Managing IRS authorizations
File and maintain these essential tools for interacting with the IRS on clients’ behalf.
Most CPA tax practitioners regularly use a Form 2848, Power of Attorney and Declaration of Representative, to represent their clients. At times, practitioners may need to obtain other IRS authorizations for a client as well, including those described below.
FORM 8821
Form 8821, Tax Information Authorization, is used to obtain taxpayer transcripts, payments made on the account, filing status, and other information. Unlike Form 2848, it does not allow a practitioner to represent a client. However, if a practitioner lists his or her firm’s name as the appointee on Form 8821, anyone from the firm, such as the firm’s secretary or bookkeeper, may call the IRS and obtain information about the taxpayer on the firm’s behalf. Considering that call wait times have increased steadily in line with recent cuts to the IRS’s budget, using less costly staff to make basic IRS phone calls can be beneficial. Additionally, as a proactive measure, practitioners should consider having a Form 8821 on file for all clients because it allows the appointee to be copied on all IRS correspondence with the client—and thus the practitioner can determine how the client should address a matter. After all, sometimes clients ignore an IRS notice or do not understand its severity.
CHECKBOX AUTHORIZATION (THIRD-PARTY DESIGNEE)
A CPA can complete the “third party designee” section on a client’s Form 1040, U.S. Individual Income Tax Return (often referred to as “checkbox authority”), allowing the CPA to discuss with the IRS the processing of the client’s tax return, including the status of tax refunds. This authorization has limited use but may be worthwhile to ensure a return is correctly processed.
COMPLETING FORMS 2848 AND 8821
Completing Forms 2848 and 8821 is fairly straightforward. A practitioner needs to have:
- Taxpayer information (name, address, taxpayer identification number, and phone number);
- The practitioner’s information (name, address, Centralized Authorization File (CAF) number, preparer tax identification number (PTIN), telephone number, and fax number); and
- Tax information (type of tax, tax form number, years or periods, and specific tax matters, if applicable).
A CAF number is a unique nine-digit identifier assigned to a practitioner the first time he or she files an authorization form with the IRS. It is different from a Social Security number, employer identification number, or PTIN.
WHERE TO FILE FORMS 2848 AND 8821
Practitioners must mail or fax their authorization forms to the applicable CAF unit (Ogden, Utah; Memphis, Tenn.; or Philadelphia) unless they check the box on line 4 of Form 2848 or 8821, indicating that the form is for a specific use not recorded on the CAF. In that case, the practitioners would mail or fax the form to the office handling the matter.
Unfortunately, with the retirement of the online Disclosure Authorization product in 2013 (which allowed practitioners to file Forms 2848 and 8821 electronically), mailing or faxing these forms are the only filing options.
Tip: If a client has an urgent issue and the practitioner does not have time to wait for the authorization to be recorded at the CAF unit, the practitioner may call the IRS and scan and fax the authorization form to the agent who takes the call.
WITHDRAWING FORM 2848 OR 8821 AUTHORIZATION
Practitioners may withdraw an authorization at any time. To do so, they must write “WITHDRAW” across the top of the first page of the Form 2848 or 8821 with a current signature and date below the annotation. Then they must provide a copy of the authorization form with the withdrawal annotation to the same CAF unit where the form was originally filed. The instructions to Form 2848 provide additional steps to take if practitioners do not have a copy of the authorization form. A taxpayer may also revoke the authorization at any time by following procedures similar to the withdrawal steps.
A new authorization supersedes an existing one unless otherwise specified on Form 2848 or 8821. Authorizations also expire with the taxpayer’s death (proof of death is required).
It is advisable to keep a list of all client authorizations that a practitioner has open with the IRS. But, at times, a practitioner may need to obtain that list from the IRS. For example, a retiring CPA may wish to withdraw all authorizations on file with the CAF unit. To do so, the CPA may first make a Freedom of Information Act (FOIA) request for a CAF representative/client listing. This is known as a “CAF77 request.” A sample FOIA CAF77 letter is shown on the IRS’s FOIA Guidelines webpage at irs.gov.
The IRS will then provide a printout or electronic copy of all of the CPA’s current authorizations. The CPA can send a signed withdrawal request for all authorizations. The CAF unit will then delete the authorizations attached to that CPA.
Editor’s note: A version of this column also appears as “Tax Practice & Procedures: Filing, Withdrawing, and Managing IRS Authorizations,” in the July 2015 issue of The Tax Adviser.
Susan Allen (sallen@aicpa.org) is a lead technical manager, taxation, with the AICPA in Durham, N.C.
To comment on this article or to suggest an idea for another article, contact Paul Bonner, senior editor, at pbonner@aicpa.org or 919-402-4434.
Other resources
- Publication 4019, Third Party Authorization, Levels of Authority: Provides a summary chart of various types of authorizations (purpose, how authority is granted, etc.).
- Publication 947, Practice Before the IRS and Power of Attorney: Provides information about practicing before the IRS.
- Form 56, Notice Concerning Fiduciary Relationship: Authorizes the designated person to perform any act on the taxpayer’s behalf (i.e., as a fiduciary under Sec. 6036 or 6903).
- IRS CAF webpage (available at irs.gov: Provides detailed guidance on CAF rules and processes.
- Internal Revenue Manual Section 21.3.7, Processing Third Party Authorizations Onto the Centralized Authorization File: Applies to IRS employees responsible for performing CAF account work, but the information may also be useful to tax practitioners in understanding the IRS’s procedures.
