For which situations does a TPA get a Form 2848 to represent a taxpayer before the IRS?

[Peter Gulia]

For which situations does a TPA get a Form 2848 to represent a taxpayer before the Internal Revenue Service?

[ESOP Guy]

As a former IRS agent I was told only two things could get you fired:

1)  Blowing a statute of limitations

2)  Unauthorized release of taxpayer information.

Because of #2 we were taught you don't talk to anyone other then the taxpayer or a person with a valid Form 2848.  You want to talk to the IRS about a client's issues without the taxpayer being there you better have a Form 2848.  I have even called to get an EIN for a client and have had to fax them a Form 2848.  (I was prepared and had it ready to be faxed when asked.) 

[RatherBeGolfing]

Short answer, whenever I need one 

Seriously though, I get a 2848 signed whenever I need to deal with the IRS because the assumption is that if it involves ANY information specific to the client, the IRS will (or is supposed to) require the 2848.  

 

[Peter Gulia]

Thanks.

Is there any situation beyond examination?

[RatherBeGolfing]

Yes.  I get one if the client gets a notice from the IRS that MAY require me to speak to the IRS to clear up a matter or clarify why the IRS sent the notice.  A simple response to a notice can be done without the POA but I get one as soon as I start working on whatever the issue is.  This way, I have it if and when I need it.

Better to have it and not need it than need it and not have it 

[Belgarath]

Hi Peter - I'm not sure what you mean by "beyond" examination. For example, I always get one when submitting a VCP filing, so the IRS will talk to me if questions.

[Peter Gulia]

Thank you for the further information.  Here’s why I'm asking.

 

The “Circular 230” rules apply to practice before the IRS.  The definitions section states:

 

Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service.  Such presentations include, but are not limited to, preparing documents; filing documents; corresponding and communicating with the Internal Revenue Service; rendering written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings, and meetings.

 

If one sets aside the bit about written advice, a TPA who doesn’t write or speak as a taxpayer’s representative concerning an examination or a correction procedure might not “practice” before the IRS, and so might not be governed by its conduct rules.

 

Do you agree?

 

Is there an idea I’m missing?

 

 

[My 2 cents]

26 minutes ago, Fiduciary Guidance Counsel said:

Thank you for the further information.  Here’s why I'm asking.

 

The “Circular 230” rules apply to practice before the IRS.  The definitions section states:

 

Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service.  Such presentations include, but are not limited to, preparing documents; filing documents; corresponding and communicating with the Internal Revenue Service; rendering written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings, and meetings.

 

If one sets aside the bit about written advice, a TPA who doesn’t write or speak as a taxpayer’s representative concerning an examination or a correction procedure might not “practice” before the IRS, and so might not be governed by its conduct rules.

 

Do you agree?

 

Is there an idea I’m missing?

 

 

If you are not the taxpayer and the taxpayer has not submitted a 2848, the IRS flat out will not talk to you.  Or at least that is what is supposed to happen. 

I am not sure whether or not one must, as a prerequisite, also be authorized to practice before the IRS to be designated on a Form 2848.  But no 2848, don't even try to discuss things with the IRS, even to provide requested information.

[Bill Presson]

Everyone seems to be focusing on getting a 2848 to allow the IRS to speak with someone. But Peter seems to be asking whether a TPA is governed by Circular 230.

" If one sets aside the bit about written advice, a TPA who doesn’t write or speak as a taxpayer’s representative concerning an examination or a correction procedure might not “practice” before the IRS, and so might not be governed by its conduct rules."

Peter, can you be more specific as to why you're concerned about this and how that involves a 2848?

 

[RatherBeGolfing]

31 minutes ago, Bill Presson said:

Everyone seems to be focusing on getting a 2848 to allow the IRS to speak with someone. But Peter seems to be asking whether a TPA is governed by Circular 230.

" If one sets aside the bit about written advice, a TPA who doesn’t write or speak as a taxpayer’s representative concerning an examination or a correction procedure might not “practice” before the IRS, and so might not be governed by its conduct rules."

Peter, can you be more specific as to why you're concerned about this and how that involves a 2848?

 

Well the original question was " For which situations does a TPA get a Form 2848 to represent a taxpayer before the Internal Revenue Service?"  That is probably why everyone is focused on the 2848 

The new question seems to be:  If you are not representing a client before the IRS (presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service), and you are not rendering written advice to the client, is it still practice governed by 230?

I think I will use the old law school answer of "it depends".  There is that little qualifier in the definition 

Quote

Such presentations include, but are not limited to

If you are subject to 230 and part of your practice is something that does not neatly fit the definition, could those actions still be practice under 230?  I think so.  Is it possible that they are not?  Yes.  

 

[ESOP Guy]

2 hours ago, Fiduciary Guidance Counsel said:

Thank you for the further information.  Here’s why I'm asking.

 

The “Circular 230” rules apply to practice before the IRS.  The definitions section states:

 

Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service.  Such presentations include, but are not limited to, preparing documents; filing documents; corresponding and communicating with the Internal Revenue Service; rendering written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings, and meetings.

 

If one sets aside the bit about written advice, a TPA who doesn’t write or speak as a taxpayer’s representative concerning an examination or a correction procedure might not “practice” before the IRS, and so might not be governed by its conduct rules.

 

Do you agree?

 

Is there an idea I’m missing?

 

 

I have always understood this is rather broad.  For example it says:

Such presentations include, but are not limited to, preparing documents; filing documents; corresponding and communicating with the Internal Revenue Service;

If a TPA prepares an 8955-SSA for a client you just prepared a document (they will most likely file it also).  I don't know a TPA that doesn't prepare the 8955-SSA for their clients.  They are governed by Circular 230.  It has been a long time since I have been part of discussion if just doing a working paper the client uses to prepare an 8955-SSA counts but at that point I don't see the point of just not following the rules. 

