Third-Party Authorizations for IRS Representation
As a business owner, it’s crucial to have a good grasp of the different types of authorizations for third-party representatives when dealing with the IRS. Whether you’re enlisting the help of a tax professional or designating a trusted individual, knowing the ins and outs of these authorizations can make navigating tax matters smoother. In this article, we’ll break down the key types of authorizations and how to revoke them if necessary.
1. Power of Attorney
A Power of Attorney (POA) allows someone to represent you in tax matters before the IRS. It’s essential to note that the representative must be an individual authorized to practice before the IRS. This authorization grants them the ability to act on your behalf when dealing with the IRS regarding your taxes.
2. Tax Information Authorization
The Tax Information Authorization (TIA) appoints a person to review or receive your confidential tax information for a specified period. It’s useful when you want someone to have access to your tax-related data without representing you before the IRS.
3. Third-Party Designee
A Third-Party Designee designation allows you to specify a person on your tax form who can discuss a particular tax return and tax year with the IRS. This is particularly helpful when you need someone to handle specific tax-related discussions on your behalf.
4. Oral Disclosure
Oral Disclosure authorization grants the IRS permission to disclose your tax information to a person you bring into a phone call or meeting with the IRS about a specific tax issue. This authorization can expire at the end of the conversation or be granted for a longer duration if needed.
Revoking a Third-Party Authorization
You have the right to revoke any third-party authorization at any time. The process for revocation varies depending on the type of authorization:
1. Authorize a New Representative: If you decide to appoint a new representative for the same tax matters and periods/years, the new authorization will automatically revoke the prior one unless you choose to retain the previous representative by indicating your preference on the necessary forms.
2. Send a Revocation to the IRS: To formally revoke an authorization, follow the instructions provided in the appropriate IRS forms. For Power of Attorney, use Form 2848, “Power of Attorney and Declaration of Representative.” For Tax Information Authorizations, follow the revocation instructions for Form 8821, “Tax Information Authorization.”
Remember, even with an authorized third party representing you, as a business owner, you remain ultimately responsible for meeting your tax obligations.
Low-Income Representation
In addition to understanding third-party authorizations, it’s worth noting that Low-Income Taxpayer Clinics (LITCs) are available to individuals with income below a certain level who need help resolving tax problems with the IRS. LITCs are independent of the IRS and the Taxpayer Advocate Service and can represent taxpayers in audits, appeals, tax collection disputes, and even court proceedings. They also provide information about taxpayer rights and responsibilities in various languages, and their services are either free or may involve a small fee.
In conclusion, as a business owner, comprehending the different types of authorizations for third-party representation can be invaluable when navigating IRS matters. Whether you’re seeking professional tax assistance or designating a trusted individual, these authorizations ensure that your interests are well-represented. Additionally, if you fall within the low-income category, don’t forget to explore the services offered by Low-Income Taxpayer Clinics to help you navigate tax-related challenges.
If you’d like to discuss a strategy for your small business and help you on your tax, Book your consultation with us today!
