Does your power of attorney cover all forms?

Your Guide to State, Local, Federal, Estate + International Taxation

power of attorney, IRS, taxThere aren’t many things more frustrating than being on hold with the IRS for over an hour only to finally be connected to an agent and told I do not have the proper authority to speak on my client’s behalf. “But I have a perfectly good Power of Attorney signed and dated by the taxpayer,” I say. Well, not necessarily. Form 2848, Power of Attorney and Declaration of Representative (POA), is a form signed by the taxpayer naming a representative to have authority to discuss the taxpayer’s tax affairs with the IRS.

Did you know that many informational returns that are attached to an income tax return are not covered under the POA for that tax return? For example, if a taxpayer files Form 1120 and attaches Form 5471, then both the 1120 and 5471 must be listed on the POA for the representative to have authority over both forms. You may assume listing only the 1120 would grant authority over all the forms attached, but that is not the case. In most cases, you must have the informational return listed on the POA to discuss anything related to that informational return, including penalties and interest.

The IRS needs to be clear of the taxpayer’s intentions as to what is covered on the POA. PLR 201736021 sheds some light on this issue by citing Reg. § 601.503(a)(6), which requires “a clear expression of the taxpayer’s intention concerning the scope of the authority granted to the recognized representative.” This helps the IRS Central Authorization File (CAF) unit in processing the POA and having a clear understanding where the authority lies.

Please consult a qualified tax professional for assistance. This information is general and should not be relied upon.

Jill A. Helm, CPA