tax assignment letter

How to Obtain a Confirmation Letter for an Assigned EIN Number

by Mariel Loveland

Published on 21 Nov 2018

When you sign up for a federal Employer Identification Number (EIN), also known as a federal tax ID number, the government makes a real point to remind you to never misplace your number. Let's be totally real, though. Some of us are pretty forgetful regardless of how successful our budding businesses may be. Losing your EIN number and the IRS confirmation happens. Don't worry – it's not gone forever.

Why Do I Need An EIN?

An Employer Identification Number is like a Social Security number for a business. You'll need your EIN to file taxes, apply for business licenses, open business bank accounts, obtain loans and new lines of credit and fill out various forms such as 1099-MISCs for contracting work. If you're working as a sole proprietor, you may wish to register for a federal tax ID number to avoid using your Social Security number for business purposes.

Sometimes, a bank or vendor may require a confirmation of your EIN from the IRS. Before you get nervous and start tearing apart your office looking for that pesky letter, don't worry. You can easily request a new confirmation letter instead.

Call The IRS And Request A Replacement Confirmation Letter

Getting a replacement confirmation letter for your Tax ID Number is as simple as calling up the IRS. Dial (800) 829-4933 if you're in the U.S. and (267) 941-1099 if you're abroad. Ask the IRS for a replacement 147C letter – that's what the letter is called. If you remember your EIN number, you can have the form faxed directly to you. If you don't remember your number, you'll have to wait for the letter to be sent by mail because the IRS will not give you the number over the phone.

Be Prepared To Answer Questions About Your Business

The IRS can't just give out EIN information to anyone. They can only send a 147C letter to an authorized individual like a corporate officer or partner. In order to confirm that you're authorized to get the form, you're going to need to answer some questions including telling the IRS your title in the business.

What Happens If I Lost My EIN Number?

If you don't need your confirmation letter and simply lost your EIN number, you can avoid calling the IRS by digging a bit into your company's records. Your EIN can be found on an old tax return. If you've set up a business account with a bank or applied for a license, you can call the bank or agency to get your EIN. If all else fails, call the IRS.

How to Obtain a Copy of Your EIN Verification Letter from the IRS

Learn how to obtain a copy of your federal EIN letter from the IRS. Discover the process, key details, and alternatives for quick verification. 6 min read updated on September 10, 2024

Key Takeaways An Employer Identification Number (EIN) is a federal tax identification number used by the IRS for business purposes. You may need to provide your EIN letter when hiring employees, opening bank accounts, or handling various business tasks. If you lose your EIN confirmation notice (Form CP 575), you can request an EIN verification letter from the IRS, which serves the same purpose. Alternatives to getting your EIN documentation include contacting your bank or accountant or checking the IRS confirmation email if you applied online. Post a job on UpCounsel to find a business lawyer in your state to help you get an EIN for your LLC, corporation, or partnership. 

An Employer Identification Number , or EIN, is a federal tax identification number the IRS uses to identify businesses for tax purposes. However, its uses go far beyond taxes.  

You will often need to provide an EIN confirmation notice or verification letter when hiring employees, opening bank accounts, or performing other business tasks. 

This article will discuss the many uses of employer identification numbers, the EIN process, and what to do if you lose your confirmation notice (your CP 575 form) and need an EIN verification letter to serve in its place.

What is an EIN, and Why Do You Need It?

Some refer to EINs as “social security numbers for businesses.”  

Like a Social Security number (SSN), an EIN is a unique nine-digit number. However, an EIN is issued by the Internal Revenue Service (IRS) to a business entity rather than to an individual by the Social Security Administration.  

Takeaway: An EIN is for a business, and a Social Security number (SSN) is for an individual.  

The IRS provides EINs free of cost. You can apply by mail, fax, or online, but not by email. 

The EIN application is available online from Monday to Friday between 7:00 a.m. to 10:00 p.m. ET. If you apply online, you can receive your EIN immediately.  

If you apply by fax, it can take up to four business days; if you apply by mail, it can take four to six weeks to arrive. Your confirmation notice will follow. 

