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Filing Tax Amendment

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Filing Tax Amendment

Filing tax amendment Publication 947 - Main Content Table of Contents Practice Before the IRSWhat Is Practice Before the IRS? Who Can Practice Before the IRS? Who Cannot Practice Before the IRS? How Does an Individual Become Enrolled? What Are the Rules of Practice? Authorizing a RepresentativeWhat Is a Power of Attorney? When Is a Power of Attorney Required? When Is a Power of Attorney Not Required? How Do I Fill Out Form 2848? What Happens to the Power of Attorney When Filed? How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Filing tax amendment Practice Before the IRS The Office of Professional Responsibility and the Return Preparer Office generally are responsible for administering and enforcing the regulations governing practice before the IRS. Filing tax amendment The Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. Filing tax amendment The Return Preparer Office is responsible for matters related to the authority to practice, including acting on applications for enrollment and administering competency testing and continuing education. Filing tax amendment What Is Practice Before the IRS? Practice before the IRS covers all matters relating to any of the following. Filing tax amendment Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS. Filing tax amendment Representing a taxpayer at conferences, hearings, or meetings with the IRS. Filing tax amendment Preparing and filing documents, including tax returns, with the IRS for a taxpayer. Filing tax amendment Providing a client with written advice which has a potential for tax avoidance or evasion. Filing tax amendment Furnishing information at the request of the IRS or appearing as a witness for the taxpayer is not practice before the IRS. Filing tax amendment Who Can Practice Before the IRS? The following individuals can practice before the IRS. Filing tax amendment However, any individual who is recognized to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. Filing tax amendment Form 2848 can be used for this purpose. Filing tax amendment Attorneys. Filing tax amendment   Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Filing tax amendment Certified public accountants (CPAs). Filing tax amendment   Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Filing tax amendment Enrolled agents. Filing tax amendment   Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Filing tax amendment Enrolled retirement plan agents. Filing tax amendment   Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Filing tax amendment The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Filing tax amendment Enrolled actuaries. Filing tax amendment   Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Filing tax amendment The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Filing tax amendment Student. Filing tax amendment    Under certain circumstances, a student who is supervised by a practitioner may request permission to represent another person before the IRS. Filing tax amendment For more information, see Authorization for special appearances, later. Filing tax amendment Registered tax return preparers and unenrolled return preparers. Filing tax amendment   A registered tax return preparer is an individual who has passed an IRS competency test and is authorized to prepare and sign tax returns as the preparer. Filing tax amendment An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. Filing tax amendment   Registered tax return preparers and unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable year or period covered by the tax return they prepared and signed. Filing tax amendment Registered tax return preparers and unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of Treasury. Filing tax amendment Registered tax return preparers and unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer. Filing tax amendment   If the unenrolled return preparer does not meet the requirements for limited representation, you may file Form 8821 to allow the preparer to inspect your tax information and receive copies of notices sent to you by the IRS. Filing tax amendment See Form 8821. Filing tax amendment Practice denied. Filing tax amendment   Any individual engaged in limited practice before the IRS who is involved in disreputable conduct is subject to disciplinary action. Filing tax amendment Disreputable conduct includes, but is not limited to, the list of items under Incompetence and Disreputable Conduct shown later under What Are the Rules of Practice. Filing tax amendment Other individuals who may serve as representatives. Filing tax amendment   Because of their special relationship with a taxpayer, the following individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer. Filing tax amendment An individual. Filing tax amendment An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority. Filing tax amendment A family member. Filing tax amendment An individual can represent members of his or her immediate family. Filing tax amendment Immediate family includes a spouse, child, parent, brother, or sister of the individual. Filing tax amendment An officer. Filing tax amendment A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. Filing tax amendment An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the organization before the IRS. Filing tax amendment A partner. Filing tax amendment A general partner may represent the partnership before the IRS. Filing tax amendment An employee. Filing tax amendment A regular full-time employee can represent his or her employer. Filing tax amendment An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority. Filing tax amendment A fiduciary. Filing tax amendment A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative. Filing tax amendment See Fiduciary under When Is a Power of Attorney Not Required, later. Filing tax amendment Representation Outside the United States Any individual may represent an individual or entity, who is outside the United States, before personnel of the IRS when such representation occurs outside the United States. Filing tax amendment See section 10. Filing tax amendment 7(c)(1)(vii) of Circular 230. Filing tax amendment Authorization for Special Appearances The Commissioner of Internal Revenue, or delegate, can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. Filing tax amendment The prospective representative must request this authorization in writing from the Office of Professional Responsibility. Filing tax amendment However, it is granted only when extremely compelling circumstances exist. Filing tax amendment If granted, the Commissioner, or delegate, will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted. Filing tax amendment The authorization letter should not be confused with a letter from an IRS center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number. Filing tax amendment The issuance of a CAF number does not indicate that an individual is either recognized or authorized to practice before the IRS. Filing tax amendment It merely confirms that a centralized file for authorizations has been established for the individual under that number. Filing tax amendment Students in LITCs and the STCP. Filing tax amendment   A student who works in a Low Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) who is supervised by a practitioner may request permission to represent another person before the IRS. Filing tax amendment Authorization requests must be made to the Office of Professional Responsibility. Filing tax amendment If granted, a letter authorizing the student's special appearance and detailing any conditions related to the appearance will be issued. Filing tax amendment Students receiving an authorization letter generally can represent taxpayers before any IRS function or office subject to any conditions in the authorization letter. Filing tax amendment If you intend to have a student represent you, review the authorization letter and ask your student, your student's supervisor, or the Office of Professional Responsibility if you have questions about the terms of the authorization. Filing tax amendment Who Cannot Practice Before the IRS? In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. Filing tax amendment If an individual loses eligibility to practice, the IRS will not recognize a power of attorney that names the individual as a representative. Filing tax amendment Corporations, associations, partnerships, and other persons that are not individuals. Filing tax amendment   These organizations (or persons) are not eligible to practice before the IRS. Filing tax amendment Loss of Eligibility Generally, individuals lose their eligibility to practice before the IRS in the following ways. Filing tax amendment Not meeting the requirements for renewal of enrollment (such as continuing professional education). Filing tax amendment Requesting to be placed in inactive retirement status. Filing tax amendment Being suspended or disbarred by the Office of Professional Responsibility for violating the regulations governing practice before the IRS. Filing tax amendment Failure to meet requirements. Filing tax amendment   Individuals who fail to comply with the requirements for eligibility for renewal of enrollment will be notified by the IRS. Filing tax amendment The notice will explain the reason for noncompliance and provide the individual with an opportunity to furnish information for reconsideration. Filing tax amendment The individual has 60 days