Category: Tax Resolution Technical Training

What years do I include on my Power of Attorney (2848 – POA) or Tax Information Authorization (8821)

I frequently get asked by tax professionals who handle representation work (Collections and Exam), what years do I put on a Power of Attorney aka POA (Form 2848) or Tax Information Authorization (Form 8821) when I am trying to get information on a taxpayer/client, research what years they have filed or not, or need to see what payments or credits were applied?

Here is what I usually say to them. It depends. (I bet you didn’t see that one coming)

If you are having a discussion with a client and they tell you they believe the last time they filed was about 6 years ago, at a minimum I will start about 9-10 years prior to the year they said. So, if they say they last filed in 2016, then I will generally put on the Form 2848 or Form 8821 2013 to the current year.

If you just need information for 2021, in general, I still suggest putting at least 3 years prior to 2021. That would mean 2018 to 2021.

If they are really unsure or there is a very reasonable doubt as to the starting year, I will usually go back to the year 2000. I will explain to the client as it will keep me from having to go back to them and ask for another one causing further delay. I will generally tell them it can take 3-5 weeks for the IRS to process my POA (which often it does, but as of the time I am writing this, they are generally taking a week or less).

Now the next question is why would I do that? Well, there are a few reasons.

  1. the client’s fuzzy recollection may cause you to have to do another POA if you did not get all of the necessary years. For many clients, it is difficult to get them to sign one (not mention a lot of work by my team), but to two it two or more times is crazy.
  2. If you need to see if your client qualified for a first-time penalty abatement opportunity, then you will need to see if they have a clean history for the 3 years prior to the year at issue.
  3. If you don’t get it right, the IRS cannot tell/give you anything about years you do not have authority for. Occasionally, I have had a nice IRS employee on the phone tell me there is an
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IRS delaying certain TFRP assessments

The IRS has issued interim guidance that delays certain Trust Fund Recovery Penalty assessments until after January 3, 2022.

This interim guidance, issued April 27th, pertains to trust fund taxes for the following periods:

  • Form 941 for Q2, Q3, Q4 2020
  • Form 943 for 2020
  • Form 944 for 2020
  • Form CT-1 for 2020

If an employer elected to defer withholding of the employee portion of Social Security as was permitted under the CARES Act and Presidential Memorandum last year, Revenue Officers cannot pursue TFRP assessment against responsible and willful parties until after that Jan. 3, 2022 date.

The full memo is SBSE-05-0421-0021.

If you represent clients with trust fund issues, you might be interested in the TFRP-related representation courses within our CTR™ curriculum, which include:

  • CTR-201: Intro to 941 Resolution
  • CTR-202: Business Financial Analysis
  • CTR-203: 941 Resolution Options
  • CTR-211: TFRP Investigations
  • CTR-212: TFRP Assessments: Responsible & Willfull
  • CTR-214: Trust Fund Recovery Penalty Appeals (coming soon)

These classes are all 2 CPE hours, and are included with your Tax Resolution Academy® Champions membership.… Continue reading

Ultimate Guide to IRS Penalty Abatements

Being assessed a tax penalty on top of the taxes you owe can greatly increase your total tax liability. The Internal Revenue Service states that it assesses tax penalties to encourage people to voluntarily comply with the tax laws. You are deemed to be voluntarily complaint when you make a good faith effort to meet your tax obligations. However, receiving a tax penalty can make it difficult for you to pay everything you owe. Fortunately, the IRS provides several methods for seeking an abatement of the penalties you might be assessed.

What are IRS penalty abatements?

Penalty abatement is a process through which you can ask the IRS to remove penalties you have been assessed. There are many different types of penalties that can potentially be abated. However, you have to go through the correct process before your tax penalties will be removed.

If you have been assessed a failure to file or a failure to pay penalty, you will have to request abatement to have the penalty removed. The IRS’s computer system automatically assesses these penalties when you file a return late or when you make a payment with a due balance.

Other types of tax penalties are normally assessed during IRS investigations or audits, including the fraud and accuracy penalties. You can request an abatement of a return accuracy penalty after it is assessed, but you might need to undergo special IRS procedures.

The three primary methods of securing tax penalty abatements include administrative waivers or first-time abatements, reasonable cause abatements, and Form 843 abatements. We’ll take a look at each of these processes below.

Administrative waivers/First-time abatements

If you meet the criteria for a first time abatement, the IRS might provide you with administrative relief for certain penalties, including the failure to file, failure to pay, or failure to deposit penalties. The first time abate program is available to you the first time you are assessed one of these types of penalties on one return. However, you must also meet the following specific eligibility guidelines to receive an administrative waiver or first-time abatement:

  • You have filed all required returns or extensions for any returns that are currently due.
  • You have made payment arrangements for any currently do taxes or have paid them.

You will be considered current with your tax return filing if you have either filed all tax returns that are due or have filed extensions for them. You cannot have … Continue reading