Tax Info for the Tax Professional Business Types

Tax Information for Tax Professionals

IRS Information Related to the American Recovery and Reinvestment Act of 2009
Update on the new economic stimulus legislation.

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:

• The newly-expanded Work Opportunity tax credit adds returning veterans and "disconnected youth" to the list of new hires covered by the credit that businesses may claim. Certification by the state work force agency is required.
  
• The Making Work Pay tax credit means more take-home pay for many Americans. For pension plan administrators, new optional withholding procedures are available to supplement the February withholding tables. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.
  
  
• Energy Efficiency and Renewable Energy Incentives. What individuals and businesses can do to reap tax rewards.
  
  
• First-Time Homebuyer Credit Expands. Homebuyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement.
  
  
• Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid.
  
  
• Enhanced Credits for Tax Years 2009, 2010. Details on the earned income tax credit, additional child tax credit and American Opportunity Credit, a new higher education benefit.
  
  
• Municipal Bond Programs. New ways to finance school construction, energy and other public projects.
  
  
• Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.
  
  
• Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.
  
  
• Net Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. Information on the carryback, an expanded section 179 deduction and other business-related provisions is now available.
  
  
• COBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941, as well as information for qualifying individuals.
  
  
• $250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.
  
  
• Health Coverage Tax Credit. Credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.

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?
A summary of the key provisions is available from the Senate Finance and House Ways and Means committees.
Disaster Relief Resource Center for Tax Professionals
As a result of recent natural disasters many payroll and practitioner businesses and their clients have suffered significant losses. Our goal is to provide resources and assistance to members of the impacted payroll and practitioner community.

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

• FAQs for Disaster Victims
• Disaster Assistance Self-Study - Record Reconstruction
• Record Reconstruction - Vehicle
  • “Kelly’s Blue Book” is available at most libraries and on-line. It is a good source for the current fair market value of most vehicles on the road.
  • Call the dealer and ask for a copy of the contract. If not available, give the dealer all the facts and details, and ask for a comparable price figure.
  • Use newspaper ads for the period in which the vehicle was purchased to determine basis, and ads for the period it was destroyed for fair market value.

  Record Reconstruction - Business

  • Inventory: Get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one year.
  • Income: Get copies of bank statements. The deposits should closely reflect what the sales were for any given period.
  • Payroll records: If the business uses a service, get copies of records. If not, request copies of back forms from federal and state agencies. To reconstruct current quarter, get copies of checks from the bank. Also ask employees for copies of their pay stubs.
  • Last year’s tax returns: Including sales tax reports, business licenses (which normally reflect gross sales for a given period), and payroll returns. Also request any quarters for the current year that are past. The previous returns will have a depreciation list to reconstruct assets.
  • Furniture and fixtures: Sketch the inside and outside of the business location. Then start to fill in the details of the sketches.
  • Inside: Where was the equipment located? What fixtures and furniture were in the store or office? Where was the inventory located - bookcases? files?
  • Outside: Shrubs, landscaping, parking, signs, awnings?
  • If you purchased an existing business – go back to the broker for a copy of the purchase agreement. Check with the previous owner for a copy. This should detail what you acquired.
  • If the building was constructed for you – go back to the contractor for building plans.
  • Check with the county or city planning commission for copies of plans.

  Record Reconstruction – Real Property

  Take photographs of real property as quickly as possible after the casualty to establish the amount of damage.

  • The best evidence is the escrow papers. Begin by calling the title company and the bank that handled the transaction.
  • If the necessary records are destroyed, use "comps" for the neighborhood. A licensed appraiser can establish the value with comps. Comps are comparable sales in the same neighborhood. (The appraisal fees are deductible on Schedule A subject to the 2% floor.)
  • Find a library of old Multiple Listing books. This is another source of comps to establish basis or fair market value.
  • Insurance policies list the value of the building to establish a base figure for replace value insurance. Check with the agent to find out what other records are on file with the policy.
  • Improvements may be proven by calling the contractors involved and asking for old records. You might also ask for statements from the contractors verifying their work and cost.
  • Get written statements from friends and relatives who saw the home before and after any renovations. Ask if they have any photos of the house taken at family gatherings.
  • If a home improvement loan was taken out, get the paperwork from the bank that issued it. The amount of the loan may help establish the cost of the improvements.
  • If no other records are available, check at the county assessor’s office for old records about the property. Look for assessed value and ask for the percentage of assessment to value at the time of purchase. This is a rough guess, but better than no records at all.
  • Check court records for probate of inherited property. If a trust or estate existed, contact the attorney who handled it.

