Last year the IRS introduced a new option on the federal individual income tax return allowing taxpayers to authorize their tax preparers to speak to the IRS on their behalf. Thirty-seven million taxpayers took advantage of this program. This year, the IRS has gone one step further and has provided taxpayers with the opportunity to designate any individual, not just a tax preparer, to discuss their tax return with the IRS.
Starting with the 2001 tax returns, there is now a line that appears right above the signature area of the 1040 and is labeled "Third Party Designee." The line appears on the Form 1040A and the 1040EZ as well. Included on the new line is an area to enter the name of the designated person, the person's telephone number, and a personal identification number.
The personal identification number is a five-digit number selected by the designated person - it can be any five digit number.
If a taxpayer wants to designate his tax preparer as the person who can speak on his behalf to the IRS, he should write "Preparer" in the space provided for the third party's name. If the preparer is chosen as the third party designee, the phone number and identification number areas may be left blank because this information appears further down on the form.
By checking the "Yes" box that accompanies the Third Party Designee area on the tax return, a taxpayer is authorizing the IRS to call the designee to request an answer to any question that may arise in the processing of the tax return. The third party designee may also provide the IRS with information that is needed for the tax return and may call the IRS and receive information about the status of the tax return or the status of a refund or payment. The third party designee may also respond to IRS notices on behalf of the taxpayer.
Authorization of third party designee does not provide Power of Attorney privileges, and therefore the person designated on the tax return does not have the right to represent the taxpayer before the IRS in situations of tax examinations, appeals, and collections. The third party authorization exists for one year from the original due date of the tax return without regard to extensions. For most taxpayers this will be April 15, 2003.