Understanding IRS Form 2848: Power of Attorney and Declaration of Representative

Taxes are a complicated area, and dealing with the IRS regarding the taxation of you or your company can be difficult. This is why many taxpayers will authorize a legal or tax professional to interface with the IRS on their behalf. This is the purpose of IRS Form 2848: Power of Attorney and Declaration of Representative. 

With the 2848 power of attorney form, a taxpayer can designate a qualified person–such as an attorney, accountant, or other tax professional–to represent them before the IRS. Here we delve into the main considerations for using Form 2848 and understanding its legal effects.

Find the form here: IRS Form 2848 – Power of Attorney

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What is Form 2848 and when is it used?

Under federal law, taxpayer information is confidential. This means the IRS cannot share or discuss tax information with a third party unless the taxpayer authorizes them to do so. Form 2848 allows a taxpayer to authorize an agent to represent them before the IRS and receive their tax information.

A taxpayer could decide to use Form 2848 for a number of reasons, but they generally involve either a complicated tax situation or an inability to communicate with the IRS themselves. Common tax situations include IRS audits, appeals, or large tax debts owed. The inability to communicate could stem from the taxpayer’s medical condition. However, it should be noted the taxpayer does not need to cite any reason for designating an agent.

Who can be designated as a representative with Form 2848?

Only certain categories of individuals are eligible to be designated as representatives with a 2848 power of attorney form, as follows:

• Attorney
• Certified Public Accountant (CPA)
• Enrolled agent. This is an agent certified by the IRS who can practice anywhere in the U.S.
• Enrolled actuary. This refers to a person approved by a federal governing entity, the Joint Board for the Enrollment of Actuaries, to perform actuarial services.
• Officer or full-time employee. These categories apply to taxpayer organizations only, not individuals.
• Unenrolled tax return preparer. Unenrolled preparers can only be agents if they prepared the tax return in question.
• Enrolled retirement plan agent. An individual qualified to practice before the IRS in tax matters concerning retirement plans.
• Qualifying student or law graduate. Qualifying representatives can be either (1) law, business, or accounting students, or (2) law school graduates, who work in a qualified Low Income Taxpayer Clinic or Student Tax Clinic Program.
• Family member. This can only be a member of the taxpayer’s immediate family, including grandparents, grandchildren, step-parents, and step-children.

Note that a family member is the only type of qualifying individual who does not need any particular licensing or certification.

What actions can a designated representative take?

Form 2848 requires the taxpayer to specifically describe the tax matter for which the agent is receiving authorization, including the tax form and applicable time period. Within those parameters, the following are some of the actions the designated agent can take on the taxpayer’s behalf:

• Receive confidential tax information, including IRS notices
• Respond to IRS notices on the taxpayer’s behalf
• Negotiate a payment plan for unresolved tax debt
• Sign a tax return on the taxpayer’s behalf in limited circumstances, including the taxpayer having a medical condition or being outside the U.S.
• Handle an appeal of an IRS decision

It is important to remember that an IRS power of attorney form does not relieve the taxpayer of any tax liability. Nor can a designated agent negotiate a refund check or direct a refund to be deposited into the agent’s bank account. The agent also cannot substitute another agent in their place, although the taxpayer has that ability.

Filling out Form 2848

After the taxpayer fills in their own information, the following sections of IRS Form 2848 must also be completed.

Designation of representative(s)

In section 2, the taxpayer lists the full names and addresses of their representatives. Form 2848 provides space for four representatives, but the taxpayer can list additional representatives on a separate form. However, the taxpayer can only designate two representatives to whom the IRS must send notices and communications (by checking the appropriate box).

The Central Authorization File (CAF) number and Preparer Tax Information Number (PTIN) must be included for each representative. The CAF number is a nine-digit number issued by the IRS for any representative the first time they are designated on a third-party authorization (first-time representatives will not have an assigned CAF number). The PTIN is a tax ID number that must be renewed annually by attorneys, CPAs, enrolled agents, and paid preparers. 

Acts authorized by taxpayer

Section 3 is where the taxpayer specifies the acts authorized by their representative. It includes columns for a description of the matter, the applicable tax forms, and the years or time period involved. The matter description can state “Income”, “Enrollment”, “Payroll”, or other simple descriptions, with examples provided on the form. Multiple tax forms can be included, but the form cannot simply state “All forms.” The time period can include multiple years or even quarterly periods, and the time periods do not need to be consecutive.

Form 2848 also provides sections for (1) additional authorized acts and (2) specific acts not authorized. 

Declaration of representative(s)

The declaration of representative must be completed and signed by each representative listed in section 2. Each representative must state which category of eligible agent they belong to, such as attorney, CPA, relative, or other tax professional. They must also include their licensing jurisdiction or authority and their applicable licensing identification, such as a bar number.

Revocation of a power of attorney or withdrawal of a representative

Either the taxpayer or the representative may terminate their relationship. The taxpayer may do so by revoking the power of attorney, while the representative may withdraw from representation. 

A taxpayer may revoke simply by naming a new representative in a newly filed Form 2848. When a taxpayer files a new Form 2848 for the same issues and time periods listed in the original form, the previous form is automatically revoked. If the taxpayer does not want to revoke the prior attorney, they must check the appropriate box in section 6 and attach a copy of the power of attorney they want to remain in effect.

If the taxpayer wants to revoke the power of attorney without naming a new representative, they may simply submit a new Form 2848 with the word “REVOKE” written across the first page. With a signature and date below that annotation, the form should be mailed or faxed to the appropriate IRS location. The representative can follow the same procedure for withdrawal, with the word “WITHDRAW” written on the first page of the power of attorney instead of “REVOKE.”

Understanding the difference between Form 2848 and Form 8821

There are times when a taxpayer merely wants to authorize a third party to see their tax information, without wanting that third party to represent them before the IRS. An example would be when a taxpayer wants to apply for a mortgage or other loan and the lender requires tax information. Form 8821 is the appropriate IRS form for these circumstances.

Taxpayers and representatives should understand their Form 2848 rights and obligations

Entering into a power of attorney relationship for tax matters is a serious endeavor for both taxpayers and their representatives. This means all parties should understand their rights and responsibilities, as well as how to modify or rescind those same rights and responsibilities. 

As Benjamin Franklin once stated, nothing in life is certain except death and taxes. For the second certainty, taxpayers need to know they have the best representation possible for the IRS. Representatives must also do all they can to fulfill their duties responsibly. Understanding Form 2848 will help them do so.

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Disclaimer: This article is provided for informational purposes only. It does not constitute legal, business, or tax advice.