You can allow the IRS to discuss your tax return information with a third party by completing the Designated Third Party section of your tax return, often referred to as the Checkbox Authority. This will allow the IRS to discuss the processing of your current tax return, including the status of tax refunds, with the person. Subsequently, the IRS cannot discuss confidential information on your tax return with any third party until we receive a new authorization from you. Any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns.
However, tax professionals have different levels of skills, education, and experience. This allows the IRS to discuss your return with the person you designate, even if they are not a tax professional. Things the IRS can discuss with the designated third party on your tax return include processing your current tax return and the status of tax refunds. This authorization is limited to tax returns with the Designated by a Third Party check box and the Preparer's Paid Use Only section.
This designated third-party tax reporting authority only lasts one year from the due date of the return. The powers granted under 2848 are quite broad and, unless specifically excluded on the form, include the right to receive and inspect confidential tax information and to perform all acts, including signing consents and exemptions, that a taxpayer may do. However, unless otherwise stated, it does not include the power to receive a check, substitute or add another representative, or sign basic tax returns. Forms 2848 can be canceled or revoked at any time by the taxpayer.
In addition, signing a new Form 2848 revokes the old one, unless you specifically say otherwise and attach one that you want to remain in effect. The IRS states that it will accept a power of attorney other than federal Form 2848 as long as the document meets the requirements for a power of attorney. In most cases, this would include your general permanent power of attorney prepared by your lawyer. However, I will say that in my experience, using a power of attorney instead of the IRS form can be complicated and time-consuming, so as a rule, I tend to avoid them when possible.
When you revoke the authorization for tax information, the designated person will no longer receive your confidential tax information for the matters and periods indicated in the authorization. While checking the box gives the preparer a limited power of attorney to discuss the return with the Service, the preparer does not have a power of attorney on all matters related to the tax return. For example, the sole preparer of a corporate income return or a small business income tax return is considered to be a tax return preparer of a partner or shareholder return if the entry or entries on the return of the company or small business corporation are reportable to the partner or shareholder, the refund constitutes a substantial part of the return of the partner or shareholder. I) Only a person who prepares all or a substantial part of a return or claim for refund shall be considered a preparer of the tax return or claim for refund.
According to the instructions on Form 1040, “Your preparer, friend, family member, or anyone else you choose may serve as a designated third party for the tax year and tax return. A) For the purpose of applying the rules in paragraph (b) (i) of this section to a tax return preparer who does not sign within the meaning of paragraph (b) (of this section only), the schedule or other party is not considered a substantial part if the schedule, registration or other part of the return or claim the refund involves amounts of gross income, amounts of deductions or amounts on the basis of which credits are determined that are-. Mark Bowles is the Tax Procedures Editor at Beyond415 and specializes in tax authorizations and investigation of IRS accounts. (iii) A tax return preparer with respect to one return is not considered a tax return preparer for another return simply because an entry or entries reported on the first return may affect an entry reported on the other return, unless the entry or entries reported on the first statement are directly reflected in the other return and constitute a substantial part of the other return.
A signing tax return preparer is the individual tax return preparer who has primary responsibility for the overall substantive accuracy of preparing such return or request for refund. Whether a schedule, registration or other part of a return or claim for refund is a substantial part is determined by whether the person knows or should reasonably know that the tax attributable to the schedule, entry or other part of a return or claim for refund is a substantial part of the tax. must be on the return or refund request. For the purposes of this section, a tax refund application includes an application for credit against any tax that is included in the guidance published in the Internal Revenue Bulletin.
For the purposes of this section, a tax return is a return (including an amended or adjusted return) filed by or on behalf of a taxpayer that reports the taxpayer's tax liability under the Code, if the type of return is identified in the guidance published in the Internal Revenue Bulletin. A person who provides tax advice on a position that is directly relevant to the determination of the existence, characterization or amount of an entry in a return or claim for reimbursement shall be deemed to have prepared that entry. . .