Ethics question

[Bees Knees]

TTB, page 15-7 says:

Form 2848, Power of Attorney and Declaration of Representative. Form 2848 authorizes a person to represent a taxpayer before the IRS. Form 2848 will not be honored for any purpose other than representation before the IRS. The power of attorney authorizes the representative to perform any and all acts the taxpayer can perform, such as signing consents extending the time to assess tax, recording the interview, or executing waivers agreeing to a tax adjustment.

This information agrees with Form 2848 instructions which say:

Authority Granted
This power of attorney authorizes the representative to
perform any and all acts you can perform, such as signing
consents extending the time to assess tax, recording the
interview, or executing waivers agreeing to a tax adjustment.


Can the taxpayer tell IRS he has alzheimers? Can the taxpayer tell IRS the trustee skipped town? Of course.

The instructions for line 3 tell you which years the POA is for. There is no expiration date for the POA, other than if a new POA is signed that nullifies your POA, or the statute of limitations has run on the tax return.

Since the IRS has sent you a letter for 2004 concerning additional tax owed, they too consider your POA valid and not expired. Therefore, you have every right to talk to IRS about your client’s 2004 tax return including information you believe to be relevant to the reason why your client is ignoring request for additional payments. The purpose of a POA is to allow you to step into the taxpayer's shoes and talk to IRS. You are not violating any ethics rules as long as you stick to the information relevant to the 2004 tax return.

[DTS]

Bees...

This is very good news. I will contact them immediately.

Thanks,

Dennis

[Bird Legs]

Dts

Keep us posted on the results.

[Black Bart]

Say Bees,

Form 2848, Power of Attorney and Declaration of Representative...authorizes a person to represent a taxpayer before the IRS...will not be honored for any purpose

Suppose I need to talk to another accountant or a third party about some portion of that 2004 return. If the 2848 can't be used for any other purpose than talking specifically to IRS, then what form or document would IRS consider to be valid in order to avoid breach of C-230 confidentiality rules if/when I talk to others?

[Bees Knees]

Suppose I need to talk to another accountant or a third party about some portion of that 2004 return. If the 2848 can't be used for any other purpose than talking specifically to IRS, then what form or document would IRS consider to be valid in order to avoid breach of C-230 confidentiality rules if/when I talk to others?

You can talk to us hypothetically. You can never discuss someone else's return using real names with another accountant or a third party even if you do have PO, unless the client gives you written permission to do so. You can't even fax the return to a mortgage company without written permission from the client.

[Black Bart]

Dennis

This is very good news. I will contact them immediately.

Thanks,

Dennis

Did you have any luck with it? How'd it come out?

[Richcpaman]

DTS:

WHOA!

You have POA. Your Client, the one with Alzhiemers, is facing a levy from the IRS. The client children stand around pointing fingers....

Take the levy notice, prepare a Form 911, and send it to the Taxpayers Advocate office.

Tell them that the T/P has Alzhiemers and in in a long term care facility.

THAT will stop/slow any levies.

Front Page of local paper: "IRS Levies Alzhiemers Patients Account, Facility to turn her out for bounced Checks"

I don't think so!

Do the right thing, PROTECT your client.

You may get paid, you might not.

But when they sue you, (and they might not, I know, but the likelihood in this case, is much higher) what answer would you like to give the jury:

1. I did all I could to prevent the levy and harmful actions of the IRS affecting my L-T client.

2. I knew what I had to do, but the beneficiaries were fighting, and I just waited for thier decision.

What answer would YOU like to give yourself?

Do the right thing, protect your client. Show some leadership here. You may get paid, you might not. But you probably will. Strong pro-client actions will be reimbursed if she becomes a ward of the court. And since the brother is on your side, you will eventually get paid when his suit prevails.

Just my .02

Rich GRaves, CPA

[DTS]

Bart...

I did not get to call, yet. I got sidetracked with everything but what I wanted to do. I will keep you posted.

