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Form 2848: The First Hurdle

Posted on Oct. 26, 2016

Today we welcome back guest blogger Caleb Smith.  Caleb is a fellow this year in the Harvard Federal Tax Clinic.  We have seen some interesting power of attorney issues in our clinic recently and Caleb provides some insight on problems that arise in this area.  Keith

The IRS is planning to implement new security measures (originally set for October 24 target date, but since pushed back) for its online services. In anticipation of these changes (and potential complications) it seems timely to devote some thought to one particularly important gateway for information gathering activities with the IRS: the Form 2848.

Sometimes you just can’t avoid calling a general number of the IRS, especially if the 2848 hasn’t been processed by CAF yet or when there is an ID Theft Indicator on the account. When contacting such a call center, one of the first questions asked is whether you have POA on file for the entity you are calling about. The IRS employee will usually offer a personal fax number for you to send the 2848 (if you have one) so that they can continue to assist you. Once the 2848 is received what happens next can be downright Kafka-esque depending on the reticence and training of the IRS employee on the other line.

Recent calls to the IPSU unit of the IRS have yielded these Halloween-worthy responses:

1). We can’t speak to you because there is no signature from the taxpayer on your 2848. The signature you have is from the previous attorney [that was granted the power to substitute or add-in new representatives]

My charitable take on this is that the IRS employee was misunderstanding the core concept of the taxpayer granting their representative the power to substitute other attorneys. Who can sign a 2848 has been dealt with here before. The continued misunderstanding of certain IRS employees, unfortunately, is not an unusual occurrence for me. The idea that someone the taxpayer specifically said could substitute attorneys for them is now substituting an attorney for them somehow smacks of foul-play. In one instance, I directed an IRS employee to the 2848 instructions specifically stating that the taxpayer doesn’t need to sign the 2848 for a subbed-in representative. The IRS employee referred to that as a “loophole.” Further attempts to explain that requiring the taxpayer to sign my 2848 would obviate the whole point of granting representatives authority to substitute attorneys were fruitless. Perhaps I should have referred the employee to IRM, which reads in relevant part “Only the taxpayer can grant a recognized representative the additional authority to substitute or delegate authority. The notice of substitution or delegation must be signed by the representative appointed on the power of attorney.”

2). We can’t speak to you because a 2848 automatically expires after 45 days(!)

My charitable take on this is that the IRS employee was misunderstanding the rule that a 2848 is invalid if the taxpayer signature is dated more than 45 days before the representative’s (See IRM As that wasn’t the case, my less charitable take is that the IRS employee just wanted to cut the call short. I am inclined to this less charitable take in part because the employee only brought up the 2848 issue after already speaking to me for several minutes about the client in a case where the IRS behavior looked somewhat bad.

All of this is to say that if an IRS employee wants to challenge your Power of Attorney they can put up a pretty big and pretty immediate roadblock. Yes, you can call back and almost certainly get a different person on the phone, but wait-times often make that impractical. During a recent visit from our local taxpayer advocate, our clinic (Harvard Legal Services Center) voiced concern about IRS employees that didn’t seem to understand how Form 2848 works and the barrier this caused for providing services. When such problems arise we were advised to request to be escalated to the employee’s manager, and that TAS would look into making sure that employees were well trained on 2848 issues. This is about as good as can be hoped for, but I’m not sure it is enough to provide a whole lot of relief. (A few weeks after that advice I attempted to put it into action and asked to be escalated to the manager on two separate occasions. On the first one, I was cut off after being put on hold. On the second, I was told (after being put on hold) that the manager wasn’t available.)

Of course, much of this can be avoided if your 2848 is on file with CAF, in which case, the main hurdle is submitting a 2848 that will be accepted and processed in the first place. Though this seems like it should be a fairly easy task (and generally it is), complications do arise.

