How Does IRS Power of Attorney Work?

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Learn everything you need to know about how, when, and why you should appoint a professional as your IRS power of attorney. 

Having tax debt or facing any other issues with the IRS is stressful enough. But when trying to negotiate, discuss, or otherwise try to resolve it with the IRS alone, that stress and anxiety can quickly escalate.  

Butalthough you have the right to represent yourself in front of the IRS, you also don’t have to

Instead, you can authorize a professional tax expert to act on your behalf, and leave all the intimidating negotiations and communications to them. 

This authorization is called power of attorney (POA), and it’s one of the first things we do at Tax Relief Helpers when working with a new client. 

Not only does POA mean we can examine everything that the IRS knows about you to give you the best advice and build your optimal tax case, but it also means we can handle absolutely everything with the IRS directly on your behalf… 

…taking all the stress and pressure off your shoulders, while also getting you the best possible result. 

Keep reading to find out more about what POA means and how the IRS power of attorney works. Or, if you have issues with the IRS that you need help with, get in touch to find out how we can help you.  

​​What is a power of attorney?

A power of attorney (POA) is a legal document that gives a specified person (known as the “agent”) the authorization and power to act on behalf of someone else (known as the “principle”). 

The purpose of a POA is to be able to appoint someone you trust to make decisions and take actions on your behalf – either in situations where you may be unable to do so yourself due to illness, incapacity, or absence, or where you need the help of an expert in their field. 

You’ve probably heard of people appointing close family members as their power of attorney to make broad medical or financial decisions on their behalf. However, that is just one type of POA. 

There are several other types of power of attorney, which usually serve very specific purposes and are more suited to a professional acting as your POA agent. 

IRS Form 2848: Power of Attorney and Declaration of Representative is one such type of POA, and it is limited exclusively to IRS matters.

An IRS power of attorney enables an authorized individual or organization, such as Tax Relief Helpers, to represent you in front of the IRS. This is both useful and necessary if you want a professional tax expert to help with things such as: 

And more.

Different types of power of attorney

Power of attorney documents are usually specific to either medical or financial purposes. 

When it comes to financial POAs, there are four main types:

  1. General Power of Attorney: This authorizes the designated agent to handle almost all types of financial and legal decisions on behalf of the principal. It is usually only valid while the principal is of sound mind and not incapacitated. This type of POA often assigns a friend or family member as the agent. 
  1. Durable Power of Attorney: This is similar to the general POA, but is pre-defined to also remain effective if or when the principal becomes incapacitated.
  1. Springing Power of Attorney: This type only becomes effective under certain conditions. It “springs” into effect upon the occurrence of a specified event, which is usually when the principal becomes incapacitated.
  1. Limited Power of Attorney: This type of POA only grants authority for the agent to perform specific transactions or activities, and is usually only valid while the principal is not incapacitated. The agent is more likely to be a professional in this type of POA. IRS Form 2848 is an example of a limited POA. 

What does Form 2848 authorize?

Signing IRS power of attorney, also known as Form 2848, allows you to authorize an individual or company to represent you in front of the IRS and take certain actions on your behalf. 

These actions include:

  • Interacting and negotiating with the IRS on your behalf.
  • Receiving and inspecting your otherwise confidential tax information. 
  • Receiving and responding to your IRS communications.
  • Representing you in discussions, meetings, and hearings with the IRS.

However, Form 2848 does not grant your designated representative authority to do everything relating to your taxes

For example, unless you specifically state otherwise as part of the application, your POA agent cannot: 

  • Endorse or negotiate a refund check, or direct a refund to be deposited into the agent’s account.
  • Substitute or add another agent without your specific authorization.
  • Request for the disclosure of tax returns or return information to a third party.

It’s also important to note that signing Form 2848 power of attorney does not relieve or indemnify you, the taxpayer, of any tax liability. 

What is the difference between Form 2848 and Form 8821? 

IRS Forms 2848 and 8821 are often confused as they both authorize third-party access to your confidential tax information. However, that is where the similarities end. 

Form 8821, Tax Information Authorization authorizes an individual or organization to access and view your confidential tax information, but NOT to represent you before the IRS or communicate with the IRS on your behalf. 

Form 2848 Power of Attorney and Declaration of Representative authorizes an individual or organization to access and view your confidential information AND to represent you before the IRS. 

How does IRS power of attorney work

To appoint someone as your IRS power of attorney, you need to complete and submit Form 2848 and authorize it with your signature. 

Here’s how it works: 

Who you can authorize

Only individuals or organizations that are authorized to practice before the IRS are eligible to be your power of attorney agent. Authorized entities include attorneys, certified public accountants (CPAs), and enrolled agents

Scope of authority

Form 2848 requires you to specify the exact scope of authority you are granting your POA. This includes the type of tax matters (such as individual income tax, business tax, estate tax, etc) and the specific tax year(s) or period(s) it is to be valid for. This can include past and future years. You can also choose whether or not you want your representative to receive copies of all notices and communications sent to you by the IRS. 

Limitations and exclusions 

You also have the option to limit or exclude certain powers, such as the authority to sign a tax return on your behalf, to disclose your returns to a third party, or to substitute or add another representative. 

Signatures and filing with the IRS

Once completed and signed by both parties, Form 2848 is filed with the IRS and the representative listed then has the authority to act on your behalf for the specified tax matters – but nothing more.

Revoking or changing your power of attorney 

Your IRS power of attorney will stay in effect until you revoke the authorization or change your appointed agent, or if your representative withdraws it. 

There are two ways to revoke a POA: 

  • Send a revocation to the IRS. The instructions for Form 2848 explain how to do this. 
  • Submit a new Form 2848 authorizing a new representative for the same tax matters and years/periods. A new authorization automatically revokes any prior one. 

At Tax Relief Helpers, we will always discuss this with you so you understand when it is beneficial to leave a POA in place or to revoke it. Once we have completed your case and no longer need power of attorney, we will withdraw it ourselves as part of our case closure. 

Using a Non-IRS POA for IRS tax matters

If you have another, non-IRS power of attorney agreement already in place, the IRS may accept this in place of a Form 2848 so long as the document satisfies the IRS’s requirements for a power of attorney. 

Specifically, it must: 

  • Not explicitly restrict your agent from handling your federal tax matters. 
  • Contain all the information required in the IRS’s Form 2848, including the types(s) of tax and tax periods for which the POA is needed. 

Alternatively, your appointed power of attorney can sign Form 2848 on your behalf, acting under that separate POA agreement to appoint another agent to handle the necessary federal tax matters.

Appointing a POA is the best way to resolve your IRS tax debts

If you have federal tax debt that you cannot afford to pay or other concerns with the IRS, the best way to resolve it is with the help of experienced tax professionals. 

While you have the option of representing yourself in front of the IRS, the federal tax system is renowned for being extremely complex, and when you are facing big debts and heavy fines, it can quickly become intimidating. 

Appointing a tax professional as your power of attorney can take all that stress off your plate.
Here at Tax Relief Helpers we have a highly experienced and qualified team of over 100 tax experts – including tax attorneys, enrolled agents, and CPAs – who understand the system inside and out, know the best options for resolving your tax debt issues, and know exactly how to handle the negotiations with the IRS in order to get the best outcomes.

Schedule your free consultation today, and find out how we could help you

If you decide to work with us, the first thing we’ll do is file Form 2848 to establish power of attorney, so that we can immediately get to work on examining everything the IRS knows about you, building your optimal tax case, and handling all discussions and negotiations with the IRS directly, on your behalf. 

Don’t suffer the stress of owing money to the IRS in silence. Contact us today, and let us help you.