Dennis

[ChEAr$]

More than 2 cents worth:

DTS:

(snipped......)

Do the right thing, protect your client. Show some leadership here. You may get paid, you might not. But you probably will. Strong pro-client actions will be reimbursed if she becomes a ward of the court. And since the brother is on your side, you will eventually get paid when his suit prevails.

Just my .02

Rich GRaves, CPA

I'd say seven cents worth at least, Rich. Because it's what I would do, also.

[Black Bart]

Profiles in Courage

Well shoot, Richie, you've taken the moral high ground and I guess you've got a point (I'd like to have you for a lawyer) since the majority of us, including me, said to "run for the doors" (I usually tell others to "get tough" with negligent clients, but frequently don't follow my own advice). Your position's admirable, but I'm still not convinced it's best. Jeannie's statement ("Don't you just hate it when you realize you care more about a client's business than they do"?) sums it up for me. The brother may be a great guy, but it still seems like he ought to go see sis (even if they're not speaking) and try to get her to pay it -- after all, it's only some taxes due and the problem can be solved by writing a check. Why make a federal case out of it and get a judge, jury, and you involved?

You have POA...client children stand around pointing fingers...

I don't see that having a POA makes Dennis responsible for consequences of the trustee's non-payment of taxes. She has the checkbook; not him.

Front Page of local paper: "IRS Levies Alzhiemers Patients Account, Facility to turn her out for bounced Checks"

I've never seen a notice of IRS levy (other than celebrities) make the front page. You?

...when they sue you...the likelihood in this case is much higher...what answer would you like to give the jury...

I'd like to give no answer at all -- I'd rather not be in court. I've been there and it's quite unpleasant (even if I was "in the right").

What answer would YOU like to give yourself...

If sis can live with herself, I can live with myself. Besides, this isn't a charity case -- $8,500 per month rent income isn't chickenfeed.

Do the right thing, protect your client. Show some leadership here

.
Exactly right and the goal to which we should nobly aspire, if only those clients will do their part and facilitate the stiffening of our spines.

...You may get paid, you might not...you probably will...

Now here's the part that would give me some trouble. How I am gonna sell this position to my better half? All well and good to go a-crusadin', but man does not live by nobility alone. See, if you dive in headfirst and, sure enough, it does end up in court, then we can look forward to: several months of worry before court date, preparation for court, the possibility that 12 dopes unfamiliar with taxes might decide "you should have done more" and help get your license pulled, stess-concern-maybe a heart attack. And...for what? Nobody wanted to take a few minutes and pay a bill. No sweat, though -- we "probably" will get paid (wonder if they'd agree your months of "worry time" was billable time?).

...since the brother is on your side, you will eventually get paid when his suit prevails.

From this, I take it you're an optimist. First, he probably won't sue his sister and alienate her for the rest of her life. But even if he does, who's to say he thinks it's worth what you think it is? I once did some client-crusading: The deed to his son's land was inaccurate (he could have lost his house), but I discovered it and made "above and beyond" efforts to fix it; spending mucho hours and making numerous trips to the out-of-town offices of Federal Land Bank, FHA, Travelers Insurance, and the county abstract office. I made the mistake of not discussing the bill beforehand (a "model" client -- fair and aboveboard). My substantial invoice brought this reply: "All you did was make a couple of phone calls."

[DTS]

More info...

Just received a call from a family member a few minutes ago stating that someone reported this situation to the Elder Abuse division of the DA's office.

What I got from the conversation was that the police, DA and someone that works closely with the DA to look after assets of elders in this situation, were at my client's home yesterday and were not happy with the conditions of her investments (they can't locate them), the rental property I mentioned in an earlier post and her home.

So, I guess this will be continued and, maybe, have a nice ending?

Dennis

[Bees Knees]

Once again, ethics is being confused with doing the right thing. Our professional ethical responsibility has nothing to do with taking the moral high ground or doing what we feel is the right thing. Ethics is nothing more, and nothing less than following the rules.

