Daily Tax Update - September 9, 2014: Corporate Employees Must Obtain a Power of Attorney to Dispute Tax Issues Under Circular 230

Corporate Employees Must Obtain a Power of Attorney to Dispute Tax Issues Under Circular 230:  The IRS Office of Professional Responsibility (OPR) stated in OPR Bulletin 2014-12, released earlier today, that a corporation must provide a power of attorney to any employee that it authorizes to dispute tax issues before the IRS on the corporation’s behalf.  OPR published this guidance in response to field questions regarding the effect of Circular 230 and OPR’s jurisdiction over the corporate officers or employees identified in Form 4764, Communications Agreement, LB&I Examination Plan, for purposes of referrals for alleged Circular 230 misconduct. 

Circular 230 regulates representation activity by those who represent and otherwise “practice” before the IRS.  The OPR Bulletin states that the LB&I Communications Agreement will suffice when a corporate employee is “merely providing or accepting information to, or from, the IRS,” because no representation activity or “practice” is occurring.  However, when the employee “advocates, negotiates, disputes or does anything which goes beyond mere delivery of facts, general explanation, or acceptance of materials,” the employee is practicing before the IRS, and therefore Form 4764 is insufficient.  If the corporation wants a specific employee to advocate, negotiate, or dispute issues with the IRS on behalf of the corporation, a Form 2848, Power of Attorney, must be obtained from the corporation authorizing that representation.  Form 2848 must be signed by a duly elected officer or director of the corporation. 

Senator Wyden Issues Statement on Addressing Inversions:  Senate Finance Committee Chairman Ron Wyden (D-OR) issued a statement earlier today on discussions with Senator Orrin Hatch (R-UT) to address corporate inversions.  While noting the opportunity for bipartisan agreement on short-term legislation addressing inversions, Senator Wyden stated that “any legislation addressing inversions must bridge to comprehensive tax reform.” 

Senator Wyden’s statement can be accessed here