Having your EIN is important for many reasons. For example, if any of the following apply, you will need an EIN : 

• You have any employees
• Your business operates as a corporation or partnership
• You file alcohol, tobacco, employment, excise, and firearms tax returns
• You’re involved with different types of entities , including estates, non-profits, and trusts
• You have a Keogh plan (a retirement plan for self-employed individuals and the people who work for them)
• You’re applying for business licenses
• You withhold taxes on income paid (not wages) to non-resident aliens   

Some proprietors also obtain an EIN to avoid using their Social Security number for business purposes.  

Banks usually insist on account holders providing EIN details to open a bank account in the name of their business. Sometimes, investors and vendors will also need these details. 

If you cannot find your initial confirmation notice, you can request a verification letter to confirm your EIN. 

Initial Receipt of the EIN Confirmation Notice

After your EIN application is approved, the IRS mails you a confirmation notice within eight to ten weeks of assigning you an EIN. Your Form CP 575 is sent to the address listed in your Form SS-4 application. 

If you lose or misplace your original EIN confirmation notice , typically a tax ID certificate, you can only get an EIN verification notice from the IRS.  

Again, this verification letter serves the purpose of the original confirmation notice you received from the IRS. 

Reasons for Needing a Copy of Your EIN Verification Letter

If you lose your EIN confirmation notice, you can request an EIN verification letter. Importantly, you can only receive an EIN confirmation notice once, but an EIN verification letter performs the same functions.  

You may need a copy of an IRS EIN letter to confirm your tax ID with bankers, financiers, and vendors.  

Some of the common situations during which a business might need to confirm their EIN include:  

• Filing electronic tax returns and making electronic payments to the IRS
• Obtaining business licenses
• Acquiring industrial permits
• Pass an IRS Taxpayer Identification Number (TIN) matching program
• Opening bank accounts

Other purposes, such as submitting Form 1099 for contracting work

How to Get an EIN Verification Letter from the IRS

Although knowing your Employer Identification Number for conducting daily business is usually sufficient, other occasions require you to provide a copy of your confirmation notice or verification letter. 

Before you begin the EIN verification process, remember that if you have Form CP 575, you already have the confirmation notice. The IRS typically mails this form within ten weeks of approving your EIN application . 

If you can't find your confirmation notice, gather relevant information to simplify the retrieval process.  

First, if you only need your EIN, you need not locate the confirmation notice. You can find the number from your bank records, previous tax filings , or business communication with the IRS. 

You may need to provide details to confirm your identity to the IRS, such as your business address as it appears in the IRS records and the type of form your business uses for filing tax returns .

Steps to Request a Verification Letter

The simplest way to get a copy of an EIN verification letter is to call the IRS.  

Follow the below process to obtain a tax ID verification letter : 

• Call the IRS support at 800-829-4933.
• Provide the name of your business and other verification details, including the support executive's address and phone number.
• Request the support executive for a 147C letter ; placing such a request is free.
• If your contact information is the same as what you provided when you applied for an EIN, the IRS can send you the verification letter through mail or fax.

If your contact information has changed, you can receive the verification letter only after you file Form 8822 .

Alternatives for Obtaining EIN Documentation

You have a few other options if you can’t get your lost EIN through the IRS. 

From Your Bank

If you've submitted a copy of your original EIN certificate to your bank, getting a copy from there would be much quicker.  

Although a photocopy received from the bank is not an accepted substitute for an IRS verification letter, it can serve the purpose in some urgent situations. For example, your vendors may accept it as proof of your EIN .

Through an Accountant or External Agency

If you applied for the EIN through an external accountant or agency, you may be able to get a copy of your confirmation notice from them. 

IRS Website Confirmation Email

If you applied for the EIN through the IRS website, try looking for the IRS confirmation email.

Tips for Ensuring Easy Access to Your EIN Letter

Here are some best practices for locating a confirmation notice or EIN letter quickly and conveniently.  

• Store digitally: Scan your EIN letter and save it into Google Drive, Dropbox, or any other cloud storage service to access it anywhere at any time.
• Keep a physical copy: Keep a physical copy of your EIN confirmation notice or verification letter in a designated file folder.
• Secure your backups: Create duplicates of your EIN letter and store them in safe locations, such as an external hard drive and a locked filing cabinet.
• Inform key personnel: If you have an accountant or office manager, let them know where to find the EIN letter in case they need it on short notice.

