Taxpayer information may be a risk of unauthorized disclosure and misuse when tax professionals electronically submit power of attorney forms (Form 2848), according to the Treasury Inspector General for Tax Administration.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
By law, the IRS can generally disclose tax information only to a taxpayer or that taxpayer’s designee or attorney-in-fact. Taxpayers can authorize individuals to represent them and can authorize a designee or attorney-in-fact to receive confidential tax information. The IRS allows certain tax professionals to obtain tax transcripts for clients via the Internet using e-Services Online Tools.
The new TIGTA report concludes that controls are insufficient to ensure that tax professionals obtain a signed Form 2848 from their client before submitting it via e-Services Disclosure Authorization; that tax professionals use Form 2848 only for its intended purpose; and that only tax professional who can file a power of attorney electronically have access to disclosure authorization.
“I am troubled that the IRS allows tax professionals to electronically obtain powers of attorney without obtaining proper authorization,” said J. Russell George, Treasury Inspector General for Tax Administration. “The IRS risks unauthorized disclosures of taxpayer information when tax professionals obtain access to taxpayer data without a signed Form 2848. When tax professionals use Form 2848 for other than its intended purposes, they are circumventing IRS controls designed to protect taxpayer information.”
IRS officials agree with the intent of all but one of TIGTA’s recommendations and plan to improve internal controls for accessing and using e-Services. They did not agree that tax professionals are misusing e-Services, noting that the instructions on Form 2848 state that authorization of an eligible representative will allow the individual to receive and inspect confidential tax return data.