Tax Information for Tax Professionals
IRS Information Related to the American Recovery and Reinvestment Act of 2009
Congress has approved and the President has signed new economic recovery legislation, the American Recovery and Reinvestment Act of 2009. The IRS is implementing tax-related provisions of this new program as quickly as possible.
Here are some key highlights:
More information on these and other provisions of the recovery program will be available on this Web site, IRS.gov, as it become available.
General Questions and Answers Regarding the Recovery Package
Could the new law affect 2008 tax returns? ARRA could affect some 2008 tax returns due April 15, 2009. For example, for some small businesses changes in the net operating loss provisions could affect 2008 tax returns. And for first-time homebuyers there is an expanded credit available on 2008 tax returns.
However, most of the changes in ARRA will affect 2009 individual tax returns filed next year and due April 15, 2010.
Does this new recovery program have any impact on the recovery rebate credit for 2008 tax returns being filed now? No. But the IRS reminds taxpayers and tax preparers to make sure they properly determine eligibility for the recovery rebate credit before they file their 2008 federal tax returns.
Where are more details on the tax provisions of the recovery law?
Through this resource center we address many of the questions received from tax professionals. We've included information published by the IRS, along with links to IRS partners who may offer additional assistance. Many of our partners have developed Web pages that highlight the efforts they've made to help their fellow practitioners to recover and get re-established.
Up-to-date information on recent disasters including severe storms and flooding in Georgia and Indiana: Tax Relief in Disasters.
Disaster Assistance Information
Copies or transcripts of filed and processed tax returns can help you begin to reconstruct tax records destroyed by Hurricane Katrina.
The IRS will waive the usual fees and expedite requests for copies of tax returns for people who need them to apply for benefits or to file amended returns claiming disaster-related losses.
To request a copy of your tax returns:
Registration is Open for the 2009 IRS Nationwide Tax Forums!
The Tax Forums offer three full days of seminars with the latest word from IRS leadership and experts in the fields of tax law, compliance and ethics. Attendees can:
*NEW* Registration is now open!
Information about seminars and schedules, exhibitor listings and more information on the 2009 tax forums will be updated on this website in the upcoming months.
2009 Registration Fees:
$206 by the pre-registration date*
*Notes about pre-registration:
The Nationwide Tax Forums Online (NTFO) is a website dedicated to providing tax professionals with the latest tax laws, current ethics rules, and latest tools which they can share with their clients. NTFO provides information for tax professionals through seminars recorded on-site at the IRS Nationwide Tax Forums. This online version is updated to provide the most current information as well as guidance on IRS procedures and processes.
Each seminar is approximately 50 minutes long. At this time, there is no cost and there are no CPE credits for using NFTO.
The Internal Revenue Service is accepting applications for membership in the Internal Revenue Service Advisory Council (IRSAC) for a three year term beginning January 2010. Applications will be accepted beginning May 1 through June 16, 2009. Applicants must complete an application form, Federal tax check waiver form and submit a completed resume. Practitioner checks are required of all applicants. In addition, a Federal Bureau of Investigation (FBI) check is required of all applicants that are deemed “best qualified”.
IRSAC is comprised of no more than thirty (35) members. It is important that the IRSAC continue to represent a diverse taxpayer and stakeholder base. Accordingly, to maintain membership diversity, selection is based on the applicant’s qualifications and areas of expertise.
IRSAC members meet in Washington, DC approximately five times a year for two days each session. Members are not paid for their services. However, travel expenses for working sessions, public meetings and orientation sessions, such as airfare, per diem, and transportation to and from airports, train stations, etc., are reimbursed within prescribed federal travel limitations.
Written applications must be postmarked or faxed on or before June 16, 2009. Applications should be sent to:
National Public Liaison (CL:NPL:P)
Applications may be submitted by mail to the address listed above or faxed to 202-927-4123.
Section 7216 Updated Rules for Tax Preparers (Updated 12/18/2008)
Revenue Procedure 2008-35 supplements the regulations, in particular Treas. Reg. Section 301.7216-3, and provides specific form and content guidance to tax return preparers for obtaining consents to disclose and consents to use taxpayer data in both the paper and electronic environments. Generally, tax preparers must obtain the signed consent of the taxpayer on paper or electronically before they can disclose taxpayer return information to anyone or use it for any purpose other than in the context of preparing and filing the return. Separate consents are required for disclosure(s) and use(s). Consents must:
The updated regulations apply to paid preparers, software developers, Electronic Return Originators, and other persons or entities engaged in tax return preparation services or services that are auxiliary to return preparation. They also apply to most volunteer tax preparers, for example Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) volunteers and employees and contractors employed by tax preparation companies in a support role.