  Record Reconstruction – PersonalThis is a difficult area to reconstruct due to the number of items that may have existed.

  • Old department store catalogs can be useful for identifying items that were lost or destroyed in the disaster, especially small kitchen gadgets you may have forgotten about.
  • Thrift stores, local newspaper want-ads can establish fair market value of items. Keep these copies with your tax files.
  • Go to a used book store. With a tape, measure several rows of used books and count the number of books per shelf. Add up the prices of those books and determine an average cost per shelf.
• Hurricane Katrina News Releases & Legal Guidance
• Order Copies or Transcripts of Tax Returns - Copies or transcripts of filed and processed tax returns can help you begin to reconstruct tax records destroyed by Hurricane Katrina.

Copies or transcripts of filed and processed tax returns can help you begin to reconstruct tax records destroyed by Hurricane Katrina.

To request a copy of your tax returns:

• Complete Form 4506, Request for Copy of Tax Return (PDF 66KB, 2 pages)

1. Complete the form online and print it.
   
   
2. Write the words “Hurricane Katrina” in red at the top of the form.
   
   
3. Mail the Form 4506 to the IRS address listed on the form for your area.
   
   

• Copies of Forms 1040, 1040A, and 1040EZ are generally available for 7 years from the filing date. Other returns may be available for a longer period of time.

• Complete Form 4506-T, Request for Transcript of Tax Return (PDF 62KB, 2 pages)

1. Complete the form online and print it.
   
   
2. Write the words “Hurricane Katrina” in red at the top of the form.
   
   
3. Mail the Form 4506-T to the IRS address listed on the form for your area.
   

• Use Form 4506-T to order a transcript or other return information, which includes a:
  
  
  • Return Transcript, includes most of the line items of a tax return as filed with the IRS. Transcripts are only available for the following returns: Form 1040 series, Form 1065, Form 1120, Form 1120A, Form 1120H, Form 1120L, and Form 1120S.
  • Account Transcript, contains information on the financial status of the account, such as payments made on the account, penalty assessments, and adjustments made by you or the IRS after the return was filed. Return information is limited to items such as tax liability and estimated tax payments. Account transcripts are available for most returns.
  • Record of Account, is a combination of line item information and later adjustments to the account. Available for the current year and three prior tax years.
  • Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. The IRS can provide a transcript that includes data from these information returns. State or local information is not included with the Form W-2 information. The IRS may be able to provide this transcript information for up to 10 years. Information for the current year is generally not available until the year after it is filed with the IRS. For example, W-2 information for 2003, filed in 2004, will not be available from the IRS until 2005.

• New! Bulk Requests from Practitioners for Disaster Relief - Guidance on procedures for practitioners who are located in affected areas who want to self-identify their clients for disaster relief.

• Where the IRS has granted a postponement of time to file returns and make payments in response to a federally declared disaster, practitioners located in the covered disaster area who maintain records necessary to meet a filing or payment deadline for taxpayers located outside the disaster area may elect to contact the IRS to identify such clients. To identify the clients, the practitioner may contact the IRS at 1-866-562-5227 or, alternatively, the practitioner may use the following procedures if the practitioner maintains the necessary records of a large number of clients (ten or more):

  Prepare a CD with the following information in an Excel spreadsheet:

  1. In column A list their client's TINs
     Note: List SSNs and EINs separately or indicate the TIN is an SSN or EIN by placing dashes in their correct places.
  2. In column B list the first four letters of the client’s last name or the first four letters of the business name, using upper case lettering. Do not use any periods, commas, separators or any additional wording such as "the", etc.
     Note: Use the first four letters of the taxpayer’s last name on Trusts and Estates.

