As a federally authorized practitioner, you have the right to represent taxpayers before the Internal Revenue Service. You also have an option that you may be failing to exercise when seeking information from the Internal Revenue Service. Form 8821 allows you to secure the same information from the IRS that you typically obtain with a form 2848, Power of Attorney. The form 8821 does not permit representation of the taxpayer before the IRS. It also represents a lower commitment to the client, which may be advisable until you have a complete picture of the prospective client’s tax situation.
Tax problem resolution practitioners have the luxury of deciding on cases to accept, refuse, or refer. Consider not elevating the relationship to the level inherent in the Power of Attorney until you are armed with complete information and have the prospective clients’ agreement to your terms of engagement, including payment for your services.
Filing the Power of Attorney permits a reasonable person to believe you have accepted the responsibility for representation of the taxpayer in question. Whereas, the Tax Information Authorization form 8821 obviously indicates you are simply gathering data. When you decline the engagement after filing the Power of Attorney, you would be well advised to then withdraw the Power of Attorney. The filing of the 8821 would not need to be withdrawn to eliminate any obligation to the taxpayer.
Even when you agree become engaged for services by a client, you likely do not view it as a lifetime commitment. But, do you establish the end of your affiliation by withdrawing the Power of Attorney once the agreed services are completed? You may have moved on to the next case and believe there is no need to spend time withdrawing your Power of Attorney, the case is done .and the client is happy. At least until he gets into tax trouble again.
Your former client stops making the payments on a favorable Installment Agreement or blows his great Offer in Compromise that you negotiated for him last year. As expected the IRS recommences enforced collection. Copies of the notices arrive at your office and you simply put them in his file believing that if he needs your help again, he will call.
Instead, after 6 months you get a summons to court because he has filed suit against you for not taking action on the notices you received. He claims his wages were levied, his savings confiscated, and a host of other problems. It’s all your fault for not acting on the notices. Sure, he’s an idiot and will likely lose his case, but do you need to spend your time defending yourself? Worse yet, what if a judge says he’s right, you had the POWER to represent him? Wrong? Yes. Want to deal with it? Me either.
If you have a whole bunch of old POAs sitting out there on the IRS computer, it’s an easy task to reduce your exposure to unfair assertions that you have any life-long responsibility for those past tax problem clients. Submit a FOIA request to the IRS Disclosure Manager with your identifying information and the Disclosure Manager will respond with a list of the Powers of Attorney listed under your CAF (Central Authorization File) number.
The information required to file the FOIA request and a sample letter is found at the following IRS web address: www.irs.gov/uac/freedom-of-information-act-foia-guidelines. Typically, there will be no charge for your list. However, IRS may charge .20 per page if your list exceeds 100 pages or requires more than 2 hours of time to prepare. You may request the information on a CD as well as a printed list. If you are contemplating mailing to the listed names, that may be of use. Otherwise, a CD will be not needed as the printed list can be used to advise IRS of which POAs you wish to revoke.
Consider sending a letter to those past clients whose Power of Attorney is being revoked advising them that this is a routine procedure for closing cases and the that you will be archiving their file. Include a request for a testimonial and a referral should they know anyone with a tax problem, and that you are available to service them again in the future should they contact you – obviously, you only make that offer to a client you would be willing to work with again. There are some you may not want back. Go forth and multiply (your income, that is.)
By: Lawrence Lawler, CPA, EA, CTRS