from the date of the notice to respond. Filing tax amendment Inactive roster. Filing tax amendment   An individual will be placed on the roster of inactive individuals for a period of three years, if he or she: Fails to respond timely to the notice of noncompliance with the renewal requirements, Fails to file timely the application for renewal, or Does not satisfy the requirements of eligibility for renewal. Filing tax amendment The individual must file an application for renewal and satisfy all requirements for renewal after being placed in inactive status. Filing tax amendment Otherwise, at the conclusion of the next renewal cycle, he or she will be removed from the roster and the enrollment or registration terminated. Filing tax amendment Inactive retirement status. Filing tax amendment   Individuals who request to be placed in an inactive retirement status will be ineligible to practice before the IRS. Filing tax amendment They must continue to adhere to all renewal requirements. Filing tax amendment They can be reinstated to an active enrollment status by filing an application for renewal and providing evidence that they have completed the required continuing professional education hours for the enrollment cycle or registration year. Filing tax amendment Suspension and disbarment. Filing tax amendment   Individuals authorized to practice before the IRS are subject to disciplinary proceedings and may be suspended or disbarred for violating any regulation governing practice before the IRS. Filing tax amendment This includes engaging in acts of disreputable conduct. Filing tax amendment For more information, see Incompetence and Disreputable Conduct under What are the Rules of Practice, later. Filing tax amendment   Practitioners who are suspended in a disciplinary proceeding are not allowed to practice before the IRS during the period of suspension. Filing tax amendment See What Is Practice Before the IRS, earlier. Filing tax amendment   Practitioners who are disbarred in a disciplinary proceeding are not allowed to practice before the IRS. Filing tax amendment However, a practitioner can seek reinstatement from the Office of Professional Responsibility five years after disbarment. Filing tax amendment   If the practitioner seeks reinstatement, he or she may not practice before the IRS until the Office of Professional Responsibility authorizes reinstatement. Filing tax amendment The Office of Professional Responsibility may reinstate the practitioner if it is determined that: The practitioner's future conduct is not likely to be in violation of the regulations, and Granting the reinstatement would not be contrary to the public interest. Filing tax amendment How Does an Individual Become Enrolled? The Return Preparer Office can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. Filing tax amendment Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. Filing tax amendment In either case, certain application forms, discussed next, must be filed. Filing tax amendment Additionally, an applicant must not have engaged in any conduct that would justify suspension or disbarment from practice before the IRS. Filing tax amendment See Incompetence and Disreputable Conduct, later. Filing tax amendment Form 2587. Filing tax amendment   Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. Filing tax amendment Form 2587 can be filed online, by mail, or by fax. Filing tax amendment For more information, see instructions and fees listed on the form. Filing tax amendment To get Form 2587, see How To Get Tax Help, later. Filing tax amendment Form 23 and Form 23-EP. Filing tax amendment   Individuals who have passed the examination or are applying on the basis of past service and technical experience with the IRS can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, or Form 23-EP, Application for Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent. Filing tax amendment The application must include a check or money order in the amount of the fee shown on Form 23 or Form 23-EP. Filing tax amendment Alternatively, payment may be made electronically pursuant to instructions on the forms. Filing tax amendment To get Form 23 or Form 23-EP, see How To Get Tax Help, later. Filing tax amendment Form 5434. Filing tax amendment   An individual may apply as an enrolled actuary on the basis of past employment with the IRS and technical experience by filing Form 5434, Application for Enrollment, with the Joint Board for the Enrollment of Actuaries. Filing tax amendment The application must include a check or money order in the amount of the fee shown on Form 5434. Filing tax amendment To get Form 5434, see How To Get Tax Help, later. Filing tax amendment Period of enrollment. Filing tax amendment   An enrollment card will be issued to each individual whose enrollment application is approved. Filing tax amendment The individual is enrolled until the expiration date shown on the enrollment card or certificate. Filing tax amendment To continue practicing beyond the expiration date, the individual must request renewal of the enrollment by filing Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, or Form 8554-EP, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA). Filing tax amendment What Are the Rules of Practice? The rules governing practice before the IRS are published in the Code of Federal Regulations at 31 C. Filing tax amendment F. Filing tax amendment R. Filing tax amendment part 10 and reprinted in Treasury Department Circular No. Filing tax amendment 230 (Circular 230). Filing tax amendment An attorney, CPA, enrolled agent, enrolled retirement plan agent, registered tax return preparer, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. Filing tax amendment In addition, a practitioner cannot engage in disreputable conduct (discussed later). Filing tax amendment Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. Filing tax amendment Also, unenrolled preparers must comply with the rules of practice and conduct to exercise the privilege of limited practice before the IRS. Filing tax amendment See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers. Filing tax amendment Duties Practitioners must promptly submit records or information requested by officers or employees of the IRS, except when the practitioner believes on reasonable belief and good faith that the information is privileged. Filing tax amendment Communications with respect to tax advice between a federally authorized tax practitioner and a taxpayer generally are confidential to the same extent that communication would be privileged if it were between a taxpayer and an attorney if the advice relates to: Noncriminal tax matters before the IRS, or Noncriminal tax proceedings brought in federal court by or against the United States. Filing tax amendment Communications regarding corporate tax shelters. Filing tax amendment   This protection of tax advice communications does not apply to any written communications between a federally authorized tax practitioner and any person, including a director, shareholder, officer, employee, agent, or representative of a corporation if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter. Filing tax amendment Duty to advise. Filing tax amendment   A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, document, affidavit, or other required paper, has the responsibility to advise the client promptly of the noncompliance, error, or omission, and the consequences of the noncompliance, error, or omission. Filing tax amendment Due diligence. Filing tax amendment   A practitioner must exercise due diligence when performing the following duties. Filing tax amendment Preparing or assisting in the preparing, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters. Filing tax amendment Determining the correctness of oral or written representations made by him or her to the Department of the Treasury. Filing tax amendment Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS. Filing tax amendment Restrictions Practitioners are restricted from engaging in certain practices. Filing tax amendment The following paragraphs discuss some of these restricted practices. Filing tax amendment Delays. Filing tax amendment   A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS. Filing tax amendment Assistance from disbarred or suspended persons and former IRS employees. Filing tax amendment   A practitioner must not knowingly, directly or indirectly, do the following. Filing tax amendment Accept assistance from, or assist, any person who is under disbarment or suspension from practice before the IRS if the assistance relates to matters considered practice before the IRS. Filing tax amendment Accept assistance from any former government employee where provisions of Circular 230 or any federal law would be violated. Filing tax amendment Performance as a notary. Filing tax amendment   A practitioner who is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, cannot engage in any notary activities related to that matter. Filing tax amendment Negotiations of taxpayer refund checks. Filing tax amendment   Practitioners must not endorse or otherwise negotiate (cash) any refund check (including directing or accepting payment by any means, electronic or otherwise, in an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to the taxpayer. Filing tax amendment Incompetence and Disreputable Conduct Any practitioner or unenrolled return preparer may be disbarred or suspended from practice before the IRS, or censured, for incompetence or disreputable conduct. Filing tax amendment The following list