P of A for unenrolled preparer

[Kram BergGold]

I just got off the phone with an IRS Rep on the priority hotline. I was trying to use the reasonable cause assistor to remove a penalty. As an unenrolled preparer she would not allow me to use a 2848 to represent my client. It seems a 2848 can only be used if the return is under examination (page 2 of the instructions for Form 2848). If a bill is sent to the client for a late payment penalty can this be construed as an examination?
I tried calling back to ask this question and the next person said Form 2848 can never be used by an unenrolled preparer. So much for that idea!
The catch 22 about this is I can't use Form 8821 as it only allows me to receive info not give it.

[jainen]

One of the categories

One of the categories for the preparer declaration on Form 2848 is unenrolled preparer--it's right there on the form itself! As explained in Pub 470 (Limited Practice for Unenrolled Preparers), you can only represent the taxpayer concerning the underlying tax liability, not the assessment of penalties. Form 8821 should allow you to receive any information about the taxpayer, but the IRS agents generally haven't been trained to accept it.

[Jiggers]

Unenrolled Preparer

The IRS is correct. Penalty by IRS does not mean that the return is under examination.

Sorry.

You might consider getting enrolled.

[Koss]

Form 8821 vs. Form 2848

I ran into the same issue recently. While I agree in principle that Form 2848 should be accepted even for an unenrolled preparer, I'm not convinced that there is a substantive difference between the two forms when an unenrolled preparer is involved.

The rules are pretty clear. An unenrolled preparer cannot represent the taxpayer in any context except the examination, and then only if that preparer actually prepared and signed the return. Viewed in this light, it almost makes sense that some IRS reps feel that a power of attorney has no validity for an unenrolled preparer unless the return is under examination.

The distinction I am trying to tease apart here is very subtle. Because an unenrolled preparer cannot represent the taxpayer except in an examination, anything an unenrolled preparer attempts to do on the basis of the Form 2848 could be considered void outside the context of an audit.

Form 8821 may actually give the unenrolled preparer more authority than Form 2848, in the sense that the 8821 effectively requires the IRS to release information requested by the person named on the form. Form 2848 is a much more powerful tool, in that theoretically it allows the preparer to act on behalf of the taxpayer. A CPA armed with a Form 2848 can agree to changes made by the IRS in an audit, even if he didn't prepare the return, and even if the taxpayer isn't in the room.

Form 2848 therefore authorizes the preparer to request information--on behalf of the taxpayer. But if there is no audit, then the authority fails for the unenrolled preparer. Form 8821 authorizes anyone to obtain information with the taxpayer's consent. Believe it or not, I was asked to sign one recently as part of a mortgage refinance application.

(It makes sense. People routinely submit bogus tax returns with mortgage loan apps.)

As to the comment in the original post, that 8821 authorizes you to receive information but not to give it... I think that misses the point.

Under the right circumstances, if you present it the right way, the IRS can accept incoming information from anyone, and the taxpayer's consent is not required.

I realize that this is an oversimplified example, but if the IRS is requesting documentation for employee business expenses, it's not going to matter who physically puts the stuff in the mail or feeds it into a fax machine. A signature is not required in this context. The IRS should accept this stuff with the preparer's cover letter, even if there is no Form 8821 or Form 2848.

Giving information to an IRS representative about a particular tax return is not the same as representing the client. It could conceiveably rise to the level of representing the client, depending on the nature of the information. If the "information" involves answering substantive questions, such as "Did the child live with the taxpayer for more than half the year?", then I suppose that might require a POA. It really depends on all the facts and circumstances.

Burton M. Koss

[OldJack]

I believe the IRS position is clear that they intend to require tax preparers to be enrolled in the future. That being the case, unenrolled tax preparers should take steps to get enrolled if they want to continue in the tax business.

[Black Bart]

Try the regular IRS info line (800-829-1040)

I just got off the phone with an IRS Rep on the priority hotline. I was trying to use the reasonable cause assistor to remove a penalty. As an unenrolled preparer she would not allow me to use a 2848 to represent my client. It seems a 2848 can only be used if the return is under examination (page 2 of the instructions for Form 2848). If a bill is sent to the client for a late payment penalty can this be construed as an examination?
I tried calling back to ask this question and the next person said Form 2848 can never be used by an unenrolled preparer. So much for that idea!
The catch 22 about this is I can't use Form 8821 as it only allows me to receive info not give it.

Those priority hotline people know too much. On the other hand, lots of run-of-the-mill IRS employees don't know anything at all about POAs except that you need one (sometimes they'll take either 8821 or 2848, so get both signed). When you get the regular line, tell the rep the problem and they may ask for a faxed form and give you what you need. If they don't know what to do (more likely), they'll transfer you to "technical assistance" which is a higher level of employee, but not as knowledgeable as the hotliners.

[taxmandan]

I just got off the phone with an IRS Rep on the priority hotline. I was trying to use the reasonable cause assistor to remove a penalty. As an unenrolled preparer she would not allow me to use a 2848 to represent my client. It seems a 2848 can only be used if the return is under examination (page 2 of the instructions for Form 2848). If a bill is sent to the client for a late payment penalty can this be construed as an examination?
I tried calling back to ask this question and the next person said Form 2848 can never be used by an unenrolled preparer. So much for that idea!
The catch 22 about this is I can't use Form 8821 as it only allows me to receive info not give it.

You don't have to be enrolled to handle tax problems for clients. There is a lady up the street from my office who has a business handling tax problems for clients , and she is unenrolled, not a CPA and doesn't prepare taxes. She never has a POA or 8821, she prepares the response/request to the IRS in a letter and has the tp sign it and mail it. If she wants to talk with the IRS by phone, she has the tp sitting in her office who tells the IRS rep that Ms. XXX is helping her understand the issue and 'please talk with her about the problem, in my presence'. No POA needed.

You can do alot as an unenrolled preparer for clients, just have to know how to handle it without the POA.

But I agree with the others, get that EA card; then join the NAEA and get onto their web board, it is the best resource I've found for tax help.

[Kram BergGold]

Koss

Now that you mention it I realize you are so right. Last summer I had an examination. Because of the timing of things my client never gave me a P of A. I showd up at the exam naked so to speak. The examiner took info from me but released nothing. So you are right, all I need is an 8821 to receive info. They will always take info from me.

[Unregistered]

Now that you mention it I realize you are so right. Last summer I had an examination. Because of the timing of things my client never gave me a P of A. I showd up at the exam naked . T

Distraction as an audit tactic.