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Do you know the types of authorizations the IRS accepts as third-party tax representation?

Posted on October 18, 2022

When working with the IRS, knowing the rules is paramount. Here’s what our CPAs know about representing taxpayers when negotiating tax penalties and/or working out agreements.

First, know that taxpayers always have the right to represent themselves.

Secondly, taxpayers can choose a third-party agent to represent them, like a tax professional, CPA, attorney, or family member. However, they need to be sure that their representative is authorized to practice before the IRS.

Additionally, a third party representative must be formally granted permission to represent the taxpayer. Here’s how that works.

Here are different types of third-party authorizations:

  • Power of Attorney – Allows someone to represent a taxpayer in tax matters before the IRS. The representative must be an individual authorized to practice before the IRS.
  • Tax Information Authorization – Appoints anyone to review or receive a taxpayer’s confidential tax information for the type of tax for a specified period.
  • Third Party Designee – Designates a person on the taxpayer’s tax form to discuss that specific tax return and year with the IRS.
  • Oral Disclosure – Authorizes the IRS to disclose the taxpayer’s tax info to a person the taxpayer brings into a phone call or meeting with the IRS about a specific tax issue.

It’s important to note, says Teipen CPA Group Mike Poynter, “Even with an authorized third party representing them, it’s the taxpayer him/herself that is ultimately responsible for meeting their tax obligations.” 

Low-income representation is a legal right
Low Income Taxpayer Clinics (LITCs) are independent from the Internal Revenue Service and the Taxpayer Advocate Service. Their services are free or may cost a small fee.

LITCs represent individuals if income is below a certain level and need to resolve tax problems with the IRS. These clinics can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages.

If you have a question about representation, please give us a call. Your questions are confidential, and we’ll be happy to advise you.

More information is also available online:
Power of Attorney Information
Disclosure Authorizations
Publication 4134, Low Income Taxpayer Clinic List
Practice Before the IRS and Power of Attorney
Power of Attorney and Declaration of Representative
Tax Information Authorization