Imagine that tomorrow you open the mailbox to see a letter from the IRS. Naturally those letters invoke an anxious response even if they turn out to be informational. When the letter does require a response, typically there is a limited amount of time to do so. Instead of trying to solve the issue alone, that is the time to reach out to your CPA for help.
If your wish is to never speak to the IRS or state tax authorities again, there is a way to help that happen when notices or letters are received. Having our firm as your CPA is not enough to allow us to deal with tax authorities on your behalf. They are very strict on their privacy rules and will not share any taxpayer information with anyone other than the taxpayer without the proper paperwork. There are several options to give individuals authorization to speak to the tax authorities on your behalf. We will go over the most common two we use:
Third Party Designee
On the first page of the income tax return there is a section to name someone as a third party designee. This can be a CPA, friend, family member, or any other person that you want to be able to discuss your tax return with the IRS. This type of authorization limits the discussion to only the individual or business income tax return that it is filed on. This type of authorization automatically ends at the due date for filing the following year’s tax return.
Power of Attorney
A power of attorney for tax purposes can be filed to allow certain persons speak to the IRS on your behalf. The reason we promote this option is that it can cover past and future tax years and multiple types of tax forms. The tax Power of Attorney can be revoked at anytime by the taxpayer, but does not automatically end like the third part designee. The following are links to both the North Carolina and IRS forms for power of attorney rights.
Keep in mind the above power of attorney forms only apply to tax matters. We recommend having one on file so that if notices or other issues arise we can speak directly to the tax authorities on our clients behalf. The processing time for approval of these power of attorney forms can be anywhere from 5 to 10 business days. It is important to make your CPA aware of any notices received in a timely manner so that we can work together to get any tax issues resolved. If you are interested in learning more about a tax power of attorney let us know!