  Caution: Do not include TINs of clients who live within the disaster declared area. A zip code listing identifying areas within the disaster area is available at http://www.icce.irs.gov/fema/

  Mail the CD to:
  Internal Revenue Service
  Special Services Section
  1 Independent Drive, Suite 500
  Stop 6000
  Jacksonville, FL 32202

  Be sure to include the Stop "6000" to ensure your request is processed timely.Include a cover letter with the CD requesting relief from penalties and/or interest. The letter should also contain the practitioner’s name and address and a statement that identifies which disaster affected their clients. A copy of the IRS news release may be helpful, but not necessary.

Registration is Open for the 2009 IRS Nationwide Tax Forums!
Attend the IRS Nationwide Tax Forums to learn the latest in tax administration, mingle with industry partners, and earn up to 18 CPE credits!

What are the 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:

• Earn up to 18 continuing professional education credits
• Hear about the latest IRS e-Services products
• Visit the Practitioner Case Resolution Room
• Explore the expo for the latest tax professional products and services

How Can I Attend?

Registration:

*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*
$335 for late registration and on-site registration

*Notes about pre-registration:

• Registration must be completed on or before this date in order to receive the pre-registration conference fee rate. You will receive an email confirmation when your registration is complete.
• Faxed registrations must be received on or before the indicated date.
• Mailed registrations must be postmarked on or before the indicated date.
• Any registration faxed or postmarked prior to the pre-registration cut-off deadlines will be honored at the pre-registration rate.
• No multiple attendee discounts.

Nationwide Tax Forums Online Website

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.
Open Season for Membership in the Internal Revenue Service Advisory Council (IRSAC)
The Internal Revenue Service is accepting applications to IRSAC beginning May 1, 2009 and ending June 16, 2009. IRSAC provides recommendations to IRS leadership on a wide range of tax administration issues.

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’s role is to provide an organized public forum for IRS officials and representatives of the public to discuss relevant tax administrative issues. The council suggests operational improvements, offers constructive observations about IRS’ current or proposed policies, programs, and procedures, and advises the IRS on particular issues having substantive effect on federal tax administration. A report is presented to the Commissioner of Internal Revenue each year at the Public Meeting. Applicants must have a strong tax or business background, excellent communications skills, practical tax administration experience and knowledge, and the ability to interact in a diversified environment. To be fully considered, an applicant's background should include several of the following:

• Application of tax law expertise to resolve complex tax issues;
• Development and implementation of customer service initiatives and tools;
• Systems management and improvement, and change management;
• Establishment of successful strategic partnerships; and
• Demonstrated ability to examine situations from a "macro" perspective.

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)
Room 7559
1111 Constitution Avenue, NW
Washington, DC 20224
Attn: Ms. Lorenza Wilds

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)
New regulations under Internal Revenue Code Section 7216, Disclosure or Use of Tax Information by Preparers of Returns, become effective January 1, 2009. The new regulations update regulations that have been substantially unchanged since the 1970s, and give taxpayers greater control over their personal tax return information. The statute limits tax return preparers’ use and disclosure of information obtained during the return preparation process to activities directly related to the preparation of the return. The regulations describe how preparers, with the informed written consent of taxpayers, may use or disclose return information for other purposes. The regulations also describe specific and limited exceptions that allow a preparer to use or disclose return information without the consent of taxpayers.

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:

• Identify the intended purpose of the disclosure or use;
• Identify the recipient(s) and describe the particular authorized information to be disclosed or used;
• Include the name of the tax return preparer and the name of the taxpayer;
• Include the applicable mandatory language set forth in section 4.04(a)-(c) of Revenue Procedure 2008-35 that informs the taxpayer that he is not required to sign the consent and if he signs the consent, he can set a time period for the duration of that consent;
• Include the mandatory language set forth in section 4.04(d) of Revenue Procedure 2008-35 that refers the taxpayer to the Treasury Inspector General for Tax Administration if he believes that his tax return information has been disclosed or used improperly.
• Where applicable, include the appropriate mandatory statement set forth in section 4.04(e) of Revenue Procedure 2008-35 that informs the taxpayer that his tax return information may be disclosed to a tax return preparer located outside the U.S;
• Be in 12-point type on 8 1/2 by 11 inch paper. Electronic consents must be in the same type as the web site’s standard text; and
• Contain the taxpayer’s affirmative consent (as opposed to an “opt-out” clause); and
• Be signed and dated by the taxpayer.

