In Memo wi-21-0720-0774, the IRS has updated its taxpayer and third party authentication procedures.
The IRS may disclose returns and return information to third parties a taxpayer has authorized to receive that information. (IRC § 6103). Generally, the IRS may disclose return information to third parties if the taxpayer's consent to such disclosure is in writing and is signed and dated by the taxpayer. (Reg. § 301.6103(c)-1(b)(1)).
Taxpayers may use Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization to consent to the IRS's disclosure of their return information to a third party. (Form 2848, Instructions)
The IRS issues a nine-digit number (CAF number) to third parties seeking to access a taxpayer's return information using Form 2848 or Form 8821. Once issued, a third party uses their CAF number as an identifier on all their future CAF authorizations.
The IRS has updated its taxpayer and third party authentication procedures in two ways:
- In certain circumstances, when a taxpayer calls the IRS seeking return information, IRS employees will ask taxpayers to provide additional authentication of their identity. These circumstances include when a taxpayer does not have any open account issues or notices, and the taxpayer calls the IRS:
- to request verbal account information (other than refund status);
- to request transcript or tax account information to be sent to an address that is not the taxpayer’s address of record; or
- about an Identity Protection Personal Identification Number (IP PIN) that is lost, misplaced, or was not received by the taxpayer.
- To authenticate the third party’s identity, the IRS employee will ask for the third party's Centralized Authorization File (CAF) number, Social Security number (SSN), date of birth and the address listed on the third party's tax return. The third party must correctly answer all the IRS employee's authentication questions to obtain the taxpayer's return information.
The guidance also supplies a limited exception to the third party authentication procedures when the taxpayer calls the IRS and the third party is either part of the phone conversation, or is present in the room with the taxpayer, and the CAF authorization is already on file with the IRS. In this case, an IRS employee can discuss the taxpayer's return information with the third party without performing the above third party authentication procedures.
If there is no Form 2848 or Form 8821 on file with the IRS, the taxpayer can verify the identity of the third party, but the disclosure authority is limited to the duration of the call or meeting, and the taxpayer must remain part of the conversation throughout. If the taxpayer leaves the conversation, the employee must end the call or meeting.
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