What does representation before the IRS mean? While representation rights have been around for a while, we've only recently started fielding calls from tax preparers asking this question. This is a result of the IRS' new Annual Filing Season Program (AFSP).
Representation, or Practice Before the IRS, is defined in IRS Publication 947 and covers all matters relating to any of the following:
- Communicating with the IRS on behalf of a taxpayer regarding the taxpayer's rights, privileges or liabilities under laws and regulations administered by the IRS.
- Representing a taxpayer at conferences, hearings or meetings with the IRS.
- Preparing, filing or submitting documents, or advising on the preparation, filing or submission of documents, including tax returns, with the IRS on behalf of a taxpayer.
- Providing a client with written tax advice on one or more Federal matters.
Any tax professional may prepare federal tax returns as long as they have an IRS Preparer Tax Identification Number (PTIN). However, there are different levels of skill, education and expertise. An important difference in the types of practitioners is "representation rights". The following lists the two categories of representation, the associated qualifications and credentials:
Unlimited Representation Rights – This allows the practitioner to represent taxpayers before the IRS on any tax matter. It does not matter who prepared the return. The following credential types have unlimited representation rights:
- Enrolled Agents (EA) – A person who has either passed the IRS' three-part comprehensive test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards.
- Certified Public Accountant (CPA) – Licensed by state boards of accountancy, the District of Columbia and U.S. territories. In addition to completing the Uniform CPA Examination, they must complete a study in accounting at a college or university and also meet experience and good character requirements established by their respective boards of accountancy.
- Attorneys – Licensed by state courts, the District of Columbia or their designees, such as the state bar.
Limited Representation Rights – Those with limited representation rights may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives and similar IRS employees, including the Taxpayer Advocate Service. They are not allowed to represent clients whose returns they did not prepare. In addition. they may not represent a client regarding appeals or collection issues even if they prepared the return. Effective January 1, 2016, only AFSP participants have limited practice rights.
Note: Effective for tax returns and claims for refunds prepared or signed after December 31, 2015, only unenrolled tax return preparers who have a record of completion under the Annual Filing Season Program for the calendar year of preparation and the calendar year of representation will be permitted to represent taxpayers before the IRS during an examination of a return they signed or prepared.
Last February the IRS launched a new, online public directory of tax return prepares to help taxpayers determine return preparer credentials and qualifications.
The directory is a searchable, sortable listing that includes the name, city, state and zip of those with limited and unlimited representation rights.