Tax return preparers perform a vital function in assisting taxpayers in meeting their tax obligations. As a tax professional, you have a vested interest (as both a taxpayer and a tax preparer) in the protection of the integrity of the tax filing system. We are committed to providing tax professionals with the information and tools you need to prepare timely, accurate, and complete tax returns for their clients.
The new American Recovery and Reinvestment Act of 2009 is the subject of many conversations and is generating many questions. Many of these questions center on how this will affect taxpayers this filing season and next. IRS has placed information to help answer that question and others, on a special Web site:
Tax Provisions in the American Recovery and Reinvestment Act of 2009
The IRS is working diligently to complete an analysis of this new legislation to determine its full effect on processes and forms and to implement them. We are committed to doing this as quickly – but more importantly – as thoroughly as possible and will be providing updates via IRS.gov. So, please monitor our Web site for the latest information over the course of the next few weeks and months. Information affecting 2008 tax returns will be posted first, with 2009 and subsequent year’s information to follow.
Could the new law affect 2008 tax returns?
The new law does not have a major impact for the vast majority of individuals preparing their 2008 tax returns due April 15. Instead, these changes will largely impact 2009 tax returns filed next year, in 2010. There are a few limited areas in the law that could impact 2008 tax returns. For some small businesses, changes in the net operating loss provisions could affect 2008 tax returns. And for first-time homebuyers there is an expanded credit available on 2008 tax returns.
The Appeals mission is to settle tax disputes without having to go to Court and a formal trial. Appeals is there to assist you if you do not agree with a tax decision. The Office of Appeals is independent of any other IRS office and provides a venue where disputes concerning the application of tax law can be resolved on a fair and impartial basis. Visit the Appeals Web page to view information, videos, and audio messages about when to appeal, how to prepare and submit a request for an appeal, descriptions of the Appeals process, and explanations of available Alternative Dispute Resolution options.Transcripts of the National Phone Forums and Webinars
Audio reenactments of selected National Phone Forums and Webinars, including presentations on canceled debt and return preparer penalties, are on the Tax Practitioner Video and Audio Presentations page.
In general, when you receive a call about a notice from a client, you should request a copy as the notice should explain the reason for the contact, provide instruction on how to handle the issue and tell you where to send the reply. As a starting point for more information here are some helpful Web pages:
Notice Numbers and How to Identify Them
We assign a number to every notice we send. We refer to this number as the CP (Computer Paragraph) number. The CP number prints at the top of the first page of every notice and also on the tear-off stub of notices that have stubs.
The CP number identifies the message delivered by the notice. For example, all CP 14 notices inform the recipient there is an amount due on their income tax and explain the steps they need to take to resolve it. Likewise, all CP 32 notices inform the recipient that we're issuing a replacement refund check since they never cashed the original.
The top of the first page (the header) of all the notices we send looks similar to one, the notice number prints in the top right hand corner, often preceded by "CP:"
The last page of a notice often includes a tear-off stub at the bottom. This stub is for the recipient to return with their payment or correspondence. The left-hand side of the stub contains information including the notice number and codes that identify variable paragraphs that are included, such as math error descriptions and penalty explanations.
What to do if You Receive an IRS Notice
It’s a moment many taxpayers dread. A letter arrives from the IRS — and it’s not a refund check. Don’t panic; many of these letters can be dealt with simply and painlessly.Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
• Agree? If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
• Disagree? If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.
Be sure to keep copies of any correspondence with your records.
For more information about IRS notices and bills, see Publication 594, What You Should Know about the IRS Collection Process. Information about penalties and interest charges is available in Publication 17, Your Federal Income Tax. Both publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).If you can not find what you need there, use the Search box to enter the notice number and/or the word “Notice”, you will receive results for several other pages containing resources, including links to charts containing specific notice explanation codes.
IRS.gov has a wealth of information on filing Power of Attorney forms and other authorization types. Check the Web pages below for more information on this topic.