contains examples of conduct that is considered disreputable. Filing tax amendment Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust. Filing tax amendment Knowingly giving false or misleading information in connection with federal tax matters, or participating in such activity. Filing tax amendment Soliciting employment by prohibited means as discussed in section 10. Filing tax amendment 30 of Circular 230. Filing tax amendment Willfully failing to file a federal tax return, evading or attempting to evade any federal tax or payment, or participating in such actions. Filing tax amendment Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes or other obligations due the United States. Filing tax amendment Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements. Filing tax amendment Being disbarred or suspended from practice as an attorney, CPA, public accountant, or actuary, by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any federal agency, body, or board. Filing tax amendment Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility of that other person. Filing tax amendment Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. Filing tax amendment Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. Filing tax amendment Censure, Disbarments, and Suspensions The Office of Professional Responsibility may censure or institute proceedings to censure, suspend or disbar any attorney, CPA, or enrolled agent who has violated Circular 230. Filing tax amendment A practitioner will be given the opportunity to demonstrate compliance with the rules before any disciplinary action is taken. Filing tax amendment Authorizing a Representative You may either represent yourself, or you may authorize an individual to represent you before the IRS. Filing tax amendment If you chose to have someone represent you, your representative must be a person eligible to practice before the IRS. Filing tax amendment See Who Can Practice Before the IRS, earlier. Filing tax amendment What Is a Power of Attorney? A power of attorney is your written authorization for an individual to act on your behalf. Filing tax amendment If the authorization is not limited, the individual generally can perform all acts that you can perform. Filing tax amendment The authority granted to a registered tax return preparer or an unenrolled preparer is limited. Filing tax amendment For information on the limits regarding registered tax return preparers, see Circular 230 §10. Filing tax amendment 3(f). Filing tax amendment For information on the limits regarding unenrolled preparers, see Publication 470. Filing tax amendment Acts performed. Filing tax amendment   Any representative, other than a registered tax return preparer or an unenrolled return preparer, can usually perform the following acts. Filing tax amendment Represent you before any office of the IRS. Filing tax amendment Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund. Filing tax amendment Sign a consent to extend the statutory time period for assessment or collection of a tax. Filing tax amendment Sign a closing agreement. Filing tax amendment Signing your return. Filing tax amendment   The representative named under a power of attorney is not permitted to sign your income tax return unless: The signature is permitted under the Internal Revenue Code and the related regulations (see Regulations section 1. Filing tax amendment 6012-1(a)(5)). Filing tax amendment You specifically authorize this in your power of attorney. Filing tax amendment For example, the regulation permits a representative to sign your return if you are unable to sign the return due to: Disease or injury. Filing tax amendment Continuous absence from the United States (including Puerto Rico) for a period of at least 60 days prior to the date required by law for filing the return. Filing tax amendment Other good cause if specific permission is requested of and granted by the IRS. Filing tax amendment When a return is signed by a representative, it must be accompanied by a power of attorney (or copy) authorizing the representative to sign the return. Filing tax amendment For more information, see the Form 2848 instructions. Filing tax amendment Limitation on substitution or delegation. Filing tax amendment   A recognized representative can substitute or delegate authority under the power of attorney to another recognized representative only if the act is specifically authorized by you on the power of attorney. Filing tax amendment   After a substitution has been made, only the newly recognized representative will be recognized as the taxpayer's representative. Filing tax amendment If a delegation of power has been made, both the original and the delegated representative will be recognized by the IRS to represent you. Filing tax amendment Disclosure of returns to a third party. Filing tax amendment   Your representative cannot execute consents that will allow the IRS to disclose tax return or return information to a third party unless you specifically delegate this authority to your representative on line 5 of Form 2848. Filing tax amendment Incapacity or incompetency. Filing tax amendment   A power of attorney is generally terminated if you become incapacitated or incompetent. Filing tax amendment   The power of attorney can continue, however, in the case of your incapacity or incompetency if you authorize this on line 5 “Other” of the Form 2848 and if your non-IRS durable power of attorney meets all the requirements for acceptance by the IRS. Filing tax amendment See Non-IRS powers of attorney, later. Filing tax amendment When Is a Power of Attorney Required? Submit a power of attorney when you want to authorize an individual to represent you before the IRS, whether or not the representative performs any of the other acts cited earlier under What Is a Power of Attorney. Filing tax amendment A power of attorney is most often required when you want to authorize another individual to perform at least one of the following acts on your behalf. Filing tax amendment Represent you at a meeting with the IRS. Filing tax amendment Prepare and file a written response to the IRS. Filing tax amendment Form Required Use Form 2848 to appoint a recognized representative to act on your behalf before the IRS. Filing tax amendment Individuals recognized to practice before the IRS are listed under Part II, Declaration of Representative, of Form 2848. Filing tax amendment Your representative must complete that part of the form. Filing tax amendment Non-IRS powers of attorney. Filing tax amendment   The IRS will accept a non-IRS power of attorney, but a completed Form 2848 must be attached in order for the power of attorney to be entered on the Centralized Authorization File (CAF) system. Filing tax amendment For more information, see Processing a non-IRS power of attorney, later. Filing tax amendment   If you want to use a power of attorney document other than Form 2848, it must contain the following information. Filing tax amendment Your name and mailing address. Filing tax amendment Your social security number and/or employer identification number. Filing tax amendment Your employee plan number, if applicable. Filing tax amendment The name and mailing address of your representative(s). Filing tax amendment The types of tax involved. Filing tax amendment The federal tax form number. Filing tax amendment The specific year(s) or period(s) involved. Filing tax amendment For estate tax matters, the decedent's date of death. Filing tax amendment A clear expression of your intention concerning the scope of authority granted to your representative(s). Filing tax amendment Your signature and date. Filing tax amendment You also must attach to the non-IRS power of attorney a signed and dated statement made by your representative. Filing tax amendment This statement, which is referred to as the Declaration of Representative, is contained in Part II of Form 2848. Filing tax amendment The statement should read: I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority, I am aware of the regulations contained in Circular 230, I am authorized to represent the taxpayer(s) identified in the power of attorney, and I am an individual described in 26 CFR 601. Filing tax amendment 502(b). Filing tax amendment Required information missing. Filing tax amendment   The IRS will not accept your non-IRS power of attorney if it does not contain all the information listed above. Filing tax amendment You can sign and submit a completed Form 2848 or a new non-IRS power of attorney that contains all the information. Filing tax amendment If you cannot sign an acceptable replacement document, your attorney-in-fact may be able to perfect (make acceptable to the IRS) your non-IRS power of attorney by using the procedure described next. Filing tax amendment Procedure for perfecting a non-IRS power of attorney. Filing tax amendment   Under the following conditions, the attorney-in-fact named in your non-IRS power of attorney can sign a Form 2848 on your behalf. Filing tax amendment The original non-IRS power of attorney grants authority to handle federal tax matters (for example, general authority to perform any acts). Filing tax amendment The attorney-in-fact attaches a statement (signed under penalty of perjury) to the Form 2848 stating that the original non-IRS power of attorney is valid under the laws of the governing jurisdiction. Filing tax amendment Example. Filing tax amendment John Elm, a taxpayer, signs a non-IRS durable power of attorney that names his neighbor and CPA, Ed Larch, as his attorney-in-fact. Filing tax