Thursday, September 20, 2012

Could Your Tax Preparer Put Your Identity at Risk?

  • Tax Problems from Power of Attorney

  • In a time-saving manuever, some CPA firms are using electronic powers of attorney to obtain tax transcripts.  The Treasury Inspector General of Tax Administration (TIGTA) points out that this approach may increase the risk of inappropriate disclosure of tax information.  Online Form 2848 allows the CPA to get tax transcripts; TIGTA points out that nearly 900,000 Form 2848s and close to 17 million transcripts have been asked for since 2004.   TIGTA's recommendations to improve internal control included a review of 2848 filings for appropriateness; especially from law/CPA firms which file large numbers of Form 2848;  assuring that tax attorneys filing returns have a signed power of attorney (POA) before appealing for internet-based POAs and that unauthorized IRS employee would not "snoop." e-transactions.

    There is such a thing as being too hasty and clearly some tax law professionals are stretching the intent of Form 2848 for their own convenience.  Safest strategy to follow here: get a signed POA before trying for an electronic POA; also, talk with the client about advantages and possible disadvantages to using electronic POAs.


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