Periodically update records: If your business's status or location changes, including a business structure change, inform the IRS and get a new EIN letter. Be sure to destroy old copies and replace them with new ones.

Get a Lawyer’s Help Obtaining an EIN for an LLC, Corporation, or Partnership 

If you need help getting an EIN letter from the IRS, post your legal need on UpCounsel's marketplace. There, you can find a business lawyer in your state who will assist you with obtaining the letter and any other legal requirements for your business.

UpCounsel accepts only the top 5% of business lawyers on its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law. They average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

EIN Letters: Frequently Asked Questions

Can i look up my ein online.

Online options for looking up your EIN are limited. The IRS does not list EINs for private companies in public databases .

How Long Does It Take To Get A Verification Letter From The IRS?

Receiving a verification letter from the IRS can take about a month. However, this isn’t always the case, and significant delays can occur. 

Is An EIN Letter Proof Of Ownership?

Yes, it can. Your confirmation notice or verification letter will include an LLC’s EIN , business name, and responsible party, which can be used to prove ownership of an LLC .

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147C Letter – IRS EIN Verification

Searching for your misplaced EIN verification letter, also known as the IRS 147c letter? You’re not alone. Many business owners and tax professionals need to request a replacement EIN confirmation document. Thankfully, retrieving your 147c letter from the IRS is a straightforward process.

This comprehensive guide will simplify everything you need to rapidly get a replacement 147c letter. We’ll explain what the EIN verification letter contains, why you may need it, who can request it, and detail the fastest options to obtain your personalized 147c letter from the IRS.

So if you’ve lost your original Employee Identification Number (EIN) confirmation notice from the IRS and need another copy, you’re in the right place. Let’s dive in and demystify the entire 147c letter request process.

What is a 147c letter?

An IRS 147c letter, also referred to as an EIN verification letter, is an official document sent from the Internal Revenue Service. It displays your business’s assigned nine-digit federal Employer Identification Number (EIN).

This EIN confirmation notice also includes your business entity’s complete registered legal name and address listed in the IRS database.

Essentially, whenever you successfully receive a federal EIN for tax and identification purposes, the IRS automatically mails your business this 147c verification letter. It serves as formal proof and acknowledgment from the IRS that your corporation, LLC, partnership or other business structure secured an official EIN.

Why do you need an IRS 147c Letter?

There are several important reasons you may need to acquire an EIN verification letter (147c) for your business:

• Opening a Business Bank Account – Most financial institutions require IRS confirmation of your EIN before opening a business bank or credit account under your company’s name and tax ID number. The 147c letter satisfies this prerequisite.
• Applying for Business Licenses – Local, state and federal licensing bureaus commonly mandate verified EIN documentation when processing applications for company licenses, permits or registrations.
• Proof of EIN for Tax Filings – Both the IRS and state taxing agencies can request your 147c letter to validate the legal business name and EIN matching their records when processing company tax documents.
• Legal Verification of Business Entity – Courts, government institutions and third parties frequently require formal IRS verification when confirming the legitimate existence of an organization’s tax identification.

In other words, despite having an EIN, many agencies and businesses will not formally recognize the legal status of your corporation or LLC without IRS-stamped validation. Whether opening a bank account, registering your company vehicle or simply proving your business life, expect to routinely provide a copy your 147c letter.

Who can request a 147c Letter?

Only authorized owners or representatives can retrieve a replacement EIN verification notice from the IRS. Typically, this means:

• A principal owning at least 20% equity share in the business
• An officer, member or partner listed in the company’s formal registration
• A designated Power of Attorney (POA) or Third Party Designee officially affiliated with the business

Minority shareholders, unofficial LLC members, employees, contractors or associates generally cannot request EIN confirmation directly from the IRS. However, with proper permissions, these informal affiliations can still obtain the 147c letter through an authorized representative listed above.

If no principal owner or officer remains active in the company, registered POAs may still qualify to receive a 147c notice on its behalf. Either way, the IRS will only issue replacement EIN letters to verified identities authorized under the business’s official registration.

How to get IRS 147c Letter (3 fast options)

Now that you understand what the form contains and why you need it, let’s explore the fastest ways to get your hands on an EIN verification letter (147c) from the IRS.

The IRS provides three reliable methods to quickly obtain your replacement 147c notice: call them directly, utilize a POA, or request through a professional tax service provider.