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.
Violations could result in imprisonment for up to one year, a fine of not more than $1,000, or both, for each violation.
Partnership Resource Guide(PDF)
The Partnership Resource Guide is designed to inform e-file audiences about new information and options available for tax preparation with articles and marketing and outreach tools that are intended to help all taxpayers to file taxes electronically.

Servicewide Key Messages for Tax Professionals
Quarterly messages for the tax professional community, including publications and educational products.

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.

• American Recovery & Reinvestment Act
• Appeal a Tax Dispute
• Transcripts of the National Phone Forums
• IRS Notices
• Power of Attorney and other Authorizations
• Disaster Relief
• Other Resources for Tax Professionals

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.

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
Third Party Authorization Product Line

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?

• A POA is a legal instrument authorizing an individual to act as a representative for either an individual or entity. Subject to the authority granted, a representative can generally perform any acts the individual or entity can perform.
• To protect taxpayer privacy, some form of authorization is necessary for disclosure purposes before an IRS employee can provide information to any third party (certified public accountant, attorney, enrolled agent, family, friend or employee).
• IRS cannot disclose details of a tax return unless the practitioner has a valid POA or has filed a Form 8821 which specifically authorizes such disclosure.

How do I notify the IRS about a POA?

• In most cases, the representative will provide the service with Form 2848, Power of Attorney and Declaration of Representative. IRS will record the information in the Centralized Authorization File (CAF).
• Form 2848 is not necessary when an individual only needs to receive tax information. For that purpose, a Form 8821, Tax Information Authorization, may be used. Please note that the Form 8821 is not a POA and should not be confused with one.
• IRS employees are permitted to accept information from practitioners and preparers without having a POA or other authorization on file.
• Tax professionals who are active participants in the IRS e-file program and who e-file five or more accepted individual or business returns in a season, are eligible to use the e-Services disclosure authorization application. Eligible tax professionals may complete authorization forms, view and modify existing authorization application forms, and receive acknowledgement of accepted submissions immediately.
• Disclosure authorization allows tax professionals to electronically submit both Form 2848 and Form 8821. Processing is expedited and the representative receives a real-time acknowledgment of accepted submissions.

What does CAF mean?

The Centralized Authorization File (CAF) is a computerized system of records that houses authorization information from: Powers of Attorney (POA); Tax Information Authorizations (TIA), and Estate Tax Returns.

What is an unenrolled preparer?

An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required to sign the return.

What are unenrolled preparers’ limitations on representation?

An unenrolled preparer’s ability to practice before the IRS is limited. An unenrolled return preparer is only permitted to represent a taxpayer only before customer service representatives, revenue agents, and other examiners with respect to a tax liability regarding a return they prepared. An unenrolled return preparer cannot:

• Represent before other offices of the IRS such as Counsel, Appeals or Collection, including the Automated Collection System (ACS) unit;
• Execute closing agreements;
• Extend the statutory period;
• Execute waivers;
• Execute claims for refund;
• Negotiate and execute installment agreements; or
• Receive refund checks.

If the unenrolled return preparer does not meet the requirements for limited representation, as stated above, Form 8821, Tax Information Authorization, should be used. Form 8821 allows an appointee to inspect and/or receive confidential tax information and is generally limited to the specific tax matter described on the form. An appointee can be an individual, corporation, firm, organization or partnership.

Will the IRS accept POAs in other formats?

Form 2848 must be attached as a transmittal form to any non-IRS POA. For more information on the specifics of using a non-IRS POA, refer to page 8 of Publication 947, Practice Before the IRS and Power of Attorney.

I called about a client’s account and was told that my POA was not on the CAF system even though I recently sent it in. What happened?

A faxed POA is usually processed within 48 hours from receipt by the CAF unit. If the POA is mailed, then it may take up to five days after receipt to be in the system. There is a 2:00 p.m. cut-off time to allow for processing of each day’s receipts. Therefore, a POA received after 2:00 p.m. is considered received the following day.

