funds, the payer is responsible for filing Form 1099-NEC with respect to that payment if the business performs management or oversight functions in connection with the payment or has a significant economic interest in the payment (such as a bank that is overseeing vendor payments on behalf of a borrower). Professional service fees, such as fees to accountants, architects, contractors, engineers, entertainers, and expert witnesses are included, as are fees paid by one professional to another, such as fee-splitting or referral fees. This includes the value of bartered services such as painting a house in exchange for legal services, but only if these services were exchanged in the course of their trades or businesses. Commissions paid to non-employee salespersons that are subject to repayment but which were not repaid during the calendar year are also covered. Taxable fringe benefits for non-employees as well as deferred compensation that is included in income for failure to comply with IRS Section 409A and golden parachute payments are all reportable on Form 1099-NEC, as are gross oil and gas payments for a working interest.

Non-employee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number (which includes a Social Security number, an employer identification number, and an individual taxpayer identification number) to the payer, or the IRS notifies the payer that the taxpayer identification number provided was incorrect.

The final version of the new Form 1099-NEC was released on December 6, 2019. Forms 1099-NEC must be filed with the IRS by January 31 following the reporting year (although the 2020 Form 1099-NEC is due on February 1, 2021 because January 31 falls on a weekend). This reflects the accelerated timing of employee and non-employee compensation required as a result of the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), enacted on December 15, 2015, by a month. Forms 1099-MISC do not have to be filed until a month later.

Failure to file required Forms 1099-NEC subjects the taxpayer to penalties that can quickly prove significant. For taxpayers with gross receipts of $5,000,000 per annum or less, the penalty in 2020 is:

$50 per 1099, if you file within 30 days of due date with a maximum penalty of $194,000;
$110 per 1099, if you file more than 30 days after the due date but by August 1, with a maximum penalty of $556,500; and
$270 per 1099, if you file after August 1, with a maximum penalty of $1,113,000.

The maximum amounts are increased for larger businesses.

Please reach out to one of the authors or any member of McGlinchey’s Tax team for help or questions.

October 2, 2023

If a tax return is sent by regular mail on or before the due date, IT MUST BE RECEIVED BY THE IRS to be treated as timely filed. Proving that it was postmarked on or before the due date is not enough.

February 7, 2023

The IRS is proposing a new voluntary program, referred to as the Service Industry Tip Compliance Agreement (SITCA) program, for employers in service industries to avoid paying the employer’s share of FICA tax on unreported employee tips.

January 22, 2021

When debt is forgiven, as much of the funding lent through the CARES Act’s PPP may be, a lender may be required to file IRS Form 1099-C with the IRS and to furnish a copy to the borrower. As a lender, do I need to file the 1099-C when I forgive a PPP loan, or when we finalize a restructuring or settle a case alleging a violation of state or Federal lending law?

January 13, 2021

Do I have to report to the IRS a payment I make to a lawyer? If you make payments to a lawyer, you may be required to file an IRS form to report that payment. For a payment to a lawyer to be reportable to the IRS, it must meet two conditions: (1) it must More

November 11, 2020

The Internal Revenue Service has announced that it will be issuing proposed regulations clarifying that certain state or local income taxes imposed on and paid by a partnership and/or an S corporation will not be subject to the $10,000 limit on state and local taxes. Specifically, in Notice 2020-75, the IRS announced that it intends to issue proposed regulation to clarify that state and local income taxes imposed on and paid by a partnership or an S corporation are allowed as a deduction by the partnership or S corporation in computing non-separately stated taxable income or loss for the taxable year of payment.

The Budget Lab at Yale Launches to Provide Novel Analysis for Federal Policy Proposals

The Budget Lab at Yale , a nonpartisan policy research center, launched on April 12 to provide in-depth analysis for federal policy proposals impacting the American economy. For too long, according to the center’s founders, policy analysis has been narrowly focused on short-term cost estimates, or traditional budget scores, according to the center’s founders. The Budget Lab aims to fill a critical gap in policy evaluation, particularly focusing on the long-term effects of proposed policies on the economy, the income distribution, and recipients. The Budget Lab’s initial analysis , released today, examines both the Tax Cut and Jobs Act (TCJA) and the Child Tax Credit (CTC) through this broader lens.

