Power of Attorney: It’s How Your Tax Pro Deals with the IRS For You
You hear “power of attorney,” and you may be confused, you may be vaguely aware of a legal meaning, or you may start dozing off.
We get it – it’s a legal term. So we’ll get this part out of the way: A power of attorney (POA) is an authorization for someone to act on your behalf.
What that actually means for you and your taxes: You can authorize your tax pro to deal with the IRS for you.
Three main benefits: Preventing problems, checking your IRS status, and fixing tax issues
Tax professionals understand “IRS speak” better than most, so they can effectively navigate the IRS and call with a dedicated practitioner hotline. That’s why many people choose to file POAs, to outsource the monitoring and handling of any tax issues that may come up.
An IRS power of attorney allows tax pros to:
- Research your IRS account to help you understand a notice, verify your good standing at the IRS, or uncover any compliance issues that you need to address.
- Get copied on any notices the IRS sends you – which allows your tax pro to reach out to you if there’s anything you need to do about the notice.
- Respond to an IRS notice or inquiry for you.
- Set up agreements with the IRS for you, like monthly payment plans for taxes you owe or agreements on audit findings.
- Represent you and advocate for you with the IRS. Common examples are when taxpayers need to argue the legitimacy of a deduction in an audit, contest a collection matter, or request penalty relief.
- Deal with the IRS Taxpayer Advocate Service.
- Appeal a dispute with the IRS.
Who can represent me with a POA?
Not just anyone can represent you. You can authorize specific family members to act on your behalf. But the most likely use of a power of attorney is to authorize a licensed tax professional to deal with the IRS for you.
Licensed tax professionals are usually CPAs, enrolled agents, and attorneys.
Unlicensed tax professionals can also help with audits and notices to a limited degree if they also prepared the return in question.
How to file a POA
Most of the time, people file a Form 2848, Power of Attorney and Declaration of Representative, with the IRS.
Here’s what you need to know:
- You and the authorized person (called a representative) must agree on the POA representation and both sign the Form 2848.
- After it’s filed with the IRS, the representative can act as you in the eyes of the IRS.
- The POA stays in effect until you or your representative withdraws the authorization.
- After seven years, if you haven’t already ended the authorization, the IRS will automatically end it.
Common misunderstanding: A POA isn’t the checkbox on your tax return
People are often confused when they file a return and “check the box” to give someone the authority to speak with the IRS about their tax return.
This authorization is called the third-party designee. It’s a person you name in the Third Party Designee area of your return. This authorization isn’t a POA. Instead, it simply helps the IRS if there are any issues processing the return, and it lasts only until April 15 of the next year.
There’s also a limited authorization
If you want someone to receive information related to the return (like IRS notices, IRS records, etc.), but you don’t want them to be able to advocate on your behalf, you can use the Form 8821, Tax Information Authorization.
This form isn’t limited to licensed tax professionals. You can authorize anyone to receive information through the Form 8821.
How to research your own account
For people who want to outsource dealing with the IRS, getting a POA is the way to go. Or if you want to start by researching your own IRS account, here’s how.
If you haven't filed required tax returns, find out how far back you may need to file, and get the nine tips you need to know about filing back tax returns.
The most commonly charged IRS penalties are failure to file, failure to pay, or estimated tax penalties. Learn more about penalties from the experts at H&R Block.
The IRS changed your return. Learn more about notice CP24 and how to handle this notice with help from the tax experts at H&R Block.
If you owe a balance to the IRS, you may have several tax debt relief options. Learn more from the tax experts at H&R Block.