amendment The power of attorney grants Ed the authority to perform any and all acts on John's behalf. Filing tax amendment However, it does not list specific tax-related information such as types of tax or tax form numbers. Filing tax amendment Shortly after John signs the power of attorney, he is declared incompetent. Filing tax amendment Later, a federal tax matter arises concerning a prior year return filed by John. Filing tax amendment Ed attempts to represent John before the IRS but is rejected because the durable power of attorney does not contain required information. Filing tax amendment If Ed attaches a statement (signed under the penalty of perjury) that the durable power of attorney is valid under the laws of the governing jurisdiction, he can sign a completed Form 2848 and submit it on John's behalf. Filing tax amendment If Ed can practice before the IRS (see Who Can Practice Before the IRS, earlier), he can name himself as representative on Form 2848. Filing tax amendment Otherwise, he must name another individual who can practice before the IRS. Filing tax amendment Processing a non-IRS power of attorney. Filing tax amendment   The IRS has a centralized computer database system called the CAF system. Filing tax amendment This system contains information on the authority of taxpayer representatives. Filing tax amendment Generally, when you submit a power of attorney document to the IRS, it is processed for inclusion on the CAF system. Filing tax amendment Entry of your power of attorney on the CAF system enables IRS personnel, who do not have a copy of your power of attorney, to verify the authority of your representative by accessing the CAF. Filing tax amendment It also enables the IRS to automatically send copies of notices and other IRS communications to your representative if you specify that your representative should receive those communications. Filing tax amendment   You can have your non-IRS power of attorney entered on the CAF system by attaching it to a completed Form 2848 and submitting it to the IRS. Filing tax amendment Your signature is not required; however, your attorney-in-fact must sign the Declaration of Representative (see Part II of Form 2848). Filing tax amendment Preparation of Form — Helpful Hints The preparation of Form 2848 is illustrated by an example, later under How Do I Fill Out Form 2848. Filing tax amendment However, the following will also assist you in preparing the form. Filing tax amendment Line-by-line hints. Filing tax amendment   The following hints are summaries of some of the line-by-line instructions for Form 2848. Filing tax amendment Line 1—Taxpayer information. Filing tax amendment   If a joint return is involved, the husband and wife each file a separate Form 2848 if they both want to be represented. Filing tax amendment If only one spouse wants to be represented in the matter, that spouse files a Form 2848. Filing tax amendment Line 2—Representative(s). Filing tax amendment   Only individuals may be named as representatives. Filing tax amendment If your representative has not been assigned a CAF number, enter “None” on that line and the IRS will issue one to your representative. Filing tax amendment If the representative's address or phone number has changed since the CAF number was issued, you should check the appropriate box. Filing tax amendment Enter your representative's fax number if available. Filing tax amendment   If you want to name more than three representatives, attach additional Form(s) 2848. Filing tax amendment The IRS can send copies of notices and communications to two of your representatives. Filing tax amendment You must, however, check the boxes on line 2 of the Form 2848 if you want the IRS to routinely send copies of notices and communications to your representatives. Filing tax amendment If you do not check the boxes, your representatives will not routinely receive copies of notices and communications. Filing tax amendment Line 3—Tax matters. Filing tax amendment   You may list any tax years or periods that have already ended as of the date you sign the power of attorney. Filing tax amendment However, you may include on a power of attorney only future tax periods that end no later than 3 years after the date the power of attorney is received by the IRS. Filing tax amendment The 3 future periods are determined starting after December 31 of the year the power of attorney is received by the IRS. Filing tax amendment However, avoid general references such as “all years” or “all taxes. Filing tax amendment ” Any Form 2848 with general references will be returned. Filing tax amendment Line 4—Specific use not recorded on Centralized Authorization File (CAF). Filing tax amendment   Certain matters cannot be recorded on the CAF system. Filing tax amendment Examples of such matters include, but are not limited to, the following. Filing tax amendment Requests for a private letter ruling or technical advice. Filing tax amendment Applications for an employer identification number (EIN). Filing tax amendment Claims filed on Form 843, Claim for Refund and Request for Abatement. Filing tax amendment Corporate dissolutions. Filing tax amendment Requests for change of accounting method. Filing tax amendment Requests for change of accounting period. Filing tax amendment Applications for recognition of exemption under sections 501(c)(3), 501(a), or 521 (Forms 1023, 1034, or 1028). Filing tax amendment Request for a determination of the qualified status of an employee benefit plan (Forms 5300, 5307, or 5310). Filing tax amendment Application for Award for Original Information under section 7623. Filing tax amendment Voluntary submissions under the Employee Plans Compliance Resolution System (EPCRS). Filing tax amendment Freedom of Information Act requests. Filing tax amendment If the tax matter described on line 3 of Form 2848 concerns one of these matters specifically, check the box on line 4. Filing tax amendment If this box is checked, the representative should mail or fax the power of attorney to the IRS office handling the matter. Filing tax amendment Otherwise, the representative should bring a copy of the power of attorney to each meeting with the IRS. Filing tax amendment Where To File a Power of Attorney Generally, you can mail or fax a paper Form 2848 directly to the IRS. Filing tax amendment To determine where you should file Form 2848, see Where To File in the instructions for Form 2848. Filing tax amendment If Form 2848 is for a specific use, mail or fax it to the office handling that matter. Filing tax amendment For more information on specific use, see the Instructions for Form 2848, line 4. Filing tax amendment FAX copies. Filing tax amendment   The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (fax). Filing tax amendment If you choose to file a power of attorney by fax, be sure the appropriate IRS office is equipped to accept this type of transmission. Filing tax amendment Your representative may be able to file Form 2848 electronically via the IRS website. Filing tax amendment For more information, your representative can go to www. Filing tax amendment irs. Filing tax amendment gov and under the Tax Professionals tab, click on e-services–Online Tools for Tax Professionals. Filing tax amendment If you complete Form 2848 for electronic signature authorization, do not file Form 2848 with the IRS. Filing tax amendment Instead, give it to your representative, who will retain the document. Filing tax amendment Updating a power of attorney. Filing tax amendment   Submit any update or modification to an existing power of attorney in writing. Filing tax amendment Your signature (or the signature of the individual(s) authorized to sign on your behalf) is required. Filing tax amendment Do this by sending the updated Form 2848 or non-IRS power of attorney to the IRS office(s) where you previously sent the original(s), including the center where the related return was, or will be filed. Filing tax amendment   A recognized representative may substitute or delegate authority if you specifically authorize your representative to substitute or delegate representation in the original power of attorney. Filing tax amendment To make a substitution or delegation, the representative must file the following items with the IRS office(s) where the power of attorney was filed. Filing tax amendment A written notice of substitution or delegation signed by the recognized representative. Filing tax amendment A written declaration of representative made by the new representative. Filing tax amendment A copy of the power of attorney that specifically authorizes the substitution or delegation. Filing tax amendment Retention/Revocation of Prior Power(s) of Attorney A newly filed power of attorney concerning the same matter will revoke a previously filed power of attorney. Filing tax amendment However, the new power of attorney will not revoke the prior power of attorney if it specifically states it does not revoke such prior power of attorney and either of the following are attached to the new power of attorney. Filing tax amendment A copy of the unrevoked prior power of attorney, or A statement signed by the taxpayer listing the name and address of each representative authorized under the prior unrevoked power of attorney. Filing tax amendment Note. Filing tax amendment The filing of Form 2848 will not revoke any  Form 8821 that is in effect. Filing tax amendment Revocation of Power of Attorney/Withdrawal of Representative If you want to revoke an existing power of attorney and do not want to name a new representative, or