Today we welcome back guest blogger Caleb Smith. Caleb is a fellow this year in the Harvard Federal Tax Clinic. We have seen some interesting power of attorney issues in our clinic recently and Caleb provides some insight on problems that arise in this area. Keith
The IRS is planning to implement new security measures (originally set for October 24 target date, but since pushed back) for its online services. In anticipation of these changes (and potential complications) it seems timely to devote some thought to one particularly important gateway for information gathering activities with the IRS: the Form 2848.
read more...Sometimes you just can’t avoid calling a general number of the IRS, especially if the 2848 hasn’t been processed by CAF yet or when there is an ID Theft Indicator on the account. When contacting such a call center, one of the first questions asked is whether you have POA on file for the entity you are calling about. The IRS employee will usually offer a personal fax number for you to send the 2848 (if you have one) so that they can continue to assist you. Once the 2848 is received what happens next can be downright Kafka-esque depending on the reticence and training of the IRS employee on the other line.
Recent calls to the IPSU unit of the IRS have yielded these Halloween-worthy responses:
1). We can’t speak to you because there is no signature from the taxpayer on your 2848. The signature you have is from the previous attorney [that was granted the power to substitute or add-in new representatives]
My charitable take on this is that the IRS employee was misunderstanding the core concept of the taxpayer granting their representative the power to substitute other attorneys. Who can sign a 2848 has been dealt with here before. The continued misunderstanding of certain IRS employees, unfortunately, is not an unusual occurrence for me. The idea that someone the taxpayer specifically said could substitute attorneys for them is now substituting an attorney for them somehow smacks of foul-play. In one instance, I directed an IRS employee to the 2848 instructions specifically stating that the taxpayer doesn’t need to sign the 2848 for a subbed-in representative. The IRS employee referred to that as a “loophole.” Further attempts to explain that requiring the taxpayer to sign my 2848 would obviate the whole point of granting representatives authority to substitute attorneys were fruitless. Perhaps I should have referred the employee to IRM 21.3.7.5.4, which reads in relevant part “Only the taxpayer can grant a recognized representative the additional authority to substitute or delegate authority. The notice of substitution or delegation must be signed by the representative appointed on the power of attorney.”
2). We can’t speak to you because a 2848 automatically expires after 45 days(!)
My charitable take on this is that the IRS employee was misunderstanding the rule that a 2848 is invalid if the taxpayer signature is dated more than 45 days before the representative’s (See IRM 21.3.7.5.1.4). As that wasn’t the case, my less charitable take is that the IRS employee just wanted to cut the call short. I am inclined to this less charitable take in part because the employee only brought up the 2848 issue after already speaking to me for several minutes about the client in a case where the IRS behavior looked somewhat bad.
All of this is to say that if an IRS employee wants to challenge your Power of Attorney they can put up a pretty big and pretty immediate roadblock. Yes, you can call back and almost certainly get a different person on the phone, but wait-times often make that impractical. During a recent visit from our local taxpayer advocate, our clinic (Harvard Legal Services Center) voiced concern about IRS employees that didn’t seem to understand how Form 2848 works and the barrier this caused for providing services. When such problems arise we were advised to request to be escalated to the employee’s manager, and that TAS would look into making sure that employees were well trained on 2848 issues. This is about as good as can be hoped for, but I’m not sure it is enough to provide a whole lot of relief. (A few weeks after that advice I attempted to put it into action and asked to be escalated to the manager on two separate occasions. On the first one, I was cut off after being put on hold. On the second, I was told (after being put on hold) that the manager wasn’t available.)
Of course, much of this can be avoided if your 2848 is on file with CAF, in which case, the main hurdle is submitting a 2848 that will be accepted and processed in the first place. Though this seems like it should be a fairly easy task (and generally it is), complications do arise.
Most recently, I’ve seen 2848s rejected for:
- Appearing to have a “stamp or electronic” signature of the representative (it wasn’t: it just looked that way because the form had been faxed so many times). See IRM 21.3.7.5.1.4.
- Having the taxpayer signature dated more than 45 days before the representative’s (it was, but only because the client signed with the wrong year) IRM 21.3.7.5.1.4 again. Note that the problem doesn’t arise if the taxpayer’s signature is more current than the representative’s.
- Form was illegible (a product of the Form 2848 being faxed multiple times, and perhaps my poor penmanship)
- Student Authorization Form missing for LITC Student Attorney (These generally result only in the student being unable to call the IRS: as an attorney, my authorization has generally still been processed.)