Most recently, I’ve seen 2848s rejected for:

  1. Appearing to have a “stamp or electronic” signature of the representative (it wasn’t: it just looked that way because the form had been faxed so many times). See IRM
  2. Having the taxpayer signature dated more than 45 days before the representative’s (it was, but only because the client signed with the wrong year) IRM again. Note that the problem doesn’t arise if the taxpayer’s signature is more current than the representative’s.
  3. Form was illegible (a product of the Form 2848 being faxed multiple times, and perhaps my poor penmanship)
  4. Student Authorization Form missing for LITC Student Attorney (These generally result only in the student being unable to call the IRS: as an attorney, my authorization has generally still been processed.)

The first time I ever submitted a Form 2848 I was under the impression that the CAF fax basically fed into an enormous scan-tron type machine that checked for initial processing requirements. My belief in that was based (1) on the sheer volume of 2848s that must be sent and (2) the fact that the Treasury Regulations provide that a substitute for Form 2848 can be used (problem for the scan-tron theory), but an actual 2848 must be attached if submitted to CAF (see Treas. Reg. 601.503(b)(2)). In fact, actual humans do process and input the Form 2848, although the number of these dedicated souls may not be sufficient for the task (see TAS report here). Beyond just taking the IRS’s word on this, other evidence of a human touch can be found in the handwritten “OK” marked next to certain areas and practically undecipherable scribbles marked next to others on 2848s that have been sent back to me from CAF.

One problem is obviously the turn-around time for figuring out whether CAF is going to process the 2848 sent. Usually, the practitioner has no way of knowing the 2848 isn’t processed until either (1) weeks pass and they are still unable to access accounts via e-services, or (2) the taxpayer receives a letter from the IRS mentioning the unprocessed 2848 (a letter which also generally serves to freak out the taxpayer). Might this be an area for the IRS “Future State” (see post on Future State here) to bring in a greater degree of automation to speed up the process? On the one hand, the sensitive data at play may warrant keeping a greater human touch. On the other hand, I’m not really sure how humans do much of anything to prevent ID theft in this context: I am fairly confident that the person at CAF isn’t comparing signatures of the taxpayer and representative to a signature database.

Another problem has less to do with the time it takes to process the 2848, and more to do with the actual processing. I have seen numerous rejection notices for 2848s supposedly lacking the proper student authorization page, when it appears from the fax records that such authorization was in fact sent. Several comments on the ABA LITC listserv have also mentioned this issue. One commenter suggested creating a “2848 Sandwich” with the student authorization page placed between page 1 and 2 of the 2848, the rationale being that it is much harder to miss the authorization page in those circumstances. I have never tried this, and cannot vouch for its efficacy, but am always a fan of creative solutions.

One area that I HAVE had experience with and can vouch is in submitting Form 2848 as a substitute representative for the original attorney of the taxpayer. As mentioned above, a taxpayer may grant their attorney the power to substitute or add representatives (see line 5a of Form 2848). Doing so, obviously, gets rid of the need for the taxpayer to sign a new 2848 for the substituted representative. The instructions (and logic) make this clear: the new attorney “can send in a new Form 2848 with a copy of the Form 2848 you [the taxpayer] are now signing, and you do not need to sign the new Form 2848.” [emphasis added.] Reading the instructions literally, one might think that all the new attorney need do is fill out a new 2848 and include a copy of the old one with it. But IRM requires a little more. For CAF to process the new 2848 you will need to send (1) the original 2848 signed by the taxpayer, and (2) a new 2848 signed by the original attorney. I usually have the original attorney sign on line 7 along with listing their CAF number. I have not found anywhere in the IRM that says this is the proper way to include the signature of the appointing attorney. But it has worked with CAF, and that is good enough for me.

When you need to speak with someone at the IRS about a client and the validity of your power of attorney is put at issue, you are essentially confronted with a brick wall. Systemic changes to how 2848s are processed by the IRS may be ideal, but in the absence of that practitioners are generally left with trading war-stories and tricks-of-the-trade. I invite anyone with such advice or stories to post below.

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