if a representative wants to withdraw from representation, mail or fax a copy of the previously executed power of attorney to the IRS, or if the power of attorney is for a specific matter, to the IRS office handling the matter. Filing tax amendment If the taxpayer is revoking the power of attorney, the taxpayer must write “REVOKE” across the top of the first page with a current signature and date below this annotation. Filing tax amendment If the representative is withdrawing from the representation, the representative must write “WITHDRAW” across the top of the first page with a current signature and date below this annotation. Filing tax amendment If you do not have a copy of the power of attorney you want to revoke or withdraw, send a statement to the IRS. Filing tax amendment The statement of revocation or withdrawal must indicate that the authority of the power of attorney is revoked or withdrawn, list the matters and periods, and must be signed and dated by the taxpayer or representative as applicable. Filing tax amendment If the taxpayer is revoking, list the name and address of each recognized representative whose authority is revoked. Filing tax amendment When the taxpayer is completely revoking authority, the form should state “remove all years/periods” instead of listing the specific tax matter, years, or periods. Filing tax amendment If the representative is withdrawing, list the name, TIN, and address (if known) of the taxpayer. Filing tax amendment To revoke a specific use power of attorney, send the power of attorney or statement of revocation to the IRS office handling your case, using the above instructions. Filing tax amendment A power of attorney held by a student will be recorded on the CAF system for 130 days from the receipt date. Filing tax amendment If you are authorizing a student to represent you after that time, you will need to submit a current and valid Form 2848. Filing tax amendment When Is a Power of Attorney Not Required? A power of attorney is not required when the third party is not dealing with the IRS as your representative. Filing tax amendment The following situations do not require a power of attorney. Filing tax amendment Providing information to the IRS. Filing tax amendment Authorizing the disclosure of tax return information through Form 8821, Tax Information Authorization, or other written or oral disclosure consent. Filing tax amendment Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document. Filing tax amendment Allowing a tax matters partner or person (TMP) to perform acts for the partnership. Filing tax amendment Allowing the IRS to discuss return information with a fiduciary. Filing tax amendment How Do I Fill Out Form 2848? The following example illustrates how to complete Form 2848. Filing tax amendment The two completed forms for this example are shown on the next pages. Filing tax amendment Example. Filing tax amendment Stan and Mary Doe have been notified that their joint tax returns (Forms 1040) for 2009, 2010, and 2011 are being examined. Filing tax amendment They have decided to appoint Jim Smith, an enrolled agent, to represent them in this matter and any future matters concerning these returns. Filing tax amendment Jim, who has prepared returns at the same location for years, already has a Centralized Authorization File (CAF) number assigned to him. Filing tax amendment Mary does not want Jim to sign any agreements on her behalf, but Stan is willing to have Jim do so. Filing tax amendment They want copies of all notices and written communications sent to Jim. Filing tax amendment This is the first time Stan and Mary have given power of attorney to anyone. Filing tax amendment They should each complete a Form 2848 as follows. Filing tax amendment Line 1—Taxpayer information. Filing tax amendment   Stan and Mary must each file a separate Form 2848. Filing tax amendment On his separate Form 2848, Stan enters his name, street address, and social security number in the spaces provided. Filing tax amendment Mary does likewise on her separate Form 2848. Filing tax amendment Line 2—Representative(s). Filing tax amendment   On their separate Forms 2848, Stan and Mary each enters the name and current address of their chosen representative, Jim Smith. Filing tax amendment Both Stan and Mary want Jim Smith to receive notices and communications concerning the matters identified in line 3, so on their separate Forms 2848, Stan and Mary each checks the box in the first column of line 2. Filing tax amendment They also enter Mr. Filing tax amendment Smith's CAF number, his telephone number, and his fax number. Filing tax amendment Mr. Filing tax amendment Smith's address, telephone number, and fax number have not changed since the IRS issued his CAF number, so Stan and Mary do not check the boxes in the second column. Filing tax amendment Line 3—Tax Matters. Filing tax amendment   On their separate Forms 2848, Stan and Mary each enters “income” for the type of tax, “1040” for the form number, and “2009, 2010, and 2011” for the tax years. Filing tax amendment Line 4—Specific use not recorded on Centralized Authorization File (CAF). Filing tax amendment   On their separate Forms 2848, Stan and Mary make no entry on this line because they do not want to restrict the use of their powers of attorney to a specific use that is not recorded on the CAF. Filing tax amendment See Preparation of Form — Helpful Hints, earlier. Filing tax amendment Line 5—Acts authorized. Filing tax amendment   Mary wants to sign any agreement that reflects changes to her and Stan's joint 2009, 2010, and 2011 income tax liability, so she writes “Taxpayer must sign any agreement form” on line 5 of her Form 2848. Filing tax amendment Stan does not wish to restrict the authority of Jim Smith in this regard, so he leaves line 5 of his Form 2848 blank. Filing tax amendment If either Mary or Stan had chosen, they could have listed other restrictions on line 5 of their separate Forms 2848. Filing tax amendment Line 6—Retention/revocation of prior power(s) of attorney. Filing tax amendment   Stan and Mary are each filing their first powers of attorney, so they make no entry on this line. Filing tax amendment However, if they had filed prior powers of attorney, the filing of this current power would revoke any earlier ones for the same tax matter(s) unless they checked the box on line 6 and attached a copy of the prior power of attorney that they wanted to remain in effect. Filing tax amendment   If Mary later decides that she can handle the examination on her own, she can revoke her power of attorney even though Stan does not revoke his power of attorney. Filing tax amendment (See Revocation of Power of Attorney/Withdrawal of Representative, earlier, for the special rules that apply. Filing tax amendment ) Line 7—Signature of taxpayer. Filing tax amendment   Stan and Mary each signs and dates his or her Form 2848. Filing tax amendment If a taxpayer does not sign, the IRS cannot accept the form. Filing tax amendment Part II—Declaration of Representative. Filing tax amendment   Jim Smith must complete this part of Form 2848. Filing tax amendment If he does not sign this part, the IRS cannot accept the form. Filing tax amendment What Happens to the Power of Attorney When Filed? A power of attorney will be recognized after it is received, reviewed, and determined by the IRS to contain the required information. Filing tax amendment However, until a power of attorney is entered on the CAF system, IRS personnel may be unaware of the authority of the person you have named to represent you. Filing tax amendment Therefore, during this interim period, IRS personnel may request that you or your representative bring a copy to any meeting with the IRS. Filing tax amendment This image is too large to be displayed in the current screen. Filing tax amendment Please click the link to view the image. Filing tax amendment Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Filing tax amendment Please click the link to view the image. Filing tax amendment Filled-in Form 2848 - Page 2 This image is too large to be displayed in the current screen. Filing tax amendment Please click the link to view the image. Filing tax amendment Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Filing tax amendment Please click the link to view the image. Filing tax amendment Filled-in Form 2848 - Page 2 Processing and Handling How the power of attorney is processed and handled depends on whether it is a complete or incomplete document. Filing tax amendment Incomplete document. Filing tax amendment   If Form 2848 is incomplete, the IRS will attempt to secure the missing information either by writing or telephoning you or your representative. Filing tax amendment For example, if your signature or signature date is missing, the IRS will contact you. Filing tax amendment If information concerning your representative is missing and information sufficient to make a contact (such as an address and/or a telephone number) is on the document, the IRS will try to contact your representative. Filing tax amendment   In either case, the power of attorney is not considered valid until all required information is entered on the document. Filing tax amendment The individual(s) named as representative(s) will not be recognized to practice before the IRS, on your behalf, until the document is complete and accepted by the IRS. Filing tax amendment Complete document. Filing tax amendment   If the power of attorney is complete and valid, the IRS will take action to recognize the representative. Filing tax