Your tax information is private. After all, it contains sensitive information including your name, address, date of birth, and your Social Security Number (SSN). You should never share it with anyone, unless, of course, there's a very good reason to do so. By the same token, he Internal Revenue Service (IRS) isn't able to share that information with others either. The agency can only share it with a third party if you authorize it to do so. The authorization to share information and to allow someone else to deal with the IRS on your behalf is made on Form 2848: Power of Attorney and Declaration of Representative. Read on to understand what signing this form can and cannot do.
- Form 2848 gives a taxpayer's agent the authority to take certain actions on their behalf.
- Agents cannot negotiate refund checks or substitute other agents.
- The taxpayer must indicate the tax form and year for which they grant authority.
- Other required information includes the agent's name and other personal details, the preparer tax identification number, and the Centralized Authorization File.
What Does the Form Authorize?
Signing Form 2848 gives your agent—a certified public accountant (CPA), attorney, or other individual designated as your agent—the authority to take certain actions on your behalf. These include:
- Receiving confidential tax information
- Performing acts that you are able to do such as signing an agreement with the IRS regarding taxes on returns specified on Form 2848.
- Signing a tax return in limited situations. If you are suffering from a disease or injury or you are continually outside the U.S. for at least 60 days before the date that a return is required to be filed. In any other circumstance—you’re on vacation in the U.S. before and after your return has been prepared and must be filed—you must submit a request in writing to the IRS for permission for someone (e.g., the preparer) to sign your return.
The form is not a blanket grant of authority to do everything when it comes to your taxes on your behalf. For instance, your agent cannot:
If you want someone merely to see your tax information but don’t want to authorize him/her to represent you before the IRS (e.g., at an audit), you can sign Form 8821: Tax Information Authorization instead.
If you want someone to see your tax information but don’t want to authorize them to represent you before the IRS, sign Form 8821: Tax Information Authorization instead.
Completing the Form
In order for Form 2848 to be effective, you have to specify the tax form and year for which you are granting authority. This includes:
- The description of the matter (e.g., income taxes)
- The tax form number. For example, if you want to authorize your agent to deal with your standard tax return form with the IRS, you would denote Form 1040. Keep in mind that saying “all forms” is not sufficient.
- The year or period of applicability (e.g., 2014). Just like the form, saying “all years” or “all periods” is not sufficient.
You also have to provide information about your agent/representative:
- Name, address, telephone number, and fax number
- PTIN number, which is a preparer tax identification number that must be renewed by CPAs, attorneys, enrolled agents, and paid preparers annually.
- CAF number, or the Centralized Authorization File that the IRS uses to identity the representative. It is a nine-digit number assigned by the IRS the first time a third-party authorization such as Form 2848 is submitted. If this is your agent’s first designation as a representative, there won’t be any CAF number to enter.
You have to sign the form. If you filed jointly and each spouse wants to grant authority, each must file a separate Form 2848 to designate a representative. Although you may have filed jointly, this doesn't mean that you have to use the same representative.
Using a Substitute Power of Attorney
If you have your own, non-IRS power of attorney (POA) form that you’ve signed to give an agent various powers to act on your behalf, it can be used in lieu of Form 2848 under specific conditions. Remember, a POA is legal document that one agent the power to act on your behalf, and is generally used when someone is ill or disabled and can't otherwise take care of their own financial situation.
Your POA must:
- Authorize your agent to act in tax matters. If the POA is a blanket grant of authority, no specific grant of authority in tax matters is necessary, but the POA cannot restrict your agent’s actions in tax matters.
- Contains all the information required in the government’s form.
Alternatively, your agent, acting under your own power of attorney form, can sign Form 2848 on your behalf.
Revoking a Power of Attorney
There may come a time when you may want to change agents—like when you hire a new CPA because you aren’t happy with the representation of the CPA to whom you originally gave authority—you must complete a new Form 2848. Filing a form for a new agent automatically revokes a former POA as long as the previous agent is in the CAF system. This is why that number assigned to your agent is important.
Filing Form 2848 does not revoke authority to see tax information that you gave by filing Form 8821.
If you are merely adding a new POA and not revoking a former one, you must indicate this by checking the box on line 6 on Form 2848. Also attach a copy of the former Form 2848 with the new form.
The Bottom Line
If you want someone to interface with the IRS on your behalf, take the formal action needed to grant authority for this purpose. Complete Form 2848 and submit it to the IRS to the address noted in the form instructions.