I also quote:

or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings, and meetings.

Isn't helping a client determine a maximum PS contributions giving "advice with respect..(a) transaction...(has) a potential for tax avoidance..."

Circular 230 isn't that hard to comply with it is mostly common sense and if you are an attorney, CPA, enrolled actuary.... it seems like your professional ethics are going to cover it. 

So to more directly answer your questions I think you are missing something.  As shown above I am hard pressed to see how a TPA isn't practicing before the IRS once they start filling out forms that are filed to the IRS. 

It has been a long time since I have had discussions of this topic with experts.  I know plenty of TPA's that don't do the little Circular 230 messages at the bottom of their e-mails like maybe they should (I forget if they are required also)  but when push comes to shove I don't see how they aren't covered by it. 

 

[Peter Gulia]

Thanks, everyone, for the further help.  And you’re right that I asked a fact question about a TPA’s work to get information for thinking about how much (or how little) the Treasury department’s rule regulates a TPA’s conduct.

 

31 U.S.C. § 330(a)(1) grants the Secretary of the Treasury power only to “regulate the practice of representatives of persons before the Department of the Treasury[.]”

 

The United States Court of Appeals held that preparing tax returns is not practice before the Internal Revenue Service, and that the Treasury department lacks power to regulate a preparer who does not appear before the IRS as a taxpayer’s representative.  Loving v. Internal Revenue Service, 742 F.3d 1013 (D.C. Cir. 2014).  In another case, that court held that 31 C.F.R. § 10.27(b) exceeds the Treasury department’s powers as applied to a person who – even if he or she is an attorney-at-law or certified public accountant the IRS recognized as a practitioner in another matter – is not engaged in a representation about the return or claim for which his or her client agreed to a contingent fee.  Ridgely v. Lew, 55 F. Supp.3d 89, 93 (D.C. Cir. 2014).  In both cases, the government did not pursue review in the Supreme Court.

 

https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2012cv0565-48

 

Further, the reasoning of these decisions calls into question whether the Treasury department has power to regulate advice-giving that is unconnected to a written submission (other than a tax return) to the IRS.  I won’t get into that analysis.  But if you want to read some background, one of my LL.M students published a law-review article.  Jamie P. Hopkins, Loving v. IRS: The IRS’s Achilles’ Heel for Regulated Tax Advice?, 34 Va. Tax Rev. 191 (Fall 2014).

 

Why did I ask about how often a TPA gets a Form 2848?  The court decisions look to the filing of a Form 2848 as the signal that a practitioner represents a taxpayer, and that practice before the IRS has begun.

 

If, much of the time, a TPA’s work involves no submission (beyond a tax return or information report) to the Internal Revenue Service, for many TPAs the Circular 230 rules might not apply.

 

I’m interested in the topic because, in my experience, many TPAs self-impose professional-conduct standards considerably higher than public law imposes.

 

Again, thank you for indulging my research interest and helping me with useful information.

[My 2 cents]

I forget - in what way does completing a Form 8955-SSA constitute work subject to Circular 230?  It is not a tax document.  It is an information document prepared for the Social Security Administration.  5500 filings are not tax documents either.  Preparation of either form should not be construed as providing tax advice.  Or am I missing something?

[ESOP Guy]

It doesn't say tax document is says document so why wouldn't it cover even an informational document?

I had forgotten about that court case Peter mentions.   That was a big case as the IRS was trying to mandate minimum education requirements and other things on anyone who prepared 1040s for pay and they basically lost.  It was a big deal as the IRS' rules were nicknamed by its critics as the H&R Block full employment rules.  They were seen as making it very hard for a small tax prep outfit from meeting them but someone like H&R Block that has the size to do in-house classes could.

Based on Peter's discussion I am willing to be told I am wrong. I was gong off memory from my IRS days and we were trained in the '80s that Circular 230 was very broad.  I know they would have taken the position even an informational return was a filing that counted.  Maybe they were just teaching me their biased take.

I stand by my take that following Circular 230 just isn't that hard to do and in many ways represents good practices. 

[Peter Gulia]

Even if one might interpret widely the word "document" as used in the administrative-law rule's definition of practice before the IRS, the Secretary of the Treasury lacks power to apply the rule if it exceeds the power Congress granted.

The court says there is no practice as a representative until a matter is a dispute, examination, ruling request, closing-agreement request (including the correction procedures), or something else that calls for a submission beyond a tax return or routine report.

I concur with the idea that following Circular 230 usually is not too burdensome, and often helps the advisor or service provider.  And many TPAs self-impose higher standards.

[SSRRS]

Based on the above, if a PS Plan is being audited by the IRS can a TPA, with no credentials such as enrolled agent etc., still be listed by the client on the 2848, as the one that will send the IRS agent the requested information and correspond with the agent during the audit, or must the TPA have some credentials to be allowed to be the POA? Thank you.

[C. B. Zeller]

There is an option on the 2848 for "unenrolled return preparer." Use that option and note that you prepared the Form 5500 under examination.

[SSRRS]

8 hours ago, C. B. Zeller said:

There is an option on the 2848 for "unenrolled return preparer." Use that option and note that you prepared the Form 5500 under examination.

C.B. Zeller. thank you very much for your help.  The instructions for the 2848 state that to sign as an unenrolled return preparer you must have a  valid Annual Filing Season Program Record of Completion for the year or years in which the representation occurs. Does this apply for a preparer of form 5500?

[C. B. Zeller]

I was by an IRS agent a couple of years ago that the annual filing season requirement didn't apply as long as it was only the Form 5500 that was in question. You might want to call the IRS agent and make sure they are ok with it and ask how exactly they want you to complete the 2848.