IRS Publication 470: Limited Practice Without Enrollment

Representing a taxpayer before the IRS is typically reserved for licensed professionals like attorneys, Certified Public Accountants (CPAs), or Enrolled Agents. However, IRS Publication 470, Limited Practice Without Enrollment, outlines the specific circumstances under which an individual without these credentials can represent a taxpayer in certain situations.

Eligibility for Limited Practice

The most common individual eligible for limited practice is the unenrolled return preparer. To qualify, this person must have a valid Preparer Tax Identification Number (PTIN) for the current year. A PTIN is an eight-digit number starting with ‘P’ that all paid tax preparers must use on federal tax returns they prepare for compensation.

An unenrolled preparer must also hold a valid record of completion from the IRS Annual Filing Season Program (AFSP) to have representation rights. Unenrolled preparers who do not complete the voluntary program are only authorized to prepare returns. To earn the AFSP Record of Completion, a preparer must annually complete 18 hours of continuing education from an IRS-approved provider. This includes a six-hour Annual Federal Tax Refresher course with a comprehension test, ten hours of other federal tax law, and two hours of ethics.

Other individuals may also qualify for limited practice. A bona fide officer or a full-time employee can represent their employer, such as a corporation or partnership. An immediate family member, defined as a spouse, child, parent, brother, or sister, may also represent a relative. An individual under suspension or disbarment from practice before the IRS is not eligible for limited practice.

Scope of Authorized Representation

The authority granted under limited practice rules pertains to the examination phase of a tax return. An eligible unenrolled preparer’s representation is confined to returns they personally prepared and signed. This allows them to represent the taxpayer before revenue agents, customer service representatives, and the Taxpayer Advocate Service for the specific tax period covered by that return.

During an examination, the representative can present records and documents to the agent and provide explanations or testimony in response to IRS inquiries. They are also permitted to receive and inspect confidential taxpayer information for the periods under examination.

Limited practice does not permit representation in matters beyond the initial examination, such as before the IRS Office of Appeals, which handles disputes over findings, or the Collection Division. An unenrolled preparer also cannot sign a closing agreement to resolve a tax liability or execute a waiver extending the statutory time for assessment or collection of tax.

Required Authorizations and Forms

An individual must obtain written authorization from the taxpayer using either Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization. Understanding the function of each form is key to granting the correct level of authority.

Form 2848 grants an individual the authority to represent the taxpayer before the IRS, allowing them to act on the taxpayer’s behalf. In contrast, Form 8821 only authorizes a third party to receive and inspect a taxpayer’s confidential tax information for specified periods and does not grant representation rights.

The taxpayer must provide their full name, address, and taxpayer identification number on the form. The form must also list the representative’s name, address, and PTIN if they are an unenrolled preparer. The authorization must be specific, listing the tax matter, form number, and the years or periods covered. Current versions of both forms are available for download on the IRS website.

Submitting Authorization and Initiating Representation

Completed and signed authorization forms can be submitted to the IRS by mail or fax. A Power of Attorney using Form 2848 can also be authorized electronically through a taxpayer’s IRS online account, where they can review and digitally sign the request.

The IRS Centralized Authorization File (CAF) unit processes these forms, assigning a unique CAF number to the representative. This information is entered into a database that allows IRS employees to verify a representative’s authority to act for a taxpayer and receive confidential information.

Processing can take several weeks, so the representative should confirm the authorization is active on the CAF system before contacting the IRS. Verification can be done by calling the practitioner priority service or by asking the IRS employee assigned to the case. Once confirmed, the representative can contact the examining agent.