Power of Attorney question re: procedure

Software. Marketing. Training. Running your business.
#1
Taxman  
Posts:
15
Joined:
10-Jul-2014 3:54pm
Location:
Georgia
Hi all,

I'm trying to get an idea of how you run your practices.

I have a client whose son decided to go to college so she needed a quick transcript sent to her. I generally do not get a Form 2848 on any clients except new clients. I generally do not fax those 2848's in unless I need to do research (ie the client can't find any previous returns or I sense something sketchy). However, because I didn't fax in the 2848 I don't have a good way to quickly get a transcript through e-services.

So do you all collect 2848's on your clients and pre-emptively fax them into the IRS as a preventative measure at the beginning of the season, needed or not?

I hate surprises and I hate sitting around for 3-5 business days while the IRS processes a last minute 2848.

Just looking for some ideas how to better manage this process and allow full use of e-services.

Thanks,
TM
 

#2
CathysTaxes  
Moderator
Posts:
3557
Joined:
21-Apr-2014 9:41am
Location:
Suburb of Chicago
It is now possible to get your own transcript online. Here's the link: http://www.irs.gov/Individuals/Get-Transcript
Cathy
CathysTaxes
 

#3
Posts:
3255
Joined:
9-Jun-2014 4:10pm
Location:
Coastal California
Taxman wrote:So do you all collect 2848's on your clients and pre-emptively fax them into the IRS as a preventative measure at the beginning of the season, needed or not?

I hate surprises

That's a mighty surprising question for someone who hates surprises. I can't guess what "preventative measure" refers to, but a POA should never be taken routinely. It has some rather serious legal implications for the representative.
 

#4
makbo  
Posts:
6840
Joined:
23-Apr-2014 3:44pm
Location:
In The Counting House
Form 8821 would be a better choice than 2848 if one wants to routinely have an authorization on file for each client. IRS would probably prefer it too. Of course, it's the IRS who created the OP's problem in the first place by shutting down online filing of POA's (they never did support full online functionality for Form 8821 AFAIK).

I've had at least one client have many problems getting his own transcript through the new IRS web site feature. Not everyone will be able to pass the identity screening info (similar to what you need to get your free annual credit report), and even then one doesn't always know exactly what menu choices to use to get the desired info. Some people really just want someone else (i.e. us) to handle it for them as a convenience.
 

#5
Taxman  
Posts:
15
Joined:
10-Jul-2014 3:54pm
Location:
Georgia
4Seasons wrote:
Taxman wrote:So do you all collect 2848's on your clients and pre-emptively fax them into the IRS as a preventative measure at the beginning of the season, needed or not?

I hate surprises

That's a mighty surprising question for someone who hates surprises. I can't guess what "preventative measure" refers to, but a POA should never be taken routinely. It has some rather serious legal implications for the representative.


Interesting, I have never had any issues with POA. What legal implications do you speak of?

I generally only get them if I have a new client come along who can't locate their records or if they seem evasive. It gives me the ability to pull their return transcripts, wage statement reporting to ensure I have everything that should be reported, etc.

I'm not aware of 2848 legal implications. Can you please explain?

Thanks
 

#6
Taxman  
Posts:
15
Joined:
10-Jul-2014 3:54pm
Location:
Georgia
CathysTaxes wrote:It is now possible to get your own transcript online. Here's the link: http://www.irs.gov/Individuals/Get-Transcript


Thanks Cathys, I gave her that option but she's not really all that computer literate. I was able to take care of her for this year's request and will just give her an extra return copy next year.
 

#7
Posts:
3255
Joined:
9-Jun-2014 4:10pm
Location:
Coastal California
Taxman wrote:I have never had any issues with POA

By definition, everyone has issues, though maybe not problems. A power of attorney establishes a legal duty to act in the client's interests, which are not known "at the beginning of the season." What if they conflict with another client's interests, or the practitioner's OWN interests? At that point even withdrawing from the POA might be legally problematic. It is a valuable tool when needed, but should never be taken casually.
Last edited by 4Seasons on 21-Aug-2014 4:19pm, edited 1 time in total.
 

#8
Taxman  
Posts:
15
Joined:
10-Jul-2014 3:54pm
Location:
Georgia
4Seasons wrote:
Taxman wrote:I have never had any issues with POA

By definition, everyone has issues, though maybe not problems. A power of attorney establishes a legal duty to act in the client's interests, which are not known "at the beginning of the season." What if they conflict with another client's interests, or the practitioner's OWN interests?. At that point even withdrawing from the POA might be legally problematic. It is a valuable tool when needed, but should never be taken casually.


Interesting, angles that I haven't ever really considered.

Do you have any citations or links to authoritative articles on the subject? I've had clients who I had to dump so if using the 2848 is opening me up to some liability, I will need to change my ways.

I don't do a lot of 2848's. I'll just use 8821's going forward.
 

#9
Frankly  
Moderator
Posts:
2454
Joined:
21-Apr-2014 9:08am
Location:
California
4Seasons wrote:A power of attorney establishes a legal duty to act in the client's interests, which are not known "at the beginning of the season." What if they conflict with another client's interests, or the practitioner's OWN interests? At that point even withdrawing from the POA might be legally problematic.
My understanding of 2848 POA is that it authorizes the practitioner to represent a client. It allows the practitioner to receive documents, perform actions on behalf of the TP including signing agreements and waivers, etc. 2848 does not obligate the practitioner to do anything.
RE 8821, that form is a limited subset of what is allowed by 2848, used by unenrolled individuals not permitted to have the powers granted by 2848. There would seem to be no benefit at all to using 8821 if 2848 is permitted.

