Monday, November 11, 2013

IRS Implements Shorter Processing Time for Taxpayer Authorizations

According to Beyond 4/15, the IRS announced that it would now process all tax authorizations within 5 business days (IRM Procedural Update #WI-21-1113-1609 dated Nov. 7, 2013), compared with its estimate of 10 days after the retirement of the IRS e-Services Disclosure Authorization tool on Sept. 3. This announcement affects the timeframe for practitioners to represent their clients and get client information from the IRS.

This announcement comes at a time when many tax professionals are concerned about the backlog of authorizations and documents submitted to the IRS during the three-week government shutdown, when the IRS was not processing authorizations.

Whether or not the IRS meets its 5 day processing goal, there are tips you can use to streamline the filing and management of authorizations in your tax practice. 

  1. File directly with the CAF unit.
  2. Consider filing a Form 8821 on all of your clients this tax season.
  3. Use e-Services to confirm whether your Form 2848 is on file without having to call.
  4. Fax instead of mail.
File directly with the CAF unit. If you are responding to the IRS for a client’s notice or tax issue, file your authorization directly with the CAF unit rather than sending it with the notice response or to an IRS compliance function (Audit, Collection, Appeals). Sending it directly to the CAF unit will likely avoid processing delays due to the backlog in IRS correspondence processing.

The Treasury Inspector General for Tax Administration reports that 40% of all IRS correspondence is more than 45 days old before it is processed.

Filing authorizations directly with the CAF unit will also ensure that you are copied on your client’s interim IRS correspondence before the IRS processes your client’s response to the notice or tax issue.

Consider filing a Form 8821 on all of your clients this tax season. If you file a Form 8821, you will not be authorized to represent your client before the IRS, as you would be with a power of attorney, but you will be copied on your client’s IRS correspondence and have the ability to research your client’s account at the IRS if the need arises. For most clients, this is all you need to stay in the loop. It also allows you to proactively address a client’s situation without taking on more risk than is necessary.

Use e-Services to confirm whether your Form 2848 is on file without having to call. If you have access to the e-Services Transcript Delivery System and can pull your client’s transcripts for the years/forms noted on your Form 2848, you’ll know that your client’s authorization is on file. If you can’t access your client’s transcripts after five days, refile your Form 2848 with the CAF unit.

Fax instead of mail. To speed up processing time for an authorization, fax your Form 2848 or 8821 to the appropriate CAF unit. This can reduce processing time by about three days compared to mailing the form.

You should also keep in mind that when your client representation engagements end:
  1. Keep a file with all original authorizations that you filed with the IRS. Authorizations automatically expire seven years after filing.
  2. When client representation engagements end, you should withdraw your Form 2848. You can still keep a Form 8821 on file to get notified on your client’s IRS correspondence, but you should only keep Form 2848 on file with the IRS if you are engaged to represent your client.
Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
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or Toll Free at 888-8TaxAid (888 882-9243)

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