TLDR: The four main types of IRS third-party authorizations are: Power of Attorney, Tax Information Authorization, Third Party Designee & Oral Disclosure
When working with the IRS, taxpayers have a right to represent themselves. They can also choose a third-party agent to represent them, like a tax professional or family member. Taxpayers should be sure that their representative is authorized to practice before the IRS.
Taxpayers who want to have a third party represent them must formally grant them permission to do so.
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.
Even with an authorized third party representing them, taxpayers are ultimately responsible for meeting their tax obligations.
Who Can Practice Before the IRS?
The following individuals are subject to the Regulations contained in Circular 230. However, any individual who is authorized generally to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. A Form 2848 Power of Attorney can be used for this purpose.
Appraisers. Any individual who prepares appraisals supporting the valuation of assets in connection with one or more federal tax matters is subject to the regulations contained in Circular 230. Appraisers have no representation rights but may appear as witnesses on behalf of taxpayers.
Attorneys. Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any U.S. state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS.
Certified public accountants (CPAs). Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any U.S. state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS.
Enrolled agents. Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS.
Enrolled retirement plan agents. Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans.
Enrolled actuaries. Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans.
Low Income Taxpayer Clinic Student Interns. Under certain circumstances, a student who is supervised by a practitioner at a law school or equivalent program providing tax services for low income taxpayers may request authorization to represent a taxpayer before the IRS. For more information, see Authorization for Special Appearances , later.
Unenrolled return preparers. An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the paid preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. However, there are limitations to what an unenrolled return preparer can do. For example, unenrolled return preparers may not represent taxpayers before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of the Treasury.
Other individuals who may serve as representatives.
Because of their special relationship with a taxpayer, the following individuals may represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer.
An individual. An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority.
A family member. An individual can represent members of his or her immediate family. Immediate family includes a spouse, child, parent, brother, or sister of the individual.
An officer. A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the governmental unit, agency, or authority before the IRS.
A partner. A general partner can represent the partnership before the IRS.
An employee. A regular full-time employee can represent his or her employer. An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority.
A fiduciary. A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative.
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