IRS online tools for tax practitioners

Editor: Rochelle Hodes, J.D., LL.M.

Congress enacted the Inflation Reduction Act of 2022, P.L. 117-169, in August 2022, providing the IRS additional funding of $80 billion over the next 10 years. In April 2023, the IRS issued the Inflation Reduction Act Strategic Operating Plan specifying five main objectives. One of the objectives is to deliver cutting-edge technology, data, and analytics to be able to operate more effectively and improve customer service. In the past two years, the IRS has added a number of online services currently available to taxpayers and tax practitioners. Although Congress has rescinded approximately $1.4 billion of the Inflation Reduction Act’s funding (in the Fiscal Responsibility Act of 2023, P.L. 118-5) and House and Senate leaders have agreed to rescind $20 billion more in fiscal 2024, the IRS remains committed to expanding its suite of online portals and tools for taxpayers and tax practitioners. This column provides an overview of the online services available to tax practitioners.

General online tools

To access IRS online tools, tax practitioners are first required to verify their identity through a third-party identity verification service, ID.me, which the IRS uses to verify the identity of the users of its various online platforms. ID.me provides one username and password to verify the identity of, and grant access to, a user logging in to an IRS online tool or service. Anyone with an existing ID.me account for accessing services through certain other government agencies such as the Social Security Administration can sign in with their existing credentials.

Once identification is established through ID.me, tax practitioners can upload a fully executed third-party authorization form (Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization) to the Centralized Authorization File (CAF) online instead of relying on fax or mail. Alternatively, the practitioner can remotely obtain signatures from individual clients and submit Form 2848 and other authorization forms electronically via the practitioner’s Tax Pro Account, which is discussed in more detail below.

Tax Pro Account features

The IRS’s Tax Pro Account function has improved capabilities that allow tax practitioners to access new online products. To establish a Tax Pro Account, a practitioner must have a CAF number in good standing. The improved Tax Pro Account allows tax professionals to do the following:

Link the tax practitioner’s Tax Pro Account with the CAF number so practitioners can manage and view the taxpayer’s information;

• View a taxpayer’s tax account information, including balances due for individual taxpayers;
• View and withdraw active authorizations on file with the CAF Unit; and
• Access the practitioner’s secure mailbox. A secure mailbox is used by IRS Practitioner Priority telephone line employees to download various tax account or tax return transcripts when requested over the phone. The IRS generally stopped faxing the transcripts in 2019.

As mentioned earlier, tax practitioners can now digitally execute authorizations with respect to individual taxpayers if the taxpayer creates an online account with the IRS. Tax practitioners can submit an authorization request to the taxpayer’s online account, and the taxpayer can then review, approve, and sign the request electronically. Additionally, practitioners can now access the Transcript Delivery System (TDS) without separately logging in to IRS e-Services. TDS allows authorized tax practitioners to access the taxpayer’s account and tax return transcripts, wage and income documents, and record of account, as well as provides verification of nonfiling letters. In order to use TDS, a practitioner must already have a properly executed Form 2848 or Form 8821 on file with the CAF Unit.

Secure Messaging options

Secure Messaging functions similarly to a web-based email service and allows authorized tax practitioners and taxpayers to communicate directly with Large Business and International Division (LB&I) representatives. With Secure Messaging, taxpayers can correspond with LB&I representatives, submit documentation requested during examination, and receive information from the IRS quickly and securely. The Secure Messaging platform is available to tax practitioners after signing the memorandum of understanding with the IRS examiner and completing the authentication process. The tool is generally user-friendly, appears to have a large file size capacity for attachments, and provides timely email notifications when there is a response in the secure mailbox. The IRS Office of Appeals also offers a similar Secure Messaging function once a case is in Appeals’ jurisdiction.

IRS Document Upload Tool

Another resource available to taxpayers is the IRS Document Upload Tool (DUT), which allows them to respond to all IRS notices electronically. DUT launched in February 2023 with respect to nine specific IRS notices but now has been expanded to all notices. DUT operates as a digital mailroom, sorting and routing the uploaded documents to the appropriate location. Taxpayers will receive confirmation of an upload, but it is important to note that the confirmations currently cannot serve as legal confirmation of delivery or receipt. Practitioners, therefore, should still consider sending in written correspondence via certified mail for any responses that require proof of submission by a certain deadline.

DUT allows taxpayers to respond to various IRS notices. Some notices appear to be flagged to produce an error message notifying the user that a response to the notice cannot be submitted using the upload tool. When a taxpayer selects the notice to which they wish to respond, the system may erroneously reject the taxpayer’s submission with a note stating that the notice does not require the taxpayer’s response. To avoid receiving this erroneous rejection, the taxpayer should scroll to the bottom of the notice list and select “other.” Selecting “other” allows the taxpayer to submit a response to any notice.

DUT may also be used over the phone with certain, but not all, IRS hotline representatives. Once the caller obtains an access code from the IRS representative, the tool may be used to transmit documents directly to a representative while on a call.

More to come

The ability to use these online services is helpful to tax practitioners and their clients to determine what issues may exist, as well as to timely and efficiently respond to IRS notices and other communications. Tax practitioners should continue to monitor the IRS’s online services as they continue to be expanded. More are expected to be offered in the near future.

Contributors

Matt Cooper, J.D., is a managing director in tax controversy services with Deloitte Tax LLP in Washington, D.C. Alina Solodchikova, J.D., LL.M., is a principal and leader of the tax controversy practice of RSM US LLP in Washington, D.C. Rochelle Hodes, J.D., LL.M., is principal with Washington National Tax, Crowe LLP, in Washington, D.C. Cooper and Solodchikova are members and Hodes is chair of the AICPA IRS Advocacy and Relations Committee. For more information about this article, contact thetaxadviser@aicpa.org.