The Treasury Inspector General for Tax Administration (TIGTA) recently published a report expressing concern over the submission of tax account transcripts to tax professionals through E-services. The concern is that confidential tax records are being sent without proper authorization.
Proper authorization normally means the signing of a Form 2848 Power of Attorney (POA). When this form is submitted to the IRS by mail or by fax, the “CAF Unit” reviews the form for accuracy and completeness and updates IRS computers accordingly. Then, when the tax professional (tax attorney, CPA, enrolled agent) contacts the IRS, they may obtain access to the taxpayer’s tax account and they may request tax account records either by phone, by fax, or online through E-services.
However, some tax professionals are authorized to submit Form 2848 electronically through IRS’ E-services. Electronic POA processing works differently, in that the tax professional is able to gain immediate access to sensitive tax records without human verification that the Form 2848 has been completed correctly. TIGTA’s concern in this audit was that some tax professionals may be submitting a “preliminary” or incomplete Form 2848 as a way to handle their most pressing tax problems immediately and then getting the required signatures afterwards. Or worse, some may be failing to secure a fully-executed POA at any point during the representation.
Of course, TIGTA did test this hypothesis using its customary small sample size, so we don’t really know how big of a problem this really is. Also, we don’t know if the problem extends to the tax relief community or if it is limited to tax preparation. But any breach in the process that could result in unauthorized disclosure of tax information should be taken seriously.