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.
- 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.
- 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.
- 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 issue with another prior year and that is all they tell me (technically they aren’t supposed to tell me that due to confidentiality rules).
When it comes to the other side of the equation, I generally put the next 3 years from the current year. So, if we are in 2024, I will put to 2027. You can put additional years there, but the IRS is only allowed to put in the next 3 years into the system.
Oh, one other tip, please make sure that the client reviews/verifies their name (including spelling), mailing address, and SSN. It will only delay things if one of these things is incorrect. Also, and this one is VERY important, make sure that you and your client, sign in the appropriate spot (and put their title, if applicable) and that you both have dated in the correct space.
Want to know more? Come check out our EventBrite page and look for our 2 hour course CTR 105 – Third Party Authorizations. We discuss the various types of ways to get information and spend almost an hour on the proper way to prepare Form 2848.
Dan Henn, CPA, CTR™, NTPI Fellow
Tax Pro Academy, LLC