Basics of Taxpayer Representation

Tax-related stress does not need to remain a burden over the holidays and into the next year. A simple no-obligation discussion can often start the process to a resolution that everyone can handle.

From time to time individual and business taxpayers run into complications with the Internal Revenue Service or another tax authority. These issues range from paperwork mishandling to substantial tax deficiencies. One thing these interactions almost always have in common is that they cause stress to taxpayers. Based on the past collective industry experience of many of these interactions, taxpayers are best-advised to seek a qualified professional opinion and at least limited representation in handling these issues. (The IRS allows and encourages direct communication with taxpayers but there are significant risks to a taxpayer who contacts the IRS directly to handle these matters. Those risks are not covered in this blog post). This post presents some basic points about representation that taxpayer’s perspective.

1) Right to representation

Every taxpayer is entitled to representation. A taxpayer may either represent him/herself or, with proper written authorization, have someone else represent him/her.

2) Qualifications of representative

A taxpayer’s representative must be an individual authorized to practice before the IRS, such as an attorney, certified public accountant, or enrolled agent. Not all people who hold these designations are equally qualified to provide taxpayer representation service. It makes sense to compare the qualifications and skills of the representative with the expected skills and expected cost of your specific situation. Be prepared to adjust the type of representative if your situation changes or new information becomes available.

3) Written authorization required

A taxpayer may use IRS Form 2848, Power of Attorney and Declaration of Representative to authorize this representation. Typically the tax professional provides this form for the taxpayer’s signature pre-filled with the representative’s information.

4) Fax, email and security

Electronic copies (fax, scan and email) of IRS communications are valid the same as the original. Skype and Zoom conversations may allow secure sharing of documents in real time.Use of a secure online portal is recommended for transferring documents to and from tax clients.

5) Payment for representation

It is not unusual for a taxpayer who owes taxes and has no money to pay the tax to also have no money to pay the tax representative. Tax representative know this, so don’t feel hindered or think that you are the only one.

Some tax representatives offer a limited amount of free or reduced prices services to those who are unable to pay – even including those who don’t advertise this arrangement.

6) Limitation on fee charged

Tax professionals are generally bound by ethical standards that require consideration that the cost of tax representation service should not exceed the expected benefit of this service.

7) Engagement agreement

Most tax representatives use a separate engagement agreement that spells out the responsibilities and terms of the representation. The agreement should clearly state the goals, time frame and reasonably expected results of the representation. If the the initial discussion, reading of documents and sometimes even the initial contact with IRS are performed prior to the execution of the engagement agreement then is is generally understood that there is no fee or obligation on either party up to that point.

8) More information

I am pleased to discuss any individual case in a private conversation. Scheduled phone, Skype or Zoom discussions are preferred for no-obligation tax matter discussions.


One response to “Basics of Taxpayer Representation”

  1. […] much more work will lie ahead in tax representation as a result of screw-ups under the new tax law. Representing clients in tax trouble is normally the largest component of my tax practice. While we have a reasonable […]

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