IRS opens tax pro accounts

The Internal Revenue Service has begun offering online Tax Pro Accounts that practitioners can use for submitting an authorization request to an individual client’s own taxes online with the IRS.

The accounts can be used for submitting a power of attorney request and a tax authorization request. The IRS plans to expand the features available to tax professionals through the Tax Pro Accounts in the future, but the initial offering debuted Sunday and can be found here.

The IRS has been working to develop the online accounts for tax professionals for several years, but the COVID-19 pandemic accelerated the development of them (see story). The hope is for the accounts to eventually allow tax professionals to enter information for their clients online, and the system will automatically correct their entries in real time.

Andrew Harrer/Bloomberg

Earlier this month, the IRS updated its Internal Revenue Manual to include information about the new system, but noted that the new system does not yet offer all the capabilities available through filing Form 2848, “Power of Attorney,” and Form 8821, “Tax Information Authorization.” Both tax pros and their clients will need to electronically sign such requests.

“Only a very limited set of authorizations can be handled via this system,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch, in a blog post on the Current Federal Tax Developments for Becker Financial Education. “In fact, advisers will note that the system, at least at the beginning, is very limited in the situations in which it can be used, and it will require the adviser’s client to access the system as well as this system has both the professional and the client electronically sign the form.”

The IRS announced the opening of the service on Monday. “The ability for taxpayers to connect online with their tax professional is a groundbreaking step for the IRS,” said IRS Commissioner Chuck Rettig in a statement. “This is the first, basic step toward a more fully integrated digital tax system that will benefit taxpayers, tax professionals and the IRS.”

The IRS also said Monday that it adding more features to the online taxpayer accounts that it has been providing to taxpayers. Taxpayers can now view the amount they owe, updated for the current calendar day; their balance details by year; their payment history and any scheduled or pending payments; key information from their most recent tax return; payment plan details; digital copies of select notices from the IRS; their Economic Impact Payments, if any; and their address on file with the IRS. Taxpayers have already been able to use the accounts to make a payment online; see payment plan options and request a plan via Online Payment Agreement; and access their tax records via the Get Transcript app.

The Tax Pro Accounts will be available for access on Monday through Saturday from 6 a.m. ET to 9 p.m. ET, and on Sunday from 10 a.m. to midnight ET, but will occasionally be down for additional hours for maintenance. Tax pros will be able to access the service through e-Servces using their Secure Access account to log in. Taxpayers will be able to electronically sign documents as well. The IRS estimates that the portal will allow tax pros to submit their requests in 15 minutes or less, and the system will provide real-time processing.

Initially, the functionality is limited. “Under this new release, only the tax pro will be able to initiate a request, although the taxpayer may be able to create one at a later date,” said Stephen Mankowski, tax chair of the National Conference of CPA Practitioners, in a briefing to NCCPAP members in April after attending a preview of the system given by the IRS. “This release applies to individual accounts (86 percent of requests). There are additional issues to address related to business accounts, including if the person is truly authorized to represent the company.”

For a Tax Information Authorization or Power of Attorney request, practitioners will need to have a Centralized Authorization File number in good standing that is assigned to them as an individual, as well as a CAF address within the 50 states or the District of Columbia. For a Power of Attorney request they also need to have authority to practice before the IRS as an attorney, CPA, enrolled agent, enrolled actuary or enrolled retirement plan agent; or license to practice in the 50 states or D.C. as an attorney or CPA.

Tax pros can request authorizations for tax years and periods from 2000 through the current year, plus three future calendar years for tax matters, according to the IRS, including Form 1040 income taxes, split spousal assessment or Form 8857 Innocent Spouse Relief, shared responsibility payment (2014 or later), shared responsibility payment for split spousal assessment (2014 or later), civil penalty (periods ending March 31, 2000 through the current year, plus three future years ending Dec. 31.)

To ask for authorization for other tax years, matters or fiscal-year filers, tax pros should submit Forms 2848 or 8821 to the IRS.

To connect with their tax preparers, taxpayers can either login to their Online Account by using their IRS username and password or they can create an account after passing a one-time identity verification process. Taxpayers who can't validate their identities can't use this option, and their tax practitioner will need to use a fax, mail or online submission process. However, the IRS plans to announce a new process for this application later this year.

Tax pros should use their IRS usernames and passwords to access the Tax Pro Account or create an account after verifying their identities.

To help tax pros educate clients about this new process, the IRS has created two e-Posters that practitioners can share with their clients:

Publication 5533, Why You Should Create an IRS Online Account

Publication 5533-A, How to Submit Authorizations Using Tax Pro Account and Online Account