The Budget Lab is co-founded by leading economic advisors and academics whose goal is to bring fresh ideas and new methods to policy making.

Natasha Sarin, Co-founder and President, is a Professor of Law at Yale Law School with a secondary appointment at the Yale School of Management in the Finance Department. She served as Deputy Assistant Secretary for Economic Policy and later as a Counselor to the U.S. Treasury Secretary Janet Yellen.
Danny Yagan, Co-founder and Chief Economist, is an Associate Professor of Economics at UC Berkeley and a Research Associate of the National Bureau of Economic Research. He was the Chief Economist of the White House Office of Management and Budget.
Martha Gimbel, Co-founder and Executive Director, is a former Senior Advisor at the White House Council of Economic Advisers, Senior Policy Advisor to the U.S Secretary of Labor, and Senior Economist and Research Director at Congress’s Joint Economic Committee.

“For many of the greatest policy challenges of our time — investing in children, combating climate change — their most important impact is not on short-run GDP. We need to understand the effects on poverty, on emissions reduction, on the income distribution,” said Sarin. “We are excited to share the tools we have built to analyze the fiscal and social impacts of government policies so policymakers can make better choices.”

The Budget Lab’s work will look at issues not included in current budget policy assessment methods, particularly in evaluating the full scope of costs and returns related to policies including the child tax credit, tax cuts, paid family leave, deficit reduction, and universal pre-K. The Lab’s innovative approach bridges this gap by offering a combination of existing open-source models and our microsimulation tax model to provide fast, transparent, and innovative estimates that unlock deeper insights.

“Our approach implements a new lens to improve existing conventions for distributional impacts by showing how policies affect families over time,” added Yagan.

One key aspect of the Budget Lab’s commitment to transparency is its open-access model code. The code used to produce analysis is publicly available, fostering trust and allowing policymakers to understand how the Budget Lab arrives at its results. It also allows for the infrastructure of the budget model the team is developing to be leveraged by others interested in similar analysis.

“Our aim is to provide rapid responses to important policy questions with the ability to think not only about the costs of policies but also about benefits and the return on investments,” said Martha Gimbel. “Our tax microsimulation model, budget estimates, and interactives will paint a broader and more realistic picture of how Americans will benefit from proposed government initiatives.”

The Budget Lab is hosting a launch event at the National Press Club on April 12 where the leadership team will share new research on budget scoring for TCJA and CTC. The event will include remarks by Shalanda Young, Director of the Office of Management and Budget and a panel discussion with Joshua Bolten, former Director of the Office of Management and Budget and White House Chief of Staff for President George W. Bush; Doug Holtz-Eakin, former Director of Congressional Budget Office and economic policy advisor to Sen. John McCain; and will be moderated by Greg Ip of The Wall Street Journal .

Budget Lab Team

In addition to the Budget Lab co-founders, the team includes leading economists who have extensive experience in the public sector.

Ernie Tedeschi, Director of Economics, was most recently the chief economist at the White House Council of Economic Advisors. Rich Prisinzano, is the Director of Policy Analysis, previously served at the Penn Wharton Budget Model and for over a decade as an economist in the Office of Tax Analysis in the U.S. Department of Treasury. John Ricco, Associate Director of Policy Analysis, is an economic researcher with a decade of experience building microsimulation models to inform public policy debates and was formerly with the Penn Wharton Budget Model and also a research analyst at the International Monetary Fund. Harris Eppsteiner, Associate Director of Policy Analysis, was a Special Assistant to the Chairman and research economist at the White House Council on Economic Advisors.

In the Press

Police union holds rally, passes out leaflets during bulldog days, law school clinic’s discrimination case on behalf of black veterans proceeds, larry summers and natasha sarin on trump’s tax cuts and reducing wealth inequity through tax policy, anti-dei complaints filed with eeoc carry no legal weight — a commentary by p. david lopez, related news.