So let us review the rules as they pertain to what we as tax perparers can do with a power of attorney, and what we cannot do.

Facts:

1) Longtime client is now in an Alzheimer facility. She has been there a couple of years.

2) Daughter is named in a trust to handle client’s affairs including all tax matters. Daughter doesn’t want to do it anymore. Won’t return any calls.

3) Brother is trying to remove his sister from such responsibility, but has not yet been able to do so.

4) Client owes tax balance due for 2004, has ignored request for money, and IRS is in the process of levy.

5) Tax preparer has a signed Form 2848 (power of attorney) for tax year 2004 from the daughter in behalf of the client.

6) Brother would like tax preparer to tell IRS about the situation. Daughter is silent on the issue.

7) Someone (not the tax preparer) has contacted the Elder Abuse division of the District Attorney’s office and has reported the situation. They are involved and not happy with what is happening to the mother.

Question: What is tax preparer’s ethical responsibility as to what he can do and what he can’t do?

Facts: The daughter is the one who was given the ability to handle the mother’s financial affairs, including all tax matters. Since this right was given to the daughter by means of a trust, the only way this right could continue after the mother became mentally incompetent would be if it was a “Durable” Power of Attorney, meaning the right to handle continues after the mother no longer mentally or physically is able to make her own decisions.

The daughter is the one that signed the Form 2848 (POA) for the tax preparer. This gives the tax preparer the right to talk to IRS about any and all tax issues involved with the 2004 tax return. The fact that the mother became mentally unable to make decisions did not null and void the tax preparer’s POA, because it wasn’t the mother that signed the POA. It was the daughter who signed it. The mother had already given up her right to direct her own tax matters, so becoming more mentally incompetent is irrelevant as regards to the tax preparer’s POA.

This fact gives the tax preparer POA until the daughter takes it away. And the daughter has not yet done that. So the tax preparer is not violating his ethical responsibilities by talking to IRS about the 2004 tax return.

Ethics is not about doing the right thing. It is about following the rules.

[Bees Knees]

It is also noteworthy to review just what Form 2848 tells us we can do, and what we cannot do.

Line 5 of Form 2848 says the following:

Acts authorized. The representatives are authorized to receive and inspect confidential tax information and to perform any and all acts that I (we) can perform with respect to the tax matters described on Iine 3, for example, the authority to sign any agreements, consents, or other documents. The authority does not include the power to receive refund checks (see line 6 below), the power to substitute another representative, the power to sign certain returns, or the power to execute a request for disclosure of tax returns or return information to a third party. See the line 5 instructions for more information.

Again, note that it does not say the representative is limited to signing agreements, consents, or other documents. Those are merely cited as examples of what the representative is authorized to do. The representative is authorized to do any and all acts, with the exception of the following:

1) The representative cannot receive refund checks.
2) The representative cannot substitute another representative.
3) The representative cannot sign certain returns.
4) The representative cannot execute a request for disclosure of tax returns or return information to a third party.

Talking to IRS about the tax year in question is certainly within the power of the one with a signed Form 2848. And since the Form 2848 was signed by the daughter who was authorized by the trust to handle all of her mother’s financial affairs after she became mentally incompetent, the Form 2848 continues to be valid until either the statute of limitations expires on tax year 2004, or the daughter signs a new Form 2848 for someone else. The mother no longer being mentally competent has no effect on the signed Form 2848, because the mother is not the one that signed the Form 2848 in the first place. The daughter, who has Durable Power of Attorney by means of the trust is the one who signed Form 2848 for the tax preparer.

[DTS]

Thank you...

Bees for the explanations today. I appreciate the time you took to help out and explain this in detail.

Dennis

[DTS]

You can talk to us hypothetically. You can never discuss someone else's return using real names with another accountant or a third party even if you do have PO, unless the client gives you written permission to do so.

Does this apply if a client's records are subpoenaed in a Worker's Comp case?

Dennis