The legal definition of Power of Attorney is, “the authority to act for another person in specified or all legal or financial matters.” But what does this mean? A Power of Attorney (POA) is used to give an appointed person legal authority to act on your behalf. Basically, you are handing over your affairs to someone you trust because you do not understand a matter, do not wish to deal with a matter, or are physically or mentally unable to deal with a matter.
There are many kinds of POAs; Medical, Financial, Limited Springing, IRS, and Vehicle, to name a few. Our department of Tax Controversy, which is made up of CPA's that are authorized to represent you in different and varying IRS and State matters, use an IRS Power of Attorney. An IRS Power of Attorney can be filed with Form 2848. Form 2848 authorizes an individual of your choosing to represent you as a taxpayer before the IRS. This form is only applicable when the agent(s) listed on the form are eligible to practice representation before the IRS. Eligible individuals include CPA’s, Enrolled Agents, and Attorneys.
Form 2848 is applicable on the Federal level, meaning the IRS will always accept these; although, several states have different requirements. If you have received a notice from a state, the Federal 2848 POA may not be accepted by the respective state. Texas, for example, does not accept the Federal 2848, and has their own POA, Form 01-137. There are a number of states besides Texas that do not accept the Federal POA. A list of these states can be found with this link: https://njsea.org/files/State-By-State-Power-of-Attorney.pdf.
The POA specifies which year(s) or period(s) it covers. Our standard procedure as your CPA is to fill out Form 2848 POAs to cover the year(s) or period(s) that a notice has been distributed for, plus three or more years before so we can check compliance history and in case the problem has carried over from a prior period. The IRS allows a POA to go out three years into the future. For example, if you received a notice regarding your 2019 tax return, we would typically issue a POA that will cover tax years 2016-2023. As the three-year rule is not the IRS rules and procedures, but our personal procedure. We do this in case the issue gets carried over into other years, and we are covered to continue helping with the issue.
What if you already have a 2848 with a previous CPA? No worries! We can revoke that POA so we are the only ones that have access to your notices and personal matters.
As your representative, we will be directly contacted by the IRS/state for updates, further notices, and information on your behalf, so the middleman is eliminated and there are no communication errors between you, ADKF, and the IRS/State. Although this does not make you any less responsible for your tax obligations. The POA simply allows ADKF to communicate at your behest to the IRS/State, it does not take over your responsibleness as a taxpayer, i.e., making payments.
Situations our Tax Controversy team can take care of with a POA filed on your behalf include, but are not limited to:
- Intent to levy or seize, failure-to-pay, failure-to- file, incomplete return, first time penalty abatements, appeals, reasonable cause penalty abatements, installment agreements, notices
Different Tax Matters
- Pending refunds, 941/940 issues
- Intent to forfeit right to transact business, failure-to-file, failure-to-pay, incomplete return