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IRS CAF Number 101: Representing Clients

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Three times in three years, and it continues to be modified annually: that’s how often the Internal Revenue Service has changed Form 2848, Power of Attorney and Declaration of Representative Circular 230. This is the form tax professionals use to represent their clients before the IRS.

Most recently there is a new checkbox on the Forms 2848 and 8821 that is used to notify clients when using an intermediate service provider, such as the IRS Solutions transcript tool, to download and store IRS transcripts. As compared with antiquated e-services, using such tools will save hours when downloading and analyzing IRS Transcripts.

One important change was not found on the form at all, but rather in the instructions.

 

Why The Change?

By changing Form 2848 instructions the IRS hopes to point out how tax pros can get a list of their active authorizations on file with the agency. Authorizations automatically remain on file with the IRS for seven years.

 

A Word to the Wise

When your client’s engagement is complete, it’s a good idea to withdraw your authorizations to limit your professional responsibility to the client and the IRS. In fact, it might be good to calendar the date so you remember to do it.

 

Here’s why….

As long as your client(s) Form 2848 remains on file with the IRS, who do you think will be the Go-To person if issues arise? That’s right. The IRS will come to you as your client’s authorized representative, even if you’re not engaged to do so. Not only can this disrupt IRS compliance efforts and present client challenges.

The IRS expects tax professionals to withdraw the power of attorney authorization or be considered knowledgeable and in a position to represent their clients.

 

Freedom of Information Act Request

As now explained in the Form 2848 instructions, practitioners may request a list of active authorizations by submitting a Freedom of Information Act (FOIA) request called a CAF77 request to the IRS Centralized Authorization File unit. This is the division that keeps track of practitioners’ filed tax authorizations.

The IRS requires a specific format for this request and guess what? They make it easy by providing a sample CAF77 request letter as a template for submitting a CAF77 request.

 

One More Thing….

The IRS also requires one more thing with the letter: proof of identity.  Remember to attach a copy of your driver’s license or a notarized statement swearing to your identity.

Fax or mail the request to the FOIA office:

Internal Revenue Service

2980 Brandywine Road Chamblee, GA 30341

Fax: (877) 807-9215

If you like, you can request the listing of your authorizations on a CD (in a Windows Notepad text file) or in a paper document. All clients with active authorizations will be shown under a single CAF number. If you have multiple CAF numbers, request CAF77 listings for each CAF number. The listing will include all Forms 2848 and Forms 8821, Tax Information Authorization, in effect.

 

NOTE: The third-party designee from any filed returns are not included.

 

How Long Will You Wait?

It usually takes two to four weeks to receive your CAF77 listing. Review it for authorizations you’d like to withdraw. You can withdraw authorizations individually using the existing instructions on Form 2848. To withdraw multiple authorizations, it’s easier to use a CAF77 listing.

When the CAF unit receives your request, it should withdraw the authorizations you indicated. Caution: you may or may not receive correspondence about whether the CAF unit processed your request.

This process is still manual. Sometimes the IRS doesn’t process withdrawal requests and leaves authorizations erroneously in effect. Is there an immediate direct way to confirm that the IRS withdrew your authorizations?

No. For this reason, regularly submit CAF77 requests to view your authorizations on file. As of yet, the IRS does not facilitate this process. Many tax professionals have suggested they do so by allowing practitioners to view a complete listing of their authorizations and withdraw them in an online account.

The IRS has expressed interest but has not moved forward with a solution. Regardless, with regard to the IRS changes to Form 2848, withdrawing authorizations is important for both client and practitioner. Engagements require closure and define your professional responsibility to your client(s) and the IRS.

This is just a synopsis of how to handle what’s coming down the pike in the tax industry. The way to succeed begins with keeping up with the changes.

 

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