Judge Thomas Griffith, Secretary Jeh Johnson, and Luke Bronin in conversation

Crossing Divides Welcomes Secretary Jeh Johnson and Judge Thomas B. Griffith

“Vital Places”: Yale Law School’s Centers Enhance Intellectual Life

Clinic Lawsuit Challenges VA Denial of Gender-Affirming Surgery

Cum-Ex Raid on ED&F Man Capital Markets Ruled Lawful by UK Court

By Tiffany Tsoi

The raid into the London offices of ED&F Man Capital Markets Ltd. , carried out on behalf of Danish and German authorities as part of their sprawling Cum-Ex trading probe in 2022, was lawful, UK judges ruled.

“There were very grave suspicions about the past conduct of ED&F,” Judge Philippa Whipple said in the decision Wednesday. “It is naive to suggest that production orders might have been effective and sufficient in the circumstances.”

The subsidiary of the global commodities broker ED&F Man Holdings , which was fined £17.2 million ($21.4 million) by the UK’s Financial Conduct Authority in 2023 over ...

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Need more time to file a federal tax return? It’s easy with IRS Free File

Use IRS Free File to get an extension online

One of the fastest and easiest ways to get an extension is through IRS Free File on IRS.gov. All individual tax filers, regardless of income, can electronically request Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return PDF , by using the IRS Free File partner software on IRS.gov.

To get an extension, taxpayers must estimate their tax liability on this form and file it by April 15, 2024.

By filing either a return on time or requesting an extension by the April 15 filing deadline, people avoid the late-filing penalty, which can be 10 times as costly as the penalty for not paying.

More time to file, not more time to pay

While an extension allows for extra time to gather, prepare and file paperwork, it's important to remember that an extension of time to file taxes is not an extension of time to pay. Taxpayers who owe should pay their entire obligation, or as much as they can, by the April 15 deadline to avoid penalties and interest.

Taxpayers who pay as much as they can by the due date reduce the overall amount subject to penalty and interest charges. The interest rate for an individual's unpaid taxes is currently 7%, compounded daily. The late-filing penalty is generally 5% per month and the late-payment penalty is normally 0.5% per month, both of which max out at 25%.

Make a payment and get an extension, automatically

Other fast, free and easy ways to get an extension include using IRS Direct Pay , the Electronic Federal Tax Payment System or by paying with a credit or debit card or digital wallet . There is no need to file a separate Form 4868 extension request when making an electronic payment and indicating it is for an extension. The IRS will automatically count it as an extension.

The IRS will work with taxpayers who cannot pay the full amount of tax they owe. Other options to pay, such as getting a loan or paying by credit card, may help resolve a tax debt. Most people can set up a payment plan on IRS.gov to pay off their balance over time.

Some taxpayers get automatic extensions

Special rules offer some taxpayers more time without having to request an extension:

U.S. citizens and resident aliens who live and work outside of the United States and Puerto Rico get an automatic two-month extension, until June 15, to file their tax returns. However, tax payments are still due April 15 or interest will accrue on the unpaid tax.
Members of the military on duty outside the United States and Puerto Rico also receive an automatic two-month extension to file. Those serving in combat zones have up to 180 days after they leave the combat zone to file returns and pay any taxes due. Details are available in Publication 3, Armed Forces' Tax Guide .
When the U.S. president makes a disaster area declaration, the IRS can postpone certain tax deadlines for taxpayers in affected areas. Taxpayers in qualified disaster areas do not need to submit an extension electronically or on paper. Information on the most recent tax relief for disaster situations can be found on the Extension of time to file your tax return page.
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COMMENTS

