IRS unveils initiative to solve processing problems.

The IRS announced that, beginning with the 2001 filing season, taxpayers will be able to check off a box on form 1040 and designate a paid individual tax return preparer to resolve processing-related issues. IR 2000-23 says the designee will be able to speak directly to IRS customer service representatives to resolve issues. The preparer's authority will be limited to matters arising during the processing of a specific return, such as math error notices and information about payments and refunds. Currently, practitioners (attorneys, CPAs and enrolled agents) and other paid preparers need a power of attorney (form 2848) in order to discuss any tax return problems with the service.

According to the IRS, approximately 8 million pieces of correspondence regarding processing problems are sent out annually to taxpayers during tax season. With the introduction of the "checkbox initiative," it expects it can resolve 90% of these issues through telephone contact with the paid preparers.

This new system does not eliminate the need for a taxpayer to sign form 2848. A power of attorney will still be required for examination matters, underreported income, appeals and collection notices.

In the future, the IRS hopes to expand the program to cover taxpayers--whether small business owners or the poor, elderly or non-English-speaking--who now rely on relatives to prepare their returns.

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--Michael Lynch, Esq., professor of tax accounting at Bryant College, Smithfield, Rhode Island.