Can someone elucidate to the contrary?
 

#10
Posts:
3255
Joined:
9-Jun-2014 4:10pm
Location:
Coastal California
Frankly wrote:perform actions on behalf of the TP

That's it, my friend. An attorney-in-fact is an AGENT of his principal. If he performs actions that are not on behalf of the taxpayer, something to the taxpayer's disadvantage, it may be a breach of the fiduciary duty. That can be serious, even if unintended such as unthinkingly when working on a different case. Form 8821 simply authorizes the release of information; Form 2848 creates an agency relationship.

Conceivably a failure to act could also be a violation of trust, or at least it could be a reason to try a lawsuit. Remember, if the IRS gets to your client, he isn't likely to blame himself.
 

#11
Taxman  
Posts:
15
Joined:
10-Jul-2014 3:54pm
Location:
Georgia
4Seasons wrote:
Frankly wrote:perform actions on behalf of the TP

That's it, my friend. An attorney-in-fact is an AGENT of his principal. If he performs actions that are not on behalf of the taxpayer, something to the taxpayer's disadvantage, it may be a breach of the fiduciary duty. That can be serious, even if unintended such as unthinkingly when working on a different case. Form 8821 simply authorizes the release of information; Form 2848 creates an agency relationship.

Conceivably a failure to act could also be a violation of trust, or at least it could be a reason to try a lawsuit. Remember, if the IRS gets to your client, he isn't likely to blame himself.


I, yeah, I'm having a bit of an issue making the leap that you are. I'm not saying you are incorrect, I just am wondering if this is an academic conversation or a real life situation that has bit some CPA or EA's. Do you have any examples of this being an issue in real-world situations?

I guess I could see a slight angle--based on where you are going with the argument--that if you engaged in some high level and serious client representation services, a client who obtains a negative result might sue you. Are you saying that the client would use the argument of 'I gave you a 2848 and you failed to do X and Y, so you breached the implied duty given by form 2848' ?

I guess that I don't see how a properly filled out 2848 limiting the CPA / EA's powers to disclosure could ever be used against them? If there was an action, it seems to me it would be based on failure to fulfill a piece of the engagement letter.
 

#12
Posts:
3255
Joined:
9-Jun-2014 4:10pm
Location:
Coastal California
Taxman wrote:a properly filled out 2848 limiting the CPA/EA's powers to disclosure

Form 8821 is for that, not something with "attorney" in the title. It's fine for a practice limited to tax preparation, but it ends where a CP2000 starts.

Of course my answer is academic--so was the question in the original post. But it isn't hard to find taxpayers blaming "reliance on a professional," and sometimes the IRS agrees. Then the IRS itself blames professionals, more and more these days, and sometimes the courts agree.

That's factual history; the trend for the future is worrisome. It isn't hard to find authoritative articles discussing this post-Enron attack on accountants, recommending comprehensive strategies for controlling exposure. Certainly engagement letters are essential. So are robust office workflow procedures for review and quality control. A good research subscription. Appropriate insurance. Careful application of powers of attorney. All in a day's work.
 

#13
Frankly  
Moderator
Posts:
2454
Joined:
21-Apr-2014 9:08am
Location:
California
4Seasons wrote:Of course my answer is academic--so was the question in the original post. But it isn't hard to find taxpayers blaming "reliance on a professional," and sometimes the IRS agrees. Then the IRS itself blames professionals, more and more these days, and sometimes the courts agree.

I'd agree that if the professional makes some egregious error that he should be blamed and held accountable. The 2848 didn't cause the problem; it's what the practitioner did that is the problem. The 2848 is just a ticket one presents to IRS to be allowed to get involved. The mere existence of a 2848 causes no problem.
Of course one could choose to never do any rep work and never get involved in any dicey situations and then no 2848 would be needed.
 

#14
Posts:
3255
Joined:
9-Jun-2014 4:10pm
Location:
Coastal California
Frankly wrote:Of course one could choose to never do any rep work and never get involved in any dicey situations and then no 2848 would be needed.

The question--the only question--was,
"So do you all collect 2848's on your clients and pre-emptively fax them into the IRS as a preventative measure at the beginning of the season, needed or not?"

I gave my answer, including the rationale for my answer. Now if someone else has a different answer to that particular question, perhaps the discussion can continue.
 

#15
Posts:
13
Joined:
17-Sep-2014 4:58pm
Location:
Kalapana, HI
I use 2848's prn, only as needed. Now I'm working on "turning off" those that are no longer needed. I read references to potential problems (on TA?) that clients can say "I didn't do anything about the notices because I know my POA got them and thought he'd take care of whatever needed taken care of - or he would have at least let me know that I needed to do something; so what if we haven't spoken in two years! Taking care of my tax stuff is what I used to pay him for!"

In the past I've had success with calling the IRS with client on 3-way to give permission then ask to be excused (this is scary and rare because no matter how much coaching they've had, they get scared and start blabbing away - even though I've explained to them that cops close cases, not because they are so smart, but because criminals can't keep their traps shut). But that takes care of the permission and I can rec'v account info, via fax, in minutes. It has also worked to fax the POA directly to the person with whom I'm speaking, they keep me on hold for ten minutes while getting coffee and using the bathroom I suppose, I guess it works for them activity-wise because they are helping a customer. Otherwise I usually just warn clients that it might be a week before it gets on the IRS's system and counsel patience.
 


Return to Business Operations and Development



Who is online

Users browsing this forum: TheAnswerMan and 31 guests