Option 1: Call the IRS directly

Calling the IRS Business and Specialty Tax line is the simplest way owners and principal officers can directly request a new 147c letter:

• Verify your government ID and personal details are available (SSN, ITIN, EIN, address etc.)
• Prepare answers to all potential IRS identity confirmation questions
• Call 800-829-4933, then press 1 for English or 2 for Spanish, followed by pressing 3 for all other questions
• Clarify the reason for your call is to request an updated 147c EIN verification letter
• Provide your fax number or verify mailing address for fastest IRS letter delivery

As long as you pass the standard security checks, the agent can instantly fax your new 147c letter or place a mail request to your registered business address. Just inform them of your preferred method to receive the refreshed EIN confirmation notice.

Expect a faxed 147c letter within minutes or mailed verification within 5-7 business days. Remember, only owners or partners can directly call the IRS through this process.

Option 2: Utilize an IRS Power of Attorney

If you cannot or prefer not to call the IRS directly, authorizing a Power of Attorney (POA) provides another path to securing your necessary 147c letter. Here are the step-by-step instructions when using an IRS-approved POA representative:

• Identify an appropriate POA for your business (tax preparer, lawyer, trusted affiliate etc.)
• Fully complete IRS Form 2848 Power of Attorney with your POA
• Write “147c letter” next to Tax Form Number on section 3 of your 2848 POA form
• Provide your POA with access to all required identity verification details
• Call the IRS together at 1-800-829-4933, select language option, then press 3
• Your POA informs the agent they will speak on your behalf with POA form ready
• Fax your Form 2848 during the call when requested
• Answer all IRS security checks through your representative POA
• Request your updated 147c EIN verification letter delivery method
• Receive your refreshed letter instantly via fax or in 5-7 days by mail

This approach allows someone to securely obtain your 147c confirmation on your behalf. Make sure to fully prepare your chosen POA representative in advance.

IRS 147c letter sample

Option 3: Retain Professional Tax Services

Finally, specialized tax preparation firms frequently provide 147c letter retrieval services for businesses nationwide. Their IRS connections and specialized staff simplify the entire EIN verification process.

Although paid services can seem inconvenient, this hands-off approach requires no effort from you. Reputable providers like H&S Accounting & Tax Services can swiftly procure your refreshed IRS notice containing up-to-date legal business details.

Professional tax services also help correctly update any changed information with the IRS, guaranteeing your new 147c letter contains current company data. Their expertise ensures you receive a valid 147c suitable for all legal and institutional purposes.

In certain cases, tax experts may directly expedite letter requests through dedicated IRS processing channels not available elsewhere. This yields the fastest and most reliable 147c letter turnaround.

While costs vary between providers, paying reliable tax professionals removes all hassle getting your urgently needed EIN verification letter reissued correctly.

147c Letter request turnaround times

Outside of professional services, how long does it take to receive your EIN confirmation after placing a 147c letter request?

The good news is the IRS can instantly fax your refreshed letter minutes after approving an owner’s call or POA request. This electronic copy usually satisfies most needs requiring the EIN notice. For a physical mailed copy, expect your official 147c envelope from the IRS within 5-7 business days after successful telephone or POA requests.

So if you need fast verification, request fax delivery and receive IRS confirmation of your EIN almost instantly. Otherwise, standard mail provides you an official document for more stringent bureaucratic demands.

Bottom Line: Verifying your business EIN is simple

Obtaining a replacement copy of your critical IRS 147c EIN verification letter is a quick and easy process. Now that you understand what this notice contains, why you need it, and how to request it, you can confidently prove and validate your registered business identification at any time.

Whether you handle the straightforward phone call directly or use a specialized service for convenience, the IRS makes retrieving your 147c confirmation simple and fast. With this guide’s help getting a refreshed letter, you can keep your company compliance and financial operations running smoothly.

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Online EIN: Frequently asked questions

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If you are unfamiliar with the Online EIN application, you may find this section helpful in answering your questions.