Can I fax my POA directly to a Practitioner Priority Service (PPS) assistor?

Yes. Authorizations can be faxed using Form 2848, Power of Attorney and Declaration of Representative, when the PPS assistor receives the call and determines a POA or other authorization form is needed. This can be done without disconnecting while the assistor holds. If, for some reason, the practitioner is unable to fax authorization during the call, the PPS assistor will advise the practitioner to either fax it directly to the CAF unit or when the practitioner has authorization, he may call the PPS line back and fax the authorization at that time.

Unenrolled return preparers can use Form 2848 if they prepare the return in question; however, if they did not prepare the return in question, then Form 8821, Tax Information Authorization, should be used. Forms 8821 being used for “specific use request” are not recorded on the CAF and will not be forwarded to the CAF unit.

What is a “specific use request?”

A specific use request is when the Form 8821 is used to verify information such as an EIN or address. Specific use refers to items not recorded on the CAF. Other examples include: income verification; small business elections; deceased taxpayers; Form 56; Non resident Alien Issues; 843 claims; 1096 issues; etc. Generally, PPS assistors do not forward these POAs to the CAF unit. Therefore, practitioners should send them directly to the CAF Unit to be placed on file.

Note: This information can be found in IRM 21.3.7.11, Specific Use Authorizations.

Can the IRS consider extending the time the Checkbox Authority (Third Party Designee Authority) is effective?

The IRS cannot extend third-party designations beyond 12 months at this time. The original intent of allowing 12 months was for use during the initial return processing. After a year, generally outstanding matters involve audit or collection activities rather than processing issues.

The Checkbox Authority expires at the one-year anniversary of the due date of the tax return (excluding extensions). The Checkbox Authority does not allow the designee to represent or otherwise practice on behalf of the taxpayer. It also does not allow the designee to receive IRS refund checks nor sign on behalf of the taxpayer.

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.

Form 2848, Power of Attorney and Declaration of Representative
Instructions for Form 2848
Form 8821, Tax Information Authorization

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 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
General Information on the Internal Revenue Service Advisory Council and the Information Reporting Program Advisory Committe

Make a Complaint Against a Tax Return Preparer
Use this site to find out how to file a complaint against a tax preparer.

To ensure that your complaint is routed correctly, please select from one of the following. Is your complaint against someone you believe:

• Is a preparer or representative who is not an attorney, enrolled agent, appraiser, or a CPA? (The majority of tax return preparers, including those employed by large tax preparation companies, fall into this category.)
• If you suspect tax fraud or know of an abusive return preparer, report this activity using IRS Form 3949-A, Information Referral. You can download Form 3949-A from the Web site at IRS.gov or call 1-800-829-3676 to order by mail. Send the completed form, or a letter detailing the alleged fraudulent activity, to Internal Revenue Service, Fresno, CA 93888. Please include specific information about who you are reporting, the activity you are reporting and how you became aware of it, when the alleged violation took place, the amount of money involved and any other information that might be helpful to an investigation. Although you are not required to identify yourself, it is helpful to do so. Your identity can be kept confidential.

• Is an attorney, enrolled agent, appraiser, or a certified public accountant (CPA)? (Each of these tax professionals must be licensed by an appropriate authority.)
• A complaint should be written in a letter format. The letter should include the tax practitioner's name, address, telephone number, designation (i.e., attorney, certified public accountant, enrolled agent, enrolled actuary, etc.), a detailed description of the allegations, and any documents that support those allegations.

• Circular 230
  Treasury Department Circular 230 (rev. 4/2008)
  Tax Hints
  Current and concise information on changes in tax law, IRS regulations and tax policy administration for the 2008 tax year.
  

  Form 990 Instructions and Background Documents
  The Internal Revenue Service has completed its revision of the 2008 Form 990 instructions* and posted them, along with three new background documents explaining the new form and instructions. The 2008 Form 990, released by the Internal Revenue Service in December 2007, is effective for 2008 tax years (for returns filed in 2009). The new background documents are described below.

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.
The International Tax Gap
Find resources on this page pertaining to the international tax gap — the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. The tax gap can also be thought of as the sum of non-compliance with the tax law.