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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Big Mistakes Tax Pros Make – Not time blocking and meeting with clients at all hours

Big Mistakes Tax Pros Make – Not time blocking and meeting with clients at all hours

If you are a tax pro like me, I know you are real busy. So busy in fact, that you barely find the time to do things you really enjoy.

That is why it was an easy way to buy back my time by using time blocking.

What is this? Well, it entails putting events, projects and meetings in a group (as best as you can). For example, you book a client on Tuesday at 10am, then try to get your next client to book at 11am (or 10:30am if it was only a 30 minute appointment).

So, now you ask, “How do I get my client to come in at 11am?” The same way your doctor or dentist gets you to come in at a certain day/time. You tell them that is your only availability for the next two weeks.

The other aspect of this is don’t let your clients have a wide range of choices.  “Hey Joe, I am available all afternoon until 7pm!” Make the appointment times convenient to YOU, not them. I only meet with clients from 10am to 4pm on Tuesday and Thursdays and only 1pm to 4pm on Wednesdays. Yes, that’s right, I do not meet with clients before 10am or after 4pm and not at all on Monday, Friday or the weekends. Have you ever made an appointment with a client at 6pm on a Wednesday night and they did not show up or were 30 minutes late? This makes you home later as well. Nothing more frustrating that this. Well, maybe a client not paying me!

I hear it all the time, “But clients will go somewhere else!” That may happen, but I want to work with people who will work on my schedule, my terms.  By the way, I have been doing this for about 6-7 years and this rarely comes up as an objection. Do I make an exception? Yes, occasionally, but only if they are a referral from a good client (and I mean GOOD client) or good referral source.

By doing this, I can focus more time on practice management, marketing and/or technical work (tax prep/review, tax planning, IRS representation cases).

I suggest you give it a try. When I started doing this, this is when I realized I was the one that was in control … Continue reading

Big Mistakes Tax Pros Make – Not increasing your fees

Big Mistakes Tax Pros Make – Not increasing your fees

It boggles my mind that this is something that needs to be said to Tax Pros, but you should be increasing your fees (on all of your services) every year at least 3-5%.

Some tax practitioners are still using the same fee structure for the last 10-15 years. Why? I don’t know. It’s not like your costs don’t increase every year!

Your employees want raises. That wonderful tax program you use increases every year. CPE and the other tools and resources you use increase every year. Why don’t you increase your fees every year?

You had the best excuse in the world to increase your fees 5-10%. What is that? Inflation in 2021 and 2022 was pretty crazy!  Please make sure you take a look at all of your fees and let your staff (and clients) know what the new fees will be.

Of course, when I say increase your fees, I am talking about raising your base rates as well as the rates you charge to your existing clients. So, if you were charging a client $200 for their tax return last year, then the fee for this coming year should be between $210-220. But your base fee should increase to $250 if you were previously charging $200. This now becomes the rate for new clients who walk in the door.

Trust me, you will thank me later when your bank account is much bigger than it used to be.

Remember, now is the time to get started learning about adding Tax Resolution representation to your list of services. It is a natural fit to the work you already do if you are a tax preparer.

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Dan Henn, CPA, CTR™, NTPI Fellow
Managing Member
Tax Pro Academy, LLC… Continue reading