Q. When can I use my Internet EIN to make tax payments or file returns?

A . This EIN is your permanent number and can be used immediately for most of your business needs, including:

• Opening a bank account
• Applying for business licenses
• Filing a tax return by mail

However, it will take up to two weeks before your EIN becomes part of the IRS's permanent records. You must wait until this occurs before you can:

• File an electronic return
• Make an electronic payment
• Pass an IRS Taxpayer Identification Number (TIN) matching program

Q. Sometimes I don't know all the information required on the application. Why should I complete the application online when I can send in paper or fax with missing information?

A. Generally, you will receive your EIN immediately when applying online. When paper or faxed Forms SS-4 are submitted with missing information it will delay the issuance of your Employer Identification Number.

Q. The legal name of my business includes the symbol for a dollar sign ($). Does the IRS accept symbols as part of a business name?

A. No. The only characters IRS systems can accept in a business name are: 1) alpha (A-Z), 2) numeric (0-9), 3) hyphen (-), and 4) ampersand (&). If the legal name of your business includes anything other than those listed above, you will need to decide how best to enter your business name into the online EIN application. Following are some suggestions:

Q. What do I do if my entire address won't fit on your address line on the Internet application?

A . IRS systems only allow 35 characters on the street address line. If your address does not fit in 35 characters, please make sure you provide the most essential address information (i.e., apartment numbers, suite numbers, etc). We’ll then validate the address you’ve provided with the United States Postal Service’s database and offer you an opportunity to make any changes to the address, if necessary.

Q. Are any entity types excluded from applying for an EIN over the internet?

A . No. All customers whose principal business, office or agency, or legal residence (in the case of an individual) is located in the United States or in one of the U.S. Territories can apply for an EIN online. The principal officer, general partner, grantor, owner, trustor etc. must have a valid Taxpayer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.

If you were incorporated outside of the United States or the U.S. territories, you cannot apply for an EIN online. Please call us at 267-941-1099 (this is not a toll-free number) between the hours of 6 a.m. to 11 p.m. Eastern Time.

Q. What if I forget the number I obtained over the internet?

A. IRS records will be updated immediately with your EIN. Simply call (800) 829-4933 and select EIN from the list of options. Once connected with an IRS employee, tell the assistor you received an EIN from the Internet but can't remember it. The IRS employee will ask the necessary disclosure and security questions prior to providing the number.

Q. Do all the EINs obtained on the internet start with specific numbers ?

A. Yes. The unique prefixes (20, 26, 27, 45, 46, 47, 81, 82, 83, 84, 85, 86, 87, 88, 92, 93, 99) identify the EIN as a number issued via the internet.

Q. Do I need a certain computer or software to obtain an EIN over the internet?

A . No. You can go to IRS.gov through any computer that has Internet access. You should have a current Internet browser, which will allow you to view and complete the application process. However, you will need Adobe Reader installed if you would like to receive a confirmation letter online.

Q. Now that I have my EIN, when can I use it to make tax deposits?

A. Based on the information you submit on your application or if you indicate you will have employees, you will automatically be enrolled in the Electronic Federal Tax Payment System—EFTPS—so you can make all your deposits online or by phone. Within a few days you will receive by mail your EFTPS enrollment confirmation, as well as a Personal Identification Number (PIN) and complete instructions for using EFTPS. You will need to wait until you receive your EFTPS information in the mail before you can make a payment electronically. Once you receive your EFTPS confirmation package, you can begin making EFTPS payments.

EFTPS is a service provided free by the U.S. Department of the Treasury that allows individual and business taxpayers to initiate all Federal tax payments using the internet or phone. You can input your tax payments 24 hours a day, 7 days a week using a secure government website or an automated voice response phone system. Refer to Publication 4275, EFTPS Express Enrollment for New Businesses PDF  for additional information about EFTPS.

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• TAX PRACTICE RESPONSIBILITIES

Best practices for engagement letters, POAs, and tax return extensions

• Practice Management & Professional Standards
• Engagement letters
• Client communications
• Professional liability

This discussion focuses on how and why to use engagement letters and what they should cover. The primary purpose of using a letter to define a professional relationship is to ensure that the client and the practitioner agree upon the services that are to be provided. Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service  (31 C.F.R. Part 10), Section 10.33, Best Practices for Tax Advisors , states that a practitioner should communicate clearly with the client regarding the terms of the engagement; a signed engagement letter provides clarity and prevents scope creep.