amendment In most instances, this includes processing the document on the CAF system. Filing tax amendment Recording the data on the CAF system enables the IRS to direct copies of mailings to authorized representatives and to readily recognize the scope of authority granted. Filing tax amendment Documents not processed on CAF. Filing tax amendment   Specific-use powers of attorney are not processed on the CAF system (see Preparation of Form – Helpful Hints, earlier). Filing tax amendment For example, a power of attorney that is a one-time or specific-issue grant of authority is not processed on the CAF system. Filing tax amendment These documents remain with the related case files. Filing tax amendment In this situation, you should check the box on line 4 of Form 2848. Filing tax amendment In these situations, the representative should bring a copy of the power of attorney to each meeting with the IRS. Filing tax amendment Dealing With the Representative After a valid power of attorney is filed, the IRS will recognize your representative. Filing tax amendment However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, nonprivileged information, the IRS can contact you directly. Filing tax amendment For example, in most instances in which a power of attorney is recognized, the IRS will contact the representative to set up appointments and to provide lists of required items. Filing tax amendment However, if the representative is unavailable, does not respond to repeated requests, and does not provide required items (other than items considered privileged), the IRS can bypass your representative and contact you directly. Filing tax amendment If a representative engages in conduct described above, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. Filing tax amendment Notices and other correspondence. Filing tax amendment   If you have a recognized representative, you and the representative will routinely receive notices and other correspondence from the IRS (either the original or a copy) if you checked the box in the left column of line 2 of Form 2848. Filing tax amendment If the power of attorney is processed on the CAF system, the IRS will send your representative(s) a duplicate of all computer-generated correspondence that is sent to you. Filing tax amendment This includes notices and letters produced either at the Martinsburg Computing Center, or other IRS centers. Filing tax amendment The IRS employee handling the case is responsible for ensuring that the original and any requested copies of each manually-generated correspondence are sent to you and your representative(s) in accordance with your authorization. Filing tax amendment How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Filing tax amendment By selecting the method that is best for you, you will have quick and easy access to tax help. Filing tax amendment Free help with your return. Filing tax amendment   Free help in preparing your return is available nationwide from IRS-certified volunteers. Filing tax amendment The Volunteer Income Tax Assistance (VITA) program is designed to help low and moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Filing tax amendment Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Filing tax amendment To find the nearest VITA or TCE site, visit IRS. Filing tax amendment gov or call 1-800-906-9887 or 1-800-829-1040. Filing tax amendment   As part of the TCE program, AARP offers the Tax-Aide counseling program. Filing tax amendment To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Filing tax amendment aarp. Filing tax amendment org/money/taxaide. Filing tax amendment   For more information on these programs, go to IRS. Filing tax amendment gov and enter keyword “VITA” in the upper right-hand corner. Filing tax amendment Internet. Filing tax amendment You can access the IRS website at IRS. Filing tax amendment gov 24 hours a day, 7 days a week to: E-file your return. Filing tax amendment Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Filing tax amendment Check the status of your refund. Filing tax amendment Go to IRS. Filing tax amendment gov and click on Where's My Refund. Filing tax amendment Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Filing tax amendment If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Filing tax amendment Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Filing tax amendment Download forms, including talking tax forms, instructions, and publications. Filing tax amendment Order IRS products online. Filing tax amendment Research your tax questions online. Filing tax amendment Search publications online by topic or keyword. Filing tax amendment Use the online Internal Revenue Code, regulations, or other official guidance. Filing tax amendment View Internal Revenue Bulletins (IRBs) published in the last few years. Filing tax amendment Figure your withholding allowances using the withholding calculator online at www. Filing tax amendment irs. Filing tax amendment gov/individuals. Filing tax amendment Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Filing tax amendment irs. Filing tax amendment gov/individuals. Filing tax amendment Sign up to receive local and national tax news by email. Filing tax amendment Get information on starting and operating a small business. Filing tax amendment Phone. Filing tax amendment Many services are available by phone. Filing tax amendment   Ordering forms, instructions, and publications. Filing tax amendment Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Filing tax amendment You should receive your order within 10 days. Filing tax amendment Asking tax questions. Filing tax amendment Call the IRS with your tax questions at 1-800-829-1040. Filing tax amendment Solving problems. Filing tax amendment You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Filing tax amendment An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Filing tax amendment Call your local Taxpayer Assistance Center for an appointment. Filing tax amendment To find the number, go to www. Filing tax amendment irs. Filing tax amendment gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Filing tax amendment TTY/TDD equipment. Filing tax amendment If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Filing tax amendment TeleTax topics. Filing tax amendment Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Filing tax amendment Refund information. Filing tax amendment To check the status of your refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Filing tax amendment Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Filing tax amendment If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Filing tax amendment Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Filing tax amendment If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Filing tax amendment Other refund information. Filing tax amendment To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Filing tax amendment Evaluating the quality of our telephone services. Filing tax amendment To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Filing tax amendment One method is for a second IRS representative to listen in on or record random telephone calls. Filing tax amendment Another is to ask some callers to complete a short survey at the end of the call. Filing tax amendment Walk-in. Filing tax amendment Many products and services are available on a walk-in basis. Filing tax amendment   Products. Filing tax amendment You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Filing tax amendment Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Filing tax amendment Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Filing tax amendment Services. Filing tax amendment You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Filing tax amendment An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Filing tax amendment If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Filing tax amendment No appointment is necessary—just walk in. Filing tax amendment If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Filing tax amendment A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Filing tax amendment If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Filing tax amendment All other issues will be handled without an appointment. Filing tax amendment To find the number of your local office, go to  www. Filing tax amendment irs. Filing tax amendment gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Filing tax amendment Mail. Filing tax amendment You can send your order for forms, instructions, and publications to the address below. Filing tax amendment You should receive a response within 10 days after your request is received. Filing tax amendment  Internal Revenue Service 1201 N. Filing tax amendment Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Filing tax amendment   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Filing tax amendment Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Filing tax amendment We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Filing tax amendment Remember, the worst thing you can do is nothing at all. Filing tax amendment   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Filing tax amendment You face (or your business is facing) an immediate threat of adverse action. Filing tax amendment You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Filing tax amendment   If you qualify for our help, we’ll do everything we can to get your problem resolved. Filing tax amendment You will be assigned to one advocate who will be with you at every turn. Filing tax amendment We have offices