Simplification of third-party authorization process.

Without any fanfare, the IRS has implemented two new avenues for taxpayer representation without the need for a Form 2848, Power of Attorney and Declaration of Representative. The two methods are called Oral Disclosure Consent and Oral Taxpayer Information Authorization. Both methods were effective April 1, 2001.

The Oral Disclosure Consent is the most limited. This method allows the taxpayer to call the Service and establish disclosure authority for all types of tax accounts for his designated representative. The taxpayer simply tells the IRS the name of his representative. Once established, the designated person may call the Service to resolve the taxpayer's problem. However, the authority is good only for two weeks, in which time the IRS expects to be able to resolve the taxpayer's issue. The Service has indicated that this authority can be renewed for an additional two weeks.

The Oral Tax Information Authorization is for those issues likely to take longer to resolve. This authority will last for one year; the IRS likens this to a paperless Form 8821, Tax Information Authorization. This method also allows the taxpayer to call the Service and establish disclosure authority for all types of tax accounts. But, in this case, the designated representative will have to have a Centralized Authorization File (CAF) number established before the taxpayer calls. The taxpayer must give the CAF number of his designated representative to the IRS to establish this authority. The representative may then immediately call the Service to discuss the taxpayer's issue.

Practitioners have long complained about the necessity of obtaining powers of attorney to handle any number of routine taxpayer problems. The advent of these two new methods of communicating with the IRS should reduce the burden on both the taxpayer and practitioner and allow for faster resolution of many problems.

The Service also made some changes to the CAF system that should help reduce the need for filing multiple copies of Form 2848 in different locations. In July, the IRS consolidated the 10 stand-alone databases into a centralized database. This should allow for early resolutions of account inquires, and help to ensure that the representative will receive a copy of related letters and notices.

As a further enhancement to the CAF system, the Service intends to centralize all processing of Forms 2848 to the Ogden and Memphis Service Centers, with the processing of international issues to the Philadelphia Service Center. Also in 2002, specific issues (e.g., civil penalties) will be added to the CAF system.

Editor's note: Mark Ely is former chair of the AICPA Relations with the IRS Committee. Deborah J. Pflieger is the current chair. Ms. Barners, Ms. Hyde and Messrs. DeGeorgio, VanDeveer and Goldstein are members of that committee.

FROM MARK A. VANDEVEER, CPA, THATCHER & BENSON PC, VIRGINIA BEACH, VA