An engagement letter is also a valuable tool for cementing the relationship with a new client, particularly when there is a delay between accepting a new client and beginning services. Furthermore, defining the scope and agreeing upon the terms in writing clarifies the client's expectations and builds trust by preventing the billing of services that were not anticipated by the client. It also removes any ambiguity regarding who the client is, especially when the practitioner is dealing with a representative of a business.

In addition, clarifying the services through an engagement letter acts as a primary defense against malpractice claims. Disagreements arise when clients believe you are handling their taxes but do not understand exactly what that might entail or encompass. A clearly defined engagement letter sets out the scope of services, defining what the practitioner has agreed to do, what the client has agreed to do, and what the practitioner will not be doing. Additionally, malpractice insurance premiums may be increased without the consistent use of engagement letters.

The importance of being specific

The benefits of engagement letters are often limited by vagueness and the omission of useful provisions. For instance, tax forms should be listed specifically, rather than using a general phrase like "all income tax returns" or "all state tax returns" and should patently exclude all returns and forms not listed. For instance, specifically mentioning and excluding any foreign reporting requirements such as the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), is prudent, considering the potential for significant penalties.

Tax planning and consulting should be excluded from engagements that are merely for tax return preparation and should ideally be dealt with under a separate engagement letter with clearly defined parameters. Clients can become upset when they discover that they have missed a tax - saving opportunity, regardless of whether they were paying for proactive tax advice. Clients' expectations of CPAs generally include tax - saving advice, so being specific about tax services can prevent a client from looking to the firm to provide remuneration for a missed opportunity.

Useful provisions to include

Because firms may not have liability protection in the event of a data breach (although this optional coverage is recommended when available), an engagement letter can offer additional protection with a provision to disclaim liability from a data breach that occurs through no fault of the firm. Reasonable measures must be taken to ensure security of data, but language providing protection is helpful when reasonable measures fail.

Practitioners should also consider a conflict - of - interest waiver clause for related parties, divorcing couples, or multiple shareholders or partnership situations. These waivers can be a part of the engagement letter or executed in conjunction with the engagement letter.

The following points should also be included in the engagement letter:

• Alternative dispute resolution provisions;
• Venue in the event of a civil claim;
• A clause to limit liability to a percentage of fees, if allowed under applicable state law;
• Termination date for services (to trigger the statute of limitation);
• Date by which information must be provided by the client to complete the work on time;
• Language about filing extensions for tax returns;
• Statement of client asserting the completeness and accuracy of the data provided;
• Disclaimer that the firm is not verifying or auditing data;
• Provisions on data retention and who is responsible for providing supporting data in the event of a future audit;
• Disclaimer that the firm is not taking steps to discover fraudulent activity, although the firm may disclose any indications of fraud that are observed during the engagement.

Engagement letters should be reviewed and revised on a continual basis, at least annually, to incorporate changes in the tax law or other provisions as needed.

Challenges for small firms

While the benefits are clear, implementing engagement letters for all clients is undeniably challenging for smaller firms with limited resources. But there are practical steps that can lessen the impact and track the process better.

Firms preparing less complex tax returns may consider negative assurance engagement letters. Essentially, such a letter provided to clients lays out the terms and states that providing information to begin work constitutes acceptance of those terms. This type of engagement letter is not as good as one requiring a signature acknowledgment but may provide some protection.

In addition, electronic signatures can be used to streamline the process. The firm can send all engagement letters en masse at the beginning of the year for electronic signature or with organizers when sent. When data is received to begin tax preparation, a process must be in place to verify that the engagement letter was signed before routing or assigning the work. If no signature is received, the firm should notify the client that work cannot commence until the engagement letter has been signed and should consider returning the paperwork to the client with the engagement letter requesting a signature for work to commence.

The ability to access information from the IRS on behalf of a client is a necessary component of the practice of most CPA firms and other tax practitioners. The two avenues for this are Form 8821, Tax Information Authorization , and Form 2848, Power of Attorney and Declaration of Representative .

There are three key differences between these two avenues. Form 2848 can be used only by someone with authority to practice before the IRS, such as an attorney, CPA, enrolled agent, enrolled actuary, or enrolled retirement plan agent; it also grants power of attorney (POA) to represent the client before the IRS. Representation before the IRS encompasses advocating for the client and providing information on behalf of the client.