Publication 947, Practice before the IRS & Power of Attorney
There are two major reasons for granting a third party authorization for the purpose of resolving your federal tax issues. The first reason for granting an authorization is for the purpose of allowing a person to represent you in tax matters before the IRS. This authorization is a "Power of Attorney" and is submitted using Form 2848 (PDF).
The second reason is to allow another person, your appointee, to exchange information with the IRS for your benefit. It is a Tax Information Authorization.
Authorizations regarding tax matters are recorded on the Centralized Authorization File (CAF). It allows IRS assistors to verify your permission to speak with someone about your private tax related information.
There are three CAF Units which process authorizations. Their locations and fax numbers are listed at the bottom of this page. They also process "revocations" if you choose to terminate the authorization. Revocations must be in writing and should include your name, address and social security number, identify the representative or appointee and the specific tax matter (s) and period(s).
Power of Attorney
A Power of Attorney (POA) allows the third party to represent you before the IRS. The authorized individual can advocate, negotiate and sign on your behalf. They can argue facts and the application of law. POAs can receive copies of notices and transcripts of your account.
POAs include attorneys, certified public accountants, enrolled agents, general partners, full time employees, family members, and others.
POAs must be in writing.
Tax Information Authorizations
Tax Information Authorizations (TIAs) allow your appointee to receive information for the tax matters and periods you specify. The appointee of a TIA can be anyone you choose, including "family and friends".
TIAs can be submitted in writing or can be done over the phone. There are many different TIAs. The paper Form 8821, Tax Information Authorization (PDF), has the same authority as the Oral Tax Information Authorization. It allows your appointee to receive verbal or written account information (transcripts) and copies of IRS notices. Form 8821 can be mailed in, faxed in or delivered to an area office. The Oral Tax Information Authority can be submitted by calling (800) 829-1040.
Another oral but limited TIA is the Oral Disclosure Consent which allows your appointee to exchange verbal information only for the tax periods you specify. This authorization is also submitted by calling (800) 829-1040.The fourth most common form of Tax Information Authorization is the Third Party Designee or the "Checkbox". It appears on individual income tax forms in the 1040 series (except amended returns) just above the signature line. It is also available on business tax returns in the 94X series, and on Forms 720, 1041, 1120, 2290 and CT-1 tax forms just above the signature line.If you complete the designation, your authorization will be recorded when we receive and begin processing the tax return. No other action is required.The designee can exchange verbal information with the IRS on return processing issues and with regard to refunds and payments related to the return.The authorization expires one year from the due date of the tax return. Authorization covers any issue arising within the life of the authorization.
Power of Attorney
What is a POA and when is it necessary?
How do I notify the IRS about a POA?
What does CAF mean?
The Centralized Authorization File (CAF) is a computerized system of records that houses authorization information from: Powers of Attorney (POA); Tax Information Authorizations (TIA), and Estate Tax Returns.
What is an unenrolled preparer?
An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required to sign the return.
What are unenrolled preparers’ limitations on representation?
An unenrolled preparer’s ability to practice before the IRS is limited. An unenrolled return preparer is only permitted to represent a taxpayer only before customer service representatives, revenue agents, and other examiners with respect to a tax liability regarding a return they prepared. An unenrolled return preparer cannot:
If the unenrolled return preparer does not meet the requirements for limited representation, as stated above, Form 8821, Tax Information Authorization, should be used. Form 8821 allows an appointee to inspect and/or receive confidential tax information and is generally limited to the specific tax matter described on the form. An appointee can be an individual, corporation, firm, organization or partnership.
Will the IRS accept POAs in other formats?
Form 2848 must be attached as a transmittal form to any non-IRS POA. For more information on the specifics of using a non-IRS POA, refer to page 8 of Publication 947, Practice Before the IRS and Power of Attorney.
I called about a client’s account and was told that my POA was not on the CAF system even though I recently sent it in. What happened?
A faxed POA is usually processed within 48 hours from receipt by the CAF unit. If the POA is mailed, then it may take up to five days after receipt to be in the system. There is a 2:00 p.m. cut-off time to allow for processing of each day’s receipts. Therefore, a POA received after 2:00 p.m. is considered received the following day.
Can I fax my POA directly to a Practitioner Priority Service (PPS) assistor?