The first time I ever submitted a Form 2848 I was under the impression that the CAF fax basically fed into an enormous scan-tron type machine that checked for initial processing requirements. My belief in that was based (1) on the sheer volume of 2848s that must be sent and (2) the fact that the Treasury Regulations provide that a substitute for Form 2848 can be used (problem for the scan-tron theory), but an actual 2848 must be attached if submitted to CAF (see Treas. Reg. 601.503(b)(2)). In fact, actual humans do process and input the Form 2848, although the number of these dedicated souls may not be sufficient for the task (see TAS report here). Beyond just taking the IRS’s word on this, other evidence of a human touch can be found in the handwritten “OK” marked next to certain areas and practically undecipherable scribbles marked next to others on 2848s that have been sent back to me from CAF.
One problem is obviously the turn-around time for figuring out whether CAF is going to process the 2848 sent. Usually, the practitioner has no way of knowing the 2848 isn’t processed until either (1) weeks pass and they are still unable to access accounts via e-services, or (2) the taxpayer receives a letter from the IRS mentioning the unprocessed 2848 (a letter which also generally serves to freak out the taxpayer). Might this be an area for the IRS “Future State” (see post on Future State here) to bring in a greater degree of automation to speed up the process? On the one hand, the sensitive data at play may warrant keeping a greater human touch. On the other hand, I’m not really sure how humans do much of anything to prevent ID theft in this context: I am fairly confident that the person at CAF isn’t comparing signatures of the taxpayer and representative to a signature database.
Another problem has less to do with the time it takes to process the 2848, and more to do with the actual processing. I have seen numerous rejection notices for 2848s supposedly lacking the proper student authorization page, when it appears from the fax records that such authorization was in fact sent. Several comments on the ABA LITC listserv have also mentioned this issue. One commenter suggested creating a “2848 Sandwich” with the student authorization page placed between page 1 and 2 of the 2848, the rationale being that it is much harder to miss the authorization page in those circumstances. I have never tried this, and cannot vouch for its efficacy, but am always a fan of creative solutions.
One area that I HAVE had experience with and can vouch is in submitting Form 2848 as a substitute representative for the original attorney of the taxpayer. As mentioned above, a taxpayer may grant their attorney the power to substitute or add representatives (see line 5a of Form 2848). Doing so, obviously, gets rid of the need for the taxpayer to sign a new 2848 for the substituted representative. The instructions (and logic) make this clear: the new attorney “can send in a new Form 2848 with a copy of the Form 2848 you [the taxpayer] are now signing, and you do not need to sign the new Form 2848.” [emphasis added.] Reading the instructions literally, one might think that all the new attorney need do is fill out a new 2848 and include a copy of the old one with it. But IRM 21.3.7.5.4 requires a little more. For CAF to process the new 2848 you will need to send (1) the original 2848 signed by the taxpayer, and (2) a new 2848 signed by the original attorney. I usually have the original attorney sign on line 7 along with listing their CAF number. I have not found anywhere in the IRM that says this is the proper way to include the signature of the appointing attorney. But it has worked with CAF, and that is good enough for me.
When you need to speak with someone at the IRS about a client and the validity of your power of attorney is put at issue, you are essentially confronted with a brick wall. Systemic changes to how 2848s are processed by the IRS may be ideal, but in the absence of that practitioners are generally left with trading war-stories and tricks-of-the-trade. I invite anyone with such advice or stories to post below.
About Caleb Smith
I have a POA signed by the executor of an estate. After working with several reps that acknowledged my POA, the next call was received by an agent that said I did not have a POA on file so she could not discuss the case. I asked her to please check again, since I have been working on resolving this case for over a year now. She told me that she didn’t have one and hung up. Very Frustrating!
I believe the IRM allows IRS employees to accept faxed copies of the Form 2848. I’m not sure of the citation, however. But that is why I tell my students that when their client signs the 2848, they should .pdf it and keep it on their computer (or now, perhaps, in “the cloud”). That why, they can always fax a copy to any IRS employee during a conversation if need be. The problem of obstreperous IRS employees cannot be solved that way, of course, but it can still help.
To Kelly: I am working on a complicated case, representing the executor of an estate. The previous rep, a former IRS attorney, tried three times to file a 2848 over a period of several months, and was not successful. But it didn’t help that rather than starting over when the errors on the form were pointed out — he just corrected them and tried to fax it back. After considerable research, my conclusion was that the executor should also file a Form 56, Notice Concerning Fiduciary Relatiionship, which also may require documentation of court appointment.
I once had a 2848 rejected because instead of listing several years like this – “2013, 2014, 2015, 2016, 2017” – I listed them like this “2013-2017.”
I always list years
Individual 1040 2002 03 04 05 06 then on the next line
Individual 1040 2007 08 09 10 11
I wanted to share the scenario when we call IRS PPS and FAX the Form 2848 to the assister. In a scene right out of Saturday Night Live, the assister then asks us to verify everything on the form we just FAXed to the Assister. Can anyone explain why this process continues ?
