Federal Tax Procedure, Practice, and Representation before the IRS
Federal Tax Procedure, Practice, and Representation before the IRS tests the controversy timeline and the authorized-representation rules. Expect Circular 230 duties, Form 2848 versus Form 8821, examination letters, statutes of limitation, penalties, and collection alternatives.
Core rules
- Practice before the IRS is governed by Circular 230. Representatives must be competent, avoid conflicts, exercise due diligence, and provide written advice that reflects reasonable factual and legal assumptions. Sanctions include censure, suspension, and disbarment.
- Form 2848, Power of Attorney and Declaration of Representative, authorizes representation and receipt of confidential information. Form 8821, Tax Information Authorization, authorizes information disclosure but not representation.
- Examination begins with an initial contact and an information document request. After the examiner's report, the taxpayer may request a conference with IRS Appeals. A statutory notice of deficiency follows; the taxpayer generally has 90 days to petition the Tax Court, or 150 days if outside the United States.
- The assessment statute is generally three years from the later of the return due date or filing date. It is six years for a substantial omission of income exceeding 25% of gross income. There is no limitation for a failure to file or a fraudulent return.
- Collection tools include the federal tax lien, levy, installment agreements, offers in compromise, and Collection Due Process hearings. Penalties include failure to file, failure to pay, accuracy-related, and fraud penalties.
Worked example
A client receives a CP2000 notice proposing tax on an unreported Form 1099. The notice gives 30 days to respond. If the client agrees, the IRS assesses and bills; if the client disagrees, the client should respond in writing with support. Ignoring the notice leads to assessment and collection. A CP2000 is not a notice of deficiency, so the 90-day Tax Court window does not begin with it. If a formal notice of deficiency later arrives, the 90-day deadline is jurisdictional and must be calendared.
Traps
Confusing Form 8821 with Form 2848 costs representation rights. Missing the 90-day Tax Court deadline is usually fatal. Do not tell a client that Appeals can ignore the statute or the record. Do not assume the three-year assessment period always applies; substantial omissions and unfiled returns change it.