IRS Explains Power-of-Attorney Requirements for Corporate Taxpayers

On Tuesday, the IRS’s Office of Professional Responsibility (OPR) issued a bulletin clarifying when corporate officers or employees must have a valid power of attorney in order to represent the company before the IRS (OPR Bulletin 2014-12). The bulletin also discusses how the existence of a power of attorney may be evidence that the officer or employee is subject to the rules of Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10).

The bulletin notes that the corporate officers or employees identified in a corporation’s Form 4764, Communications Agreement, LB&I Examination Plan, are only authorized to take certain actions. Specifically, these individuals are permitted to (1) discuss tax matters; (2) provide and receive information; or (3) receive and discuss adjustments. (This is similar to the authorization provided under Form 8821, Tax Information Authorization.)

This level of representation, which the IRS describes as providing information to or accepting information from the IRS, does not amount to representation or practice before the IRS. However, once an employee or officer goes beyond providing or accepting information and advocates, negotiates, or disputes (or does anything beyond delivering facts or information or accepting materials), the employee or officer will be considered to be practicing before the IRS. In that case, the company must provide the IRS with a Form 2848, Power of Attorney.

Form 2848, which can designate specific employees to represent the corporation, must be signed by a duly elected officer or director of the corporation as identified in the corporate articles or bylaws (this person is usually the one who signs the corporation’s tax returns and consents to extend the time for assessment of tax).

The OPR bulletin also discusses how a signed power of attorney affects OPR’s jurisdiction over a corporate officer or employee when an IRS employee makes a referral to OPR. IRS employees use Form 8484, Suspected Practitioner Misconduct Report for the Office of Professional Responsibility, to make referrals to OPR for alleged misconduct under Circular 230. The form asks for evidence of a practitioner’s practice before the IRS. A Form 2848 submitted to the IRS is one piece of evidence that an individual has practiced before the IRS and is subject to OPR’s jurisdiction.