Pretty funny, but the norm! My most recent snafu was the rep telling me to take a hike because the address on the brand new 2848 was not identical to the address on the last filed tax return. Of course I protested in vain. If the IRS had wanted the address on the “last tax return” they would have put it in writing on the 2848.
Responding to Bill’s question, I do know the answer although I don’t necessarily like it, the reason we go through everything is because the calls are both monitored and/or recorded so they don’t know what we both are seeing so we have to verbally state it for the record. I personally dislike having to state all the years on the POA/TIA (which is something some assistors enforce others do not) as the assistors don’t understand that I can have multiple Forms 2848/8821 on file and these add up to years 1998 thru 2016 under my authority but the particular 2848 I am calling with may only have 2013 thru 2016 on it.
Another problem area with sending POAs to the CAF is when I am trying not to override a colleague’s power of attorney by checking the box on line 6 and faxing my new POA with a copy of the prior POA which should stay in effect along with mine. Too often the client gets a letter saying that a copy of the first POA was not submitted with my POA. Makes me look inefficient, and possibly ignorant, to my client.
I feel your pain. I’ve been with the Philip C. Cook Low-Income Taxpayer Clinic since 2001. In January of 2002, when the CAF unit was re-organized and centralized into Memphis and Utah all our POA’s came back for many months because the new employees did NOT know what a Special Order (now Special Authorization) was and the person picking up the faxes would toss the letters in the trash! After many pleas, someone that knew how to process these took pity on us and processed all of them for us. Even after a couple of training sessions in the Memphis SC, 14 years later, we still get some back because of the Special Authorization lack of training. Then, there was the ‘k’ coding issue in 2006. For some reason someone at the IRS misinterpreted the purpose of ‘k’ coding and our students were told that no one could speak to them because they weren’t authorized. It took the intervention of the Office of Professional Responsibility over several months and direct calls from that office to the different IRS representatives to get them to understand they were wrong and the actual purpose of the implementation of ‘k’ coding. Our plight ended up in Nina Olson’s 2007 Objectives Report to Congress – and yet to this day, once in a while a student will get the phone hung up because they’re not authorized. And just like you, nowadays we get the rejection because they don’t understand the substitution rule and there’s also the issue of the amount of time it takes to assign CAF number to incoming students. It’s just refreshing to hear that it’s not just us going through this misery! Thank you for sharing!
Recently, I called the service center to discuss a client’s issue. I told the rep I would like to fax over my form 2848 so we could talk. He said I have to fax it to the CAF unit and call back in 10 days. I asked him why and he said those are the rules. I told him no they’re not and he became belligerent. After I explained to him that I’m a former Revenue Agent, and his story is a flat out lie, I heard a dial tone.
Victor , first thing I do on EVERY CALL is
IRS: This is Jane Smith , employee number 1000123456
ME: Your name is Jane Smith and what was your number again?
IRS : 1000123456
ME: 10000123456
IRS: yes
ME: How is the weather there in Ogden Ut.
IRS: No I am in Covington KY
…..
Now when they get belligerent I remind them your in Covington KY right? and Jane Smith …… then realizes that I have her name and employee number.
I see this is a very popular subject! (Try working with the State of CA’s requirements where we do all the work to upload all your POA details onto their system – and then have to wait another 30 days for them to verify and add you onto their system so you can actually start representing a client!!)
I thought that I would share a recent POA issue with one of my clients. When she first engaged me, she had joint liabilities with a former husband and my F2848 properly identified income tax, form 1040 and the years in question. We went through the Innocent Spouse process successfully, which then required to IRS to do “mirrored assessments”, which in essence sets up separate tax modules for husband and wife, but now under Master File Transaction codes 31, instead of the original MFT 30’s. Same years, same taxes and same forms. I went online to pull up the transcripts under separate assessments and was denied. Then I called the Tax Practitioner Hotline to secure the transcripts and the person told me I wasn’t authorized as the F2848 wasn’t processed under MFT 31 (as it didn’t exist at the time!). Knowing that I was correct (30 years with the IRS) I asked him to check with his supervisor who couldn’t reverse his decision due to their procedures. I then called the head of the local Disclosure office who confirmed that I was correct- good for my ego but I didn’t get anywhere on the case. Prepared new F2848’s to include MFT 30 and MFT 31 and I now have access to online IRS records again…. Yikes, what a waste of unbillable time!
State of RI has their own POA form and they require you to fax it over before they speak to you. The good part is the RI Division of Taxation has a reording:
All representatives are assisting other callers at this time please try another time.
HANG UP!
you can not even get into a que.