in every state, the District of Columbia, and Puerto Rico. Filing tax amendment Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Filing tax amendment And our services are always free. Filing tax amendment   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Filing tax amendment Our tax toolkit at www. Filing tax amendment TaxpayerAdvocate. Filing tax amendment irs. Filing tax amendment gov can help you understand these rights. Filing tax amendment   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Filing tax amendment irs. Filing tax amendment gov/advocate. Filing tax amendment You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Filing tax amendment   TAS also handles large-scale or systemic problems that affect many taxpayers. Filing tax amendment If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Filing tax amendment irs. Filing tax amendment gov/advocate. Filing tax amendment Low Income Taxpayer Clinics (LITCs). Filing tax amendment   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Filing tax amendment Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Filing tax amendment These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Filing tax amendment Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Filing tax amendment For more information and to find a clinic near you, see the LITC page on www. Filing tax amendment irs. Filing tax amendment gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Filing tax amendment This publication is also available by calling 1-800-829-3676 or at your local IRS office. Filing tax amendment Free tax services. Filing tax amendment   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Filing tax amendment Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Filing tax amendment The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Filing tax amendment The majority of the information and services listed in this publication are available to you free of charge. Filing tax amendment If there is a fee associated with a resource or service, it is listed in the publication. Filing tax amendment   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Filing tax amendment DVD for tax products. Filing tax amendment You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Filing tax amendment Prior-year forms, instructions, and publications. Filing tax amendment Tax Map: an electronic research tool and finding aid. Filing tax amendment Tax law frequently asked questions. Filing tax amendment Tax Topics from the IRS telephone response system. Filing tax amendment Internal Revenue Code—Title 26 of the U. Filing tax amendment S. Filing tax amendment Code. Filing tax amendment Links to other Internet based Tax Research Materials. Filing tax amendment Fill-in, print, and save features for most tax forms. Filing tax amendment Internal Revenue Bulletins. Filing tax amendment Toll-free and email technical support. Filing tax amendment Two releases during the year. Filing tax amendment  – The first release will ship the beginning of January. Filing tax amendment  – The final release will ship the beginning of March. Filing tax amendment Purchase the DVD from National Technical Information Service (NTIS) at www. Filing tax amendment irs. 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The Filing Tax Amendment

Filing tax amendment 2. Filing tax amendment   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. Filing tax amendment ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. Filing tax amendment In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. Filing tax amendment Those cases are called “abusive tax shelters. Filing tax amendment ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. Filing tax amendment Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . Filing tax amendment Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Filing tax amendment Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. Filing tax amendment They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. Filing tax amendment Despite appearances to the contrary, the taxpayer generally risks little. Filing tax amendment Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. Filing tax amendment Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. Filing tax amendment (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. Filing tax amendment ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. Filing tax amendment This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. Filing tax amendment Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. Filing tax amendment However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. Filing tax amendment Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. Filing tax amendment These provisions include the following. Filing tax amendment Disclosure of reportable transactions. Filing tax amendment   You must disclose information for each reportable transaction in which you participate. Filing tax amendment See Reportable Transaction Disclosure Statement , later. Filing tax amendment   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. Filing tax amendment To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. Filing tax amendment   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. Filing tax amendment They must provide this number to all persons to whom they acted as a material advisor. Filing tax amendment They must provide the number at the time the transaction is entered into. Filing tax amendment If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. Filing tax amendment For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. Filing tax amendment Requirement to maintain list. Filing tax amendment   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. Filing tax amendment The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. Filing tax amendment See Regulations section 301. Filing tax amendment 6112-1 for more information (including what information is required to be included on the list). Filing tax amendment Confidentiality privilege. Filing tax amendment   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. Filing tax amendment Appraisal requirement for donated property. Filing tax amendment   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. Filing tax amendment If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. Filing tax amendment If you file electronically, see Form 8453, U. Filing tax amendment S. Filing tax amendment Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. Filing tax amendment For more information about appraisals, including exceptions, see Publication 561. Filing tax amendment Passive activity loss and credit limits. Filing tax amendment   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. Filing tax amendment For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. Filing tax amendment Interest on penalties. Filing tax amendment   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. Filing tax amendment Accounting method restriction. Filing tax amendment   Tax shelters generally cannot use the cash method of accounting. Filing tax amendment Uniform capitalization rules. Filing tax amendment   The uniform capitalization rules generally apply to producing property or acquiring it for resale. Filing tax amendment Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. Filing tax amendment For more information, see Publication 538. Filing tax amendment Denial of deduction for interest on an underpayment due to a reportable transaction. Filing tax amendment   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. Filing tax amendment This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. Filing tax amendment Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. Filing tax amendment The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. Filing tax amendment Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. Filing tax amendment So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. Filing tax amendment In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. Filing tax amendment The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. Filing tax amendment Investor Reporting You may be required to file a reportable transaction disclosure statement. Filing tax amendment Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. Filing tax amendment Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. Filing tax amendment Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). Filing tax amendment In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. Filing tax amendment  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. Filing tax amendment If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. Filing tax amendment If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. Filing tax amendment See Penalty for failure to disclose a reportable transaction , later under Penalties. Filing tax amendment The following discussion briefly describes reportable transactions. Filing tax amendment For more details, see the Instructions for Form 8886. Filing tax amendment Reportable transaction. Filing tax amendment   A reportable transaction is any of the following. Filing tax amendment A listed transaction. Filing tax amendment A confidential transaction. Filing tax amendment A transaction with contractual protection. Filing tax amendment A loss transaction. Filing tax amendment A transaction of interest entered into after November 1, 2006. Filing tax amendment Note. Filing tax amendment Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. Filing tax amendment Listed transaction. Filing tax amendment   