Publication 947 (02/2018), Practice Before the IRS and Power of
Unenrolled return preparers may not execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, or sign any document on behalf of a taxpayer. If an unenrolled return preparer does not meet the requirements for limited representation, you may authorize the unenrolled return preparer to ...
4.11.55 Power of Attorney Rights and Responsibilities
One who acts on behalf of the taxpayer in urging particular determinations with respect to issues or controversies. ... This encompasses all matters connected with a presentation of information to the Internal Revenue Service relating to a taxpayer's rights, privileges, or liabilities. ... Communication between the taxpayer's tax practitioner ...
IRS Form 2848: Power of Attorney Representation
Substitute to Form 2848. Form 2848 is used to appoint a recognized representative to act on the taxpayer's behalf in front of the IRS. Representatives are listed and must complete Part 2 of the form. The IRS will accept a non-IRS power of attorney, but Form 2848 must be completed and attached as well.
Power of Attorney and Declaration of Representative
The power of attorney (POA) is the written authorization for an individual to receive confidential information from the IRS and to perform certain actions on behalf of a taxpayer. If the authorization is not limited, the individual can generally perform all acts that a taxpayer can perform except negotiating a check.
Who Can Act As My Business's Tax Representative at an IRS Audit?
Technically, anyone can practice before the IRS. You can appear on your own behalf or that of an immediate family member. Any of your full-time employees or -- if you've formed a partnership -- a general partner can represent your business. A bona fide officer or regular full-time employee of a corporation, association or organized group can ...
Tax Dictionary
Circular 230 is a publication that provides guidance on practicing before the IRS. Examples of practice before the IRS include: Corresponding and communicating with the IRS on behalf of a taxpayer. Representing a taxpayer at conferences, hearings, or meetings with the IRS. Preparing and submitting a response to an IRS notice or inquiry.
Representing Clients Before the IRS: Power of Attorney
Form 2848 is used to appoint a recognized representative to act on the taxpayer's behalf in front of the IRS. Representatives are listed and must complete Part 2 of the form. The IRS will accept ...
A Guide to IRS Appeals, Part Three: Presentation
The taxpayer is offered an opportunity to attend the pre-conference. Although the taxpayer's presence is not required, we can't think of a situation they wouldn't attend. This pre-conference proceeding is a result of the prohibition on ex parte communication found in the IRS Restructuring and Reform Act of 1998. Pub.
Representation Before the IRS
The IRS refers to a person's representation of you before the IRS as "practice before the IRS," which covers all of the following activities (source IRS publication 947): Communicating with the IRS on a taxpayer's behalf regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS
What if I need to call the IRS on behalf of someone else?
The taxpayer's name, SSN/ITIN, tax period, and tax form(s) filed. Preparer Tax Identification Number (PTIN) or PIN if a third-party designee. Either: A current, completed, and signed Form 8821, Tax Information Authorization. A completed and signed Form 2848, Power of Attorney and Declaration of Representative. Calling for someone who is deceased
Court Says Unenrolled Agents Can't Represent Taxpayers Before IRS
The IRS limits those that are entitled to "practice" before it. Generally, "practice before the IRS" is defined as including all matters connected with a presentation to the IRS on behalf of the taxpayer. Examples include preparing and filing documents, communicating with the IRS, and representing a client at meetings. Any attorney, CPA, enrolled agent or enrolled actuary who
Dealing with the IRS On Behalf of Your Clients
It's important to communicate with your clients that the IRS is not always correct, and reviewing the information thoroughly before forking over a payment to the IRS is a best practice. Don't count on talking to a person. Don't expect to be able to phone an employee. Their telephone system is designed to allow or force the taxpayer to ...
Preface
On behalf of taxpayers, I applaud the IRS's efforts. I also want to acknowledge the tremendous contributions of my predecessors — Val Oveson, who led TAS from 1998-2000, and Nina E. Olson, who led TAS from 2001-2019. Over the past 20 years, TAS has successfully assisted over 4.5 million taxpayers by helping them resolve their tax problems ...
IRS Guidance Clarifies When Company Employees are Subject to Circular
