Tax News Highlights: IRS Guidance Issued for Employees Participating in IRS Audit Process

| 9/25/2014

Recent guidance from the IRS Office of Professional Responsibility (OPR) confirms that Form 2848, “Power of Attorney and Declaration of Representative,” must be provided to the IRS to designate nonofficer employees of corporate taxpayers who have permission to advocate, negotiate, or dispute tax issues with the IRS.

In its guidance, the OPR indicates that identifying employees on Form 4764, “LMSB Examination Plan,” is not a substitute for Form 2848.

The purpose of Form 4764 is to allow a corporate taxpayer to designate one or more employees to: 1) discuss tax matters, 2) provide and receive information, and 3) receive and discuss adjustments. However, if the employee does anything beyond explaining the facts, providing general explanations, or accepting materials from the IRS, the company will be required to submit an appropriately completed Form 2848 allowing that employee to engage in acts beyond those permitted by Form 4764. For corporate taxpayers, this typically will occur if an employee is advocating or defending the corporation’s tax positions related to liabilities and adjustments or negotiating the settlement of issues. Form 2848 must be signed by a duly elected officer or director of the corporation.

The OPR views employees designated on Form 2848 to be practicing before the IRS under Circular 230.  As a result, those employees are subject to all of the provisions of Circular 230, including potential disciplinary sanctions.


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