Yes. Authorizations can be faxed using Form 2848, Power of Attorney and Declaration of Representative, when the PPS assistor receives the call and determines a POA or other authorization form is needed. This can be done without disconnecting while the assistor holds. If, for some reason, the practitioner is unable to fax authorization during the call, the PPS assistor will advise the practitioner to either fax it directly to the CAF unit or when the practitioner has authorization, he may call the PPS line back and fax the authorization at that time.
Unenrolled return preparers can use Form 2848 if they prepare the return in question; however, if they did not prepare the return in question, then Form 8821, Tax Information Authorization, should be used. Forms 8821 being used for “specific use request” are not recorded on the CAF and will not be forwarded to the CAF unit.
What is a “specific use request?”
A specific use request is when the Form 8821 is used to verify information such as an EIN or address. Specific use refers to items not recorded on the CAF. Other examples include: income verification; small business elections; deceased taxpayers; Form 56; Non resident Alien Issues; 843 claims; 1096 issues; etc. Generally, PPS assistors do not forward these POAs to the CAF unit. Therefore, practitioners should send them directly to the CAF Unit to be placed on file.
Note: This information can be found in IRM 18.104.22.168, Specific Use Authorizations.
Can the IRS consider extending the time the Checkbox Authority (Third Party Designee Authority) is effective?
The IRS cannot extend third-party designations beyond 12 months at this time. The original intent of allowing 12 months was for use during the initial return processing. After a year, generally outstanding matters involve audit or collection activities rather than processing issues.
The Checkbox Authority expires at the one-year anniversary of the due date of the tax return (excluding extensions). The Checkbox Authority does not allow the designee to represent or otherwise practice on behalf of the taxpayer. It also does not allow the designee to receive IRS refund checks nor sign on behalf of the taxpayer.
Modifying Power of Attorney Authorizations
Form 2848, Line 5, allows the taxpayer to grant additional authority or limit the authority provided in the form.
When the taxpayer grants authority to more than one representative, using Form 2848, but only wishes to modify the authority of one representative, it should be noted on Line 5 along with the specific acts.
Unless otherwise specified, the modification will apply to all representatives listed in Part II of Form 2848.
Practitioners may contact Special Services’ toll-free support-line directly for assistance when they or their clients have been impacted by natural disasters. The Bulk Requests from Practitioners for Disaster Relief webpage provides instructions for notifying IRS of those impacted by contacting Special Services via mail or telephone.
Special Services can be reached at 1-866-562-5227. Hours of operation are Monday through Friday, 7:00 a.m. to 10 p.m. local time (Alaska and Hawaii follow Pacific Time.)Automated Underreporter Program
Automated Underreporter cases are created when amounts reported on individual tax returns and amounts reported by third parties don’t match. If the discrepancy cannot be resolved, usually a CP 2000 is issued.
See Headliner Volume 239, Tips From the IRS Automated Underreporter Program, for information on how to avoid and resolve AUR issues.
IRSAC and IRPAC General Information
Make a Complaint Against a Tax Return Preparer
To ensure that your complaint is routed correctly, please select from one of the following. Is your complaint against someone you believe:
The first of these documents, Background Paper – Summary of Form 990 Redesign Process, provides a 5-page explanation of the redesign process, from the release of the form’s discussion draft in June 2007 to today’s release of the new form’s instructions. Topics include reasons for the redesign, the public comment process, key changes from the old to the new form, and some next steps organizations and their preparers should consider as they get ready for the 2009 filing season. This document also summarizes the transition relief available to many smaller organizations for the 2008 and 2009 tax years.
The second document, Background Paper – Form 990, Moving from the Old to the New, lists and summarizes the parts and schedules of the new form, highlights which portions are new or significantly revised from the 2007 form, and compares material differences between the 2007 and the 2008 forms and instructions. This document contains a separate description of each part of the core form and each schedule, which explains the purpose, rationale and overview, key points, and effect on reporting relating to that part or schedule. The description of each schedule also includes an explanation of how an organization determines whether it must complete that schedule.
The third document, Background Paper – Changes to April Draft Instructions, provides an overview of significant changes to the April draft instructions and lists areas requiring further study for future years. The document also includes a detailed list of material changes to the April draft instructions, prepared in the order in which they appear in the instructions – first - the general instructions, and then the specific instructions for each part and schedule of the new form.The issuance of the revised instructions and these accompanying background documents will help organizations and practitioners prepare to file the new 2008 Form 990 as the 2009 filing season approaches. The Internal Revenue Service intends to release draft instructions to the Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, in the next few weeks.