A taxpayer that chooses to be represented before the IRS must execute a Power of Attorney in favor of the designated representative. An executed Power of Attorney authorizes the IRS to communicate with the representative and allows the representative to act on the taxpayer's behalf relating to matters described in the Power of Attorney.
Taxpayer Representation in the Shadow of Preparer Discipline
The CPA needs not only to represent and advocate on behalf of the taxpayer in the examination but also to prepare the taxpayer for a potential role as a witness in the IRS investigation of the preparer's possible misconduct. Except where otherwise mentioned, this column assumes that the CPA representative did not prepare the return the IRS is ...
3.7 Presentation of taxes collected from customers
Entities often collect amounts from customers that must be remitted to a governmental agency. The revenue standards include a general principle that requires management to assess each type of tax, on a jurisdiction-by-jurisdiction basis, to conclude whether to net these amounts against revenue or to recognize them as an operating expense. US GAAP.
Regulations Governing Practice Before the Internal Revenue Service
The final regulations provide that practice before Start Printed Page 54541 the IRS comprehends all matters connected with a presentation to the IRS or any of its officers or employees relating to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the IRS. Consistent with the Jobs Act amendment to section ...
New IRS Rules for Reporting Non-Employee Compensation
Alert. New IRS Rules for Reporting Non-Employee Compensation. July 7, 2020. Read Time: 3 mins. On July 6, 2020, the IRS issued Tax Tip 2020-80 to remind business taxpayers that, commencing with payments made in 2020, they must report any payments of over $600 per year for services by non-employees on Form 1099-NEC (for Non-Employee Compensation), a form last used by the IRS in 1982.
The Budget Lab at Yale Launches to Provide Novel Analysis for Federal
The Budget Lab aims to fill a critical gap in policy evaluation, particularly focusing on the long-term effects of proposed policies on the economy, the income distribution, and recipients. The Budget Lab's initial analysis, released today, examines both the Tax Cut and Jobs Act (TCJA) and the Child Tax Credit (CTC) through this broader lens.
PDF DEPARTMENT OF THE TREASURY Internal Revenue Service Open Meeting of the
Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Taxpayer Advocacy Panel's Special Projects Committee will be held Friday, May 10, 2024, at 9:00a.m. Eastern Time. The public is invited to make oral comments or submit written statements for consideration. Due to limited time
Thornton man accused of preparing false tax returns
A Thornton man who was sentenced to probation for false tax returns in 2014 was recently indicted by a federal grand jury and accused of preparing false tax returns on behalf of clients.
Cum-Ex Raid on ED&F Man Capital Markets Ruled Lawful by ...
The raid into the London offices of ED&F Man Capital Markets Ltd., carried out on behalf of Danish and German authorities as part of their sprawling Cum-Ex trading probe in 2022, was lawful, UK judges ruled. "There were very grave suspicions about the past conduct of ED&F," Judge Philippa Whipple said in the decision Wednesday.
PDF Property Transfer Tax and Working Lands
Transfer Tax 1.25% Property Transfer Tax 3.65% Property Transfer Tax 0.22% Clean Water Surcharge Not Principal Residence $0 - $750,000 Marginal Value > $750,000 Principal Residence $0 - $200,0000 $200,000 - $750,000 Marginal Value > $750,000 Principal Residence Purchased w/ VHFA, VCTF, or USDA Assistance $0 - $250,000
PDF Appeals Team Case Leader Conferencing Initiative: Summary of Findings
In early 2017, Appeals began exploring an initiative to improve conference efficiency for large, complex cases. Consistent with Appeals' impartiality, the initiative relied on Compliance and taxpayers to participate in focused discussions with Appeals to clarify the scope of the controversy and areas of disagreement.
Need more time to file a federal tax return? It's easy with IRS Free
IR-2024-106, April 11, 2024. WASHINGTON — With the April 15 tax filing deadline fast approaching, the Internal Revenue Service reminds taxpayers who need more time to file their return that receiving an extension is quick and easy through IRS Free File on IRS.gov. An extension gives taxpayers an automatic six more months - until Oct. 15 this year - to file their tax return.

Representing Clients Before the IRS: Power of Attorney

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Written by Mike D'Avolio, CPA, JD

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