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. Filing tax amendment These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. Filing tax amendment For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2009-31_IRB/ar07. Filing tax amendment html. Filing tax amendment Confidential transaction. Filing tax amendment   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. Filing tax amendment A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. Filing tax amendment The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. Filing tax amendment Transaction with contractual protection. Filing tax amendment   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. Filing tax amendment For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2007-07_IRB/ar15. Filing tax amendment html. Filing tax amendment Loss transaction. Filing tax amendment   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. Filing tax amendment A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. Filing tax amendment   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. Filing tax amendment For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2004-50_IRB/ar11. Filing tax amendment html. Filing tax amendment Transaction of interest. Filing tax amendment   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. Filing tax amendment The IRS has identified the following transactions of interest. Filing tax amendment “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. Filing tax amendment R. Filing tax amendment B. Filing tax amendment 545, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2007-36_IRB/ar20. Filing tax amendment html. Filing tax amendment Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. Filing tax amendment R. Filing tax amendment B. Filing tax amendment 544, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2007-36_IRB/ar19. Filing tax amendment html. Filing tax amendment Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. Filing tax amendment R. Filing tax amendment B. Filing tax amendment 1194, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2008-47_IRB/ar11. Filing tax amendment html. Filing tax amendment Certain transactions involving a U. Filing tax amendment S. Filing tax amendment taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. Filing tax amendment R. Filing tax amendment B. Filing tax amendment 312, available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2009-03_IRB/ar10. Filing tax amendment html. Filing tax amendment   For updates to this list, go to www. Filing tax amendment irs. Filing tax amendment gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. Filing tax amendment Penalties Investing in an abusive tax shelter may lead to substantial expenses. Filing tax amendment First, the promoter generally charges a substantial fee. Filing tax amendment If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. Filing tax amendment You may also be subject to the penalty for failure to pay tax. Filing tax amendment These penalties are explained in the following paragraphs. Filing tax amendment Accuracy-related penalties. Filing tax amendment   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). Filing tax amendment Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. Filing tax amendment Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. Filing tax amendment   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. Filing tax amendment   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). Filing tax amendment Negligence or disregard of rules or regulations. Filing tax amendment   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. Filing tax amendment The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. Filing tax amendment    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Filing tax amendment It also includes any failure to keep adequate books and records. Filing tax amendment A return position that has a reasonable basis is not negligence. Filing tax amendment   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. Filing tax amendment   The penalty for disregard of rules and regulations can be avoided if all the following are true. Filing tax amendment You keep adequate books and records. Filing tax amendment You have a reasonable basis for your position on the tax issue. Filing tax amendment You make an adequate disclosure of your position. Filing tax amendment Use Form 8275 to make your disclosure and attach it to your return. Filing tax amendment To disclose a position contrary to a regulation, use Form 8275-R. Filing tax amendment Use Form 8886 to disclose a reportable transaction (discussed earlier). Filing tax amendment Substantial understatement of tax. Filing tax amendment   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. Filing tax amendment An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. Filing tax amendment The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. Filing tax amendment   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. Filing tax amendment In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. Filing tax amendment Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. Filing tax amendment   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. Filing tax amendment An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. Filing tax amendment Substantial valuation misstatement. Filing tax amendment   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. Filing tax amendment The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. Filing tax amendment You underpaid your tax by more than $5,000 because of the misstatement. Filing tax amendment You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. Filing tax amendment   You may be assessed a penalty of 40% for a gross valuation misstatement. Filing tax amendment If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. Filing tax amendment The penalty rate is also 40% if the property's correct value or adjusted basis is zero. Filing tax amendment Transaction lacking economic substance. Filing tax amendment   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. Filing tax amendment For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. Filing tax amendment   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. Filing tax amendment   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. Filing tax amendment   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. Filing tax amendment Relevant facts include any facts affecting the tax treatment of the transaction. Filing tax amendment    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. Filing tax amendment Undisclosed foreign financial asset understatement. Filing tax amendment   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. Filing tax amendment An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. Filing tax amendment The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. Filing tax amendment Any foreign business you control, reportable on Form 5471, Information Return of U. Filing tax amendment S. Filing tax amendment Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. Filing tax amendment S. Filing tax amendment Persons With Respect to Certain Foreign Partnerships. Filing tax amendment Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. Filing tax amendment S. Filing tax amendment Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. Filing tax amendment Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. Filing tax amendment    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. Filing tax amendment See the Instructions for Form 8938 for details. Filing tax amendment    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. Filing tax amendment Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Filing tax amendment Penalty for incorrect appraisals. Filing tax amendment   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. Filing tax amendment For details on the penalty amount and exceptions, see Publication 561. Filing tax amendment Penalty for failure to disclose a reportable transaction. Filing tax amendment   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). Filing tax amendment For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). Filing tax amendment This penalty is in addition to any other penalty that may be imposed. Filing tax amendment   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. Filing tax amendment For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. Filing tax amendment irs. Filing tax amendment gov/irb/2007-09_IRB/ar12. Filing tax amendment html. Filing tax amendment Accuracy-related penalty for a reportable transaction understatement. Filing tax amendment   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. Filing tax amendment This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. Filing tax amendment The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. Filing tax amendment You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. Filing tax amendment The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. Filing tax amendment   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. Filing tax amendment Civil fraud penalty. Filing tax amendment   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. Filing tax amendment Joint return. Filing tax amendment   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. Filing tax amendment Failure to pay tax. Filing tax amendment   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. Filing tax amendment Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. Filing tax amendment Prev  Up  Next   Home   More Online Publications