Who Knows All About Your Returns?

The IRS has recently issued guidance on third-party authorizations. In short, who can get into your tax account?

First, understand that there are different types of third-party authorizations with specific roles assigned. Additionally, taxpayers who want to have a third party represent them must formally grant them permission to do so.

Different types of third-party authorizations:

• Power of Attorney – Allows someone to represent a taxpayer when resolving tax matters with the IRS. With this authorization, the representative must be an individual authorized to practice before the IRS and Form 2848, Power of Attorney and Declaration of Representative must be completed. A POA can do several things, such as:
  • Represent, advocate, negotiate and sign on behalf of the taxpayer
  • Argue facts and the application of law
  • Receive tax information for the matters and tax years/periods specified by the taxpayer
  • Receive copies of IRS notices and communications
• Tax Information Authorization – Appoints a person to review or receive a taxpayer’s confidential tax information for the type of tax for a specified period using form 8821.
• Third Party Designee – Designates a person on the taxpayer’s tax form to discuss that specific tax return and tax year with the IRS.
• Oral Disclosure – Authorizes the IRS to disclose the taxpayer’s tax info to a person the taxpayer brings into a phone call or meeting with the IRS about a specific tax issue.

Revoking a third-party authorization

A taxpayer can choose to revoke any authorization at any time.

• Power of Attorney stays in place until the taxpayer revokes the authorization or the representative withdraws it.
• Tax Information Authorization stays in effect until it is revoked by the taxpayer or the designee withdraws it.
• Third Party Designee generally expires one year from the due date of the tax return, not counting extensions.
• Oral disclosure, unless it’s stated otherwise, is automatically revoked once the conversation has ended. If the taxpayer wants additional oral disclosure exceeding the original request, a new authorization will be required.

Talk with your qualified tax advisor about these different type of authorizations, to see what’s right for you.