Form 8821 only allows the appointee to receive information, but the appointee does not need any authority to practice before the IRS or even need to be an individual; businesses and entities can be appointed via the Form 8821. Form 8821 may be a viable option if a practitioner is merely collecting data to file a return or, where the firm is the appointee, to allow unlicensed staff to request transcripts from the IRS. It also may be useful to accept a limited authorization under a Form 8821 during the process of determining whether to accept someone as a client. It allows the practitioner to receive information but makes clear to the IRS representative and to the client that the practitioner has not accepted the authority and responsibility to advocate on the client's behalf.

The final key difference is that a Form 8821 automatically expires after seven years, while a Form 2848 must be revoked. With the termination of a POA, the practitioner can no longer represent the taxpayer for that tax period.To revoke a Form 2848, the practitioner should write "REVOKE" across the top of the Form 2848 that is being revoked and sign and date below the notation. The revocation should be filed with the Centralized Authorization File (CAF) unit in the same manner as the original POA. If the original Form 2848 is not available, a signed and dated letter from the practitioner stating the intention to revoke the POA for the applicable tax matters and periods, the name and address of each recognized representative whose authority is revoked, the taxpayer's name, the taxpayer's address, and the taxpayer identification number can be submitted to the CAF unit. If all authority under the POA is being revoked, "revoke all years/periods" can be written instead of listing the specific matters and years/periods.

With the revocation, both the client and the firm should be clear that the firm is no longer responsible for tracking new notices as they arise. It may be prudent to issue a termination of the engagement letter at the time of the POA revocation. The clear communication of the letter articulates the mutual understanding while also working within the relationship to remind the client that the practitioner will be available to help on other issues later.

If Form 2848 is used, the firm should track all POAs for all practitioners in the firm and have a system in place for revoking them when the project terminates or when the client is no longer a client. This avoids confusion about who is responsible for replying to further notices for the covered subject or period.

If there is uncertainty regarding what POAs a firm has outstanding, a Freedom of Information Act (FOIA) request can be filed. The request must state that it is being made under the Freedom of Information Act, identify the records that are being sought, identify the name and address of the requester, provide a copy of a valid photo identification of the requestor that includes a signature, and make a firm commitment to pay any applicable fees. The requestor can state the maximum fee he or she is willing to pay. Generally, there will be no fee for individuals seeking records for their own use unless the request is for more than 100 pages or the search takes more than two hours. If the applicable fees will exceed the maximum fee stated, the IRS will contact the requestor and ask the requestor whether he or she would like to withdraw or modify the request before proceeding.

The IRS recently implemented an online authorization process through the Tax Pro Account service to simplify the process and allow instant access for the practitioner. A tax practitioner can submit a POA authorization (if the practitioner meets the POA requirements) or a Tax Information Authorization request to the taxpayer's individual IRS online account. The practitioner chooses the appropriate authorization type when requesting it.

To request an authorization online, representatives log in to their Tax Pro Account on irs.gov and request an authorization from the taxpayer. The representatives will need all of the data traditionally required on a Form 8821 or Form 2848; the data entered must match previously filed returns exactly. After submitting the form, the practitioner should notify the taxpayer that the request is waiting for authorization. The taxpayer must log in to his or her individual IRS account to review and sign the authorization request; if any data is incorrect, the request will not appear for the taxpayer, and the practitioner will need to resubmit the request with the correct data.

Authority via a Tax Pro Account can only be granted for the years 2000 through the current year plus three calendar years forward from the date of the request and is limited to the following matters:

• Form 1040, U.S. Individual Income Tax Return , income tax;
• Split spousal assessment or innocent spouse relief;
• Shared-responsibility payment, including split spousal assessment; and
• Civil penalties.

Unlike with a paper filing, only two representatives can receive copies of a taxpayer's IRS notices and communications, and the online process automatically revokes any other authorization granted for that period, tax matter, or authorization type. If multiple representatives are requesting authority, the taxpayer must authorize them on the same day. Once the taxpayer has accepted the request in his or her online account, the representative has immediate access to the records.

Extensions provide a valuable release valve for the tax preparer in two primary ways: They spread out the tax filing over a longer period, and they allow time for the necessary data to arrive for the return to be accurately prepared.

