Page 95 - TaxAdviser_2022

TAX PRACTICE RESPONSIBILITIES

the practitioner stating the intention will exceed the maximum fee stated, the taxpayer’s IRS notices and communica-
to revoke the POA for the applicable IRS will contact the requestor and ask tions, and the online process automati-
tax matters and periods, the name and the requestor whether he or she would cally revokes any other authorization
address of each recognized representa- like to withdraw or modify the request granted for that period, tax matter, or
tive whose authority is revoked, the before proceeding. authorization type. If multiple represen-
taxpayer’s name, the taxpayer’s address, The IRS recently implemented an tatives are requesting authority, the tax-
and the taxpayer identification number online authorization process through payer must authorize them on the same
can be submitted to the CAF unit. If the Tax Pro Account service to simplify day. Once the taxpayer has accepted the
all authority under the POA is being the process and allow instant access for request in his or her online account, the
revoked, “revoke all years/periods” can the practitioner. A tax practitioner can representative has immediate access to
be written instead of listing the specific submit a POA authorization (if the the records.
matters and years/periods. practitioner meets the POA require-
With the revocation, both the client ments) or a Tax Information Authoriza- Extensions provide several
and the firm should be clear that the tion request to the taxpayer’s individual timely benefits
firm is no longer responsible for track- IRS online account. The practitioner Extensions provide a valuable release
ing new notices as they arise. It may be chooses the appropriate authorization valve for the tax preparer in two primary
prudent to issue a termination of the type when requesting it. ways: They spread out the tax filing over
engagement letter at the time of the To request an authorization online, a longer period, and they allow time
POA revocation. The clear communica- representatives log in to their Tax Pro for the necessary data to arrive for the
tion of the letter articulates the mutual Account on irs.gov and request an return to be accurately prepared.
understanding while also working with- authorization from the taxpayer. The Increased complexity and additional
in the relationship to remind the client representatives will need all of the data reporting requirements have resulted
that the practitioner will be available to traditionally required on a Form 8821 in Schedules K-1 and corrected infor-
help on other issues later. or Form 2848; the data entered must mation returns being sent out shortly
If Form 2848 is used, the firm should match previously filed returns exactly. before or even after the filing deadline.
track all POAs for all practitioners in After submitting the form, the practi- However, clients often want their re-
the firm and have a system in place for tioner should notify the taxpayer that turns to be filed “on time,” while failing
revoking them when the project termi- the request is waiting for authorization. to understand that, with an extension,
nates or when the client is no longer a The taxpayer must log in to his or her the return is still on time if it is filed by
client. This avoids confusion about who individual IRS account to review and the extended due date. The taxes must
is responsible for replying to further no- sign the authorization request; if any be paid by the due date, but unless there
tices for the covered subject or period. data is incorrect, the request will not is a compelling need for the return to be
If there is uncertainty regarding appear for the taxpayer, and the practi- filed by the original due date, the practi-
what POAs a firm has outstanding, a tioner will need to resubmit the request tioner should advise the client to wait so
Freedom of Information Act (FOIA) with the correct data. that a more complex return can be done
request can be filed. The request must Authority via a Tax Pro Account when professionals are less fatigued
state that it is being made under the can only be granted for the years 2000 and not under a pressing deadline. It
Freedom of Information Act, iden- through the current year plus three is worth considering charging a higher
tify the records that are being sought, calendar years forward from the date of rate for those who insist on filing by the
identify the name and address of the the request and is limited to the follow- original due date, to compensate for the
requester, provide a copy of a valid ing matters: additional burden and risk of error.
photo identification of the requestor ■ Form 1040, U.S. Individual Income An extension allows additional time
that includes a signature, and make Tax Return, income tax; for retroactive tax law changes to be
a firm commitment to pay any ap- ■ Split spousal assessment or innocent incorporated into tax preparation soft-
plicable fees. The requestor can state spouse relief; ware. The IRS did not require amended
the maximum fee he or she is willing ■ Shared-responsibility payment, returns to be filed for returns filed prior
to pay. Generally, there will be no fee including split spousal assessment; to the tax law changes for tax year 2020
for individuals seeking records for their and but instead adjusted taxpayers’ returns;
own use unless the request is for more ■ Civil penalties. the resulting notices of the adjustments
than 100 pages or the search takes more Unlike with a paper filing, only two sent to taxpayers by the IRS raised
than two hours. If the applicable fees representatives can receive copies of a concerns that the practitioner had erred.

48 February 2022 The Tax Adviser