The Right to Retain Representation: Who Can Speak for You and What They Can Do

The single most useful right on the list may be the ninth one. Not because representatives work magic, but because the right changes who is in the room.

Section 7803(a)(3)(I) lists "the right to retain representation." Publication 1 describes it as the right to retain an authorized representative of your choice to represent you in your dealings with the IRS, and the right to seek assistance from a Low Income Taxpayer Clinic if you cannot afford representation.

Who can represent you

Not everyone can. Representation before the IRS is regulated. The Instructions for Form 2848 list the designations under which a representative signs the declaration in Part II of the form. The main ones are:

• (a) Attorney, a member in good standing of the bar of the highest court of the jurisdiction shown on the form,
• (b) Certified public accountant,
• (c) Enrolled agent,
• (d) Officer of the taxpayer organization,
• (e) Full-time employee of the taxpayer,
• (f) Family member, limited to a spouse, parent, child, brother, sister, grandparent, grandchild, step-parent, step-child, step-brother or step-sister,
• (g) Enrolled actuary,
• (h) Unenrolled return preparer, with limited rights,
• (k) Qualifying student or law graduate working in a Low Income Taxpayer Clinic or Student Tax Clinic Program, with permission,
• (r) Enrolled retirement plan agent.

Unenrolled return preparers have narrow rights. According to the Form 2848 instructions, they may represent taxpayers only before revenue agents, customer service representatives and similar employees, including the Taxpayer Advocate Service, during an examination of the tax period covered by a return they prepared and signed. They cannot represent taxpayers before appeals officers, revenue officers or Chief Counsel attorneys, and cannot execute closing agreements, extend statutes, execute waivers or claims for refund, or sign documents on a taxpayer's behalf. For returns prepared and signed after December 31, 2015, they also need an Annual Filing Season Program Record of Completion for the year the return was prepared and the year of the representation.

For a full discussion of how to evaluate a representative, see the existing lesson on choosing IRS representation.

The paperwork that makes it real

You grant representation authority with Form 2848, Power of Attorney and Declaration of Representative. It names the representative, lists the specific tax matters and periods, and is signed by you and by the representative. Once it is recorded, the representative can generally inspect and receive your confidential tax information and perform the acts you can perform for the listed matters, with exceptions spelled out in the instructions.

If you only want someone to see your information, not to represent you, use Form 8821 instead. The difference is explained in Form 2848 vs. Form 8821.

What representation does in an interview: IRC 7521

This is where the right earns its keep. Two subsections of IRC 7521 matter most.

You can stop an interview to get help. Section 7521(b)(2) says that if a taxpayer clearly states to an IRS officer or employee at any time during an interview that the taxpayer wishes to consult with an attorney, certified public accountant, enrolled agent, enrolled actuary or any other person permitted to represent the taxpayer before the IRS, the employee shall suspend the interview, regardless of whether the taxpayer may have answered one or more questions. The exception is an interview initiated by an administrative summons.

Notice the words "clearly states." Mumbling "maybe I should talk to someone" is not the same thing. Say it plainly: "I want to stop this interview so I can consult with a representative."

Your representative can go instead of you. Section 7521(c) says an attorney, CPA, enrolled agent, enrolled actuary or other person permitted to represent the taxpayer, who is not disbarred or suspended and who holds a written power of attorney, may be authorized to represent the taxpayer in an interview. An IRS employee may not require the taxpayer to accompany the representative unless an administrative summons has been issued to the taxpayer.

There is a counterweight. The same subsection lets an IRS employee, with the consent of the employee's immediate supervisor, notify the taxpayer directly if the employee believes the representative is responsible for unreasonable delay or hindrance of the examination or investigation. A good representative moves the case forward. That provision is aimed at the ones who do not.

Not for criminal cases. Section 7521(d) says the section does not apply to criminal investigations or investigations relating to the integrity of an IRS officer or employee. If there is any hint of a criminal matter, the rules are different and an attorney is the person to call.

Why having someone else in the room helps

In my experience, the benefit is less about legal argument and more about distance.

• A representative is not nervous. Nervous taxpayers guess, ramble and volunteer. A representative answers what was asked.
• A representative knows the procedure. What the IRS can ask for, what deadlines apply, which manager to call.
• A representative can say "I will get back to you." That sentence is hard to say about your own life. It is easy to say about a client's.
• A representative creates a record. Letters, call notes, organized submissions.

If you cannot afford representation

The right expressly includes help from Low Income Taxpayer Clinics. IRC 7526 authorizes matching grants to qualified clinics that charge no more than a nominal fee and that represent low-income taxpayers in controversies with the IRS or inform individuals for whom English is a second language about their rights and responsibilities. For clinics that represent taxpayers, at least 90 percent of the taxpayers represented must have incomes that do not exceed 250 percent of the poverty level, and the amount in controversy for any year generally does not exceed the amount specified in section 7463.

The IRS says LITCs are independent of the IRS and provide services for free or a small fee. Full details are in Low Income Taxpayer Clinics.

What representation does not change

Hiring a representative changes who talks to the IRS. It does not change who owes the tax. The Form 2848 instructions say it directly: authorizing someone to represent you does not relieve you of your tax obligations.

A few other limits are worth knowing before you sign:

• Representatives are not authorized to endorse or otherwise negotiate any government check issued for a federal tax liability, or to direct a payment into an account they control.
• Unless you specifically authorize it on the form, a representative cannot substitute or add another representative, sign certain returns, or consent to disclosure of your information to a third party.
• An address on Form 2848 does not change your address with the IRS. Use Form 8822 for that.

Your representative works for you, inside the limits you set on the form. Read the form before you sign it, and ask questions about anything you do not understand.

How to bring a representative in quickly

Timing matters. A representative who is on file before the first interview can shape the whole case. One who arrives after three interviews spends time undoing them. The fastest routes are a Form 2848 submitted online, or a request your representative sends through the IRS's Tax Pro Account that you approve in your own online account. See submitting Forms 2848 and 8821 online. If an interview is already scheduled, tell the IRS employee in writing that you have retained a representative and ask that future contact go through that person.

When to use the right

You do not need a representative for every letter. You should strongly consider one when:

• an IRS employee wants an in-person interview,
• the amount at stake is significant to you,
• a statutory deadline such as a Tax Court petition is running,
• the IRS is taking or threatening collection action against wages, bank accounts or property,
• you have unfiled returns or any concern about criminal exposure, or
• you have already tried to resolve the issue and been told no.

The right to representation is your right to choose. Choose early. Representatives do their best work before the problem hardens, not after.