Increased complexity and additional reporting requirements have resulted in Schedules K - 1 and corrected information returns being sent out shortly before or even after the filing deadline. However, clients often want their returns to be filed "on time," while failing to understand that, with an extension, the return is still on time if it is filed by the extended due date. The taxes must be paid by the due date, but unless there is a compelling need for the return to be filed by the original due date, the practitioner should advise the client to wait so that a more complex return can be done when professionals are less fatigued and not under a pressing deadline. It is worth considering charging a higher rate for those who insist on filing by the original due date, to compensate for the additional burden and risk of error.

An extension allows additional time for retroactive tax law changes to be incorporated into tax preparation software. The IRS did not require amended returns to be filed for returns filed prior to the tax law changes for tax year 2020 but instead adjusted taxpayers' returns; the resulting notices of the adjustments sent to taxpayers by the IRS raised concerns that the practitioner had erred. Thus, because these returns were not extended, additional time was required for client inquiries and explanations for returns. Moreover, because not all states pass legislation to conform to the federal tax law by the due date of the return, retroactive changes at the state level also generate notices to adjust the state tax return, again wasting the time of taxpayers and practitioners.

The opportunity for filing a superseding return is an often - overlooked benefit of filing an extension. A superseding return acts as the original filed return and allows for elections that are required to be filed with the original return if they are considered timely filed by its extended due date. Even if the return is filed by the original due date, an extension allows for the possibility of filing a superseding return and acts as a safety net for any missed elections if they are caught before the extended due date. However, superseding returns do not allow a change from married filing jointly to married filing separately or changes to other irrevocable elections.

When return due dates are legislatively postponed, such as occurred during the filing seasons for tax years 2019 and 2020, the period for claiming a refund may be shortened if the return is filed after the original due date but before the postponed due date. Under Secs. 6511(a) and (b)(2) and Regs. Secs. 301.6511(a)- 1 (a) and 301.6511(b)- 1 (b), a refund claim can be made for three years from the date of filing, with the amount of the claim limited to the taxes paid or considered paid within a lookback period of three years plus any extension period. If no extension was filed, taxes are considered paid on April 15, even if the return was timely filed on May 15. The three - year lookback period stops at the date filed unless a valid extension was filed to bring it back to the original due date of the return.

When due dates are postponed, filing extensions as of the original due date of the returns serves a practical purpose for smaller firms; by following the firm's normal procedures, there is less likelihood of making mistakes or missing necessary extensions.

There are potential pitfalls to be wary of when filing extensions. Some elections, such as the mark - to - market election for traders, must be made by the due date of the return without taking into account any extensions. If extensions are filed without a full review of the taxpayer's documents, the need or benefit of such an election may be missed before the due date.

An additional area of potential liability is in failing to properly advise the taxpayers or document having advised them that the extension does not extend the time to pay. Taxpayers must still provide the necessary data to enable the correct tax liability to be calculated and paid by the original due date. To qualify for an extension, the taxpayer must properly estimate the tax liability using the information available, enter the total tax liability, and file the extension by the return's due date. A failure to calculate the tax may result in a rejection of the extension and additional penalties.

Preparers subject to Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), must follow the due diligence guidelines for preparing and filing extensions found in Sections 10.22, Diligence as to Accuracy ,and 10.36, Procedures to Ensure Compliance , of Circular 230 or face potential penalties and liabilities.An example of a potential area for concern is when a taxpayer has an accepted offer in compromise or an installment agreement, or is subject to a pertinent court order; failing to file or failing to pay the full amount of tax due could terminate the existing agreement or violate the terms of the order. It is advisable to document the authorization to file the extension and the calculation of the tax due. Smaller firms may have a difficult time tracking the information for due diligence compliance and may not be able to bill the clients for the additional expense and the additional time in the file.

An extension may lessen the urgency felt by taxpayers to compile their financial data; in the event of an increase in taxable income, the delay in organization of the data creates the possibility of cash flow difficulties for business owners. A taxpayer with a surprise tax payment due for the prior year may also have to make a large fourth - quarter estimated payment for the current year if the three quarterly estimated payments for the current year that are due prior to the extended due date of the return were underestimated using old data. The additional penalties and interest on the underpayment of estimates and the late payments of taxes may cause the client to feel the preparer is at fault regardless of when the information is provided to the preparer.

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