Dealing with the IRS on your own can be difficult, especially if you’re facing an audit or a similar complex procedure. That’s why taxpayers choose to hire a tax professional to represent them before the IRS.
IRS Code 960 appears on a tax account transcript once the IRS approves a taxpayer’s representative. The average time the IRS needs to approve a Power of Attorney varies from 22 to 70 days.
Patience is vital if you don’t want to e-file taxes or file amended returns by yourself because the IRS will need some time to approve the representative you select.
We’ll show you what the IRS Code 960 could mean on an IRS transcript and point out the advantages of Power of Attorney.
Table of Contents
Understanding the Form 2848
Account tax transcripts can only contain Code 960 if a taxpayer chooses to appoint a representative that is qualified to practice before the IRS.
You must file Form 2848 Power of Attorney and Declaration of Representative to give your representative the Power of Attorney that appoints them as your representative before the IRS.
This two-page document defines the acts a representative can perform on behalf of a taxpayer.
Hence, you can authorize a representative to sign documents, make payment agreements with the IRS or access your tax records.
The representative you choose must be one of the following:
- Certified Public Accountant.
- Unenrolled Return Preparer.
- Qualifying student or law graduate.
- Attorney.
- Officer of a taxpayer organization.
- Family members.
- An agent enrolled by the IRS.
- A taxpayer’s full-time employee.
- Enrolled actuary.
- Enrolled retirement plan agent.
Form 2848 and consequently Power of Attorney will not be valid unless both the taxpayer and the representative sign the document. In addition, both parties must agree on Power of Attorney representation before the document is filed with the IRS.
The Advantages of Filing a Power of Attorney
Even seasoned tax professionals sometimes struggle to keep up with the IRS jargon. As a result, most taxpayers find it difficult to navigate the filing season, interpret their tax return transcripts, or determine their eligibility for different tax credits.
Filing Form 2848 and giving a tax professional the Power of Attorney will take these tasks off your hands, so you won’t have to monitor your tax return’s processing status or deal with complex tax issues.
The Power of Attorney will enable your representative to perform the acts below on your behalf:
- Tax account review – The POA gives a representative the right to access your tax records and search for potential issues that could cause processing delays or other problems with the IRS.
- Receive copies of notices the IRS sends to a taxpayer – You’ll receive a notice whenever the IRS adjusts your refund amount or encounters a problem they cannot resolve without your assistance. The POA ensures your representative will get a copy of all notices the IRS sends to you.
- Handle communication with the IRS – Instead of sending the additional documents to the IRS on your own, you can use the POA to enable your representative to handle these tasks for you.
- Represent your interests before the IRS – A representative you appoint can appeal the outcome of an IRS audit, a tax refund adjustment, or any other change the IRS makes on your tax return.
How to Check Your Tax Account Transcript?
Outsourcing all tax-related issues to a representative doesn’t mean you can’t monitor the status of your tax return.
The Get Transcript tool gives you access to different types of tax transcripts. You must request access to the tax account transcript to check if the IRS approved your Power of Attorney request.
This document contains different transaction codes such as Code 150, Code 766, Code 806, and countless other codes. Code 960 usually appears in a tax account transcript four weeks after you file Form 2848, but in some cases, this process can take a couple of months.
Taxpayers can request a paper version of their tax account transcript or choose to receive the document via fax.
Interpreting the IRS Code 960
The title of Code 960 in Section 8A – Master File Codes is as follows:
‘Add/Update Centralized Authorization File Indicator Reporting Agents File’
The Remarks section next to this code offers an additional explanation of its purpose and it states that Code 960 adds/updates the CAF indicator to the model.
The same section of the document provides the following information about this code:
- Causes notices and/or refunds to be sent to an authorized representative
- Code 960 can be generated when Code 150 or 620 (BMF) has a significant CAF code and an unreversed Code 960 is not already posted.
- Posts to the entity and sets the RAF-Filing and EFTPS indicators
Although this language can seem incomprehensible to someone unfamiliar with the IRS jargon, the meaning of Code 960 is simple.
As indicated by the Explanation of Transaction section in Code 960 line in a tax account transcript which reads ‘Appointed Representative’, this code signals that the Centralized Authorization File system has finished processing your Form 2848.
The date next to Code 960 shows the day when the file entered the system. Seeing this transaction code on a tax account transcript means that the IRS has approved the POA you gave to your representative.
Form 2848 doesn’t expire, but the IRS won’t process a POA filed for more than three years. POA will remain in effect until you or your representative revoke it. In addition, you can use Form 8821 Tax Information Authorization if you’d like to authorize a tax professional to review and receive information about your tax return, but you don’t want them to represent you before the IRS.
Reversing the IRS Code 960
As we already noted, POA assigned to a representative with Form 2848 doesn’t expire. Consequently, taxpayers or their representatives must revoke a POA.
This process slightly differs for individuals and authorized IRS representatives.
You must obtain a copy of Form 2848 you previously filed and write ‘REVOKE’ on the first page in case you want to cancel a Power of Attorney and you don’t want to name another representative.
You’ll have to sign and date the copy before sending it to the IRS via mail or fax. The Information for Form 2848 page on the IRS website contains the Where to File Chart section that can help you find the right address or fax number for the state you live in.
Taxpayers who don’t have access to the copy of Form 2848 they filed when selecting a representative must send the ‘Statement of Revocation’ to the IRS that contains the following information:
- Specify which POA is being revoked.
- List all issues and periods for which POA was assigned.
- Provide the names and addresses of representatives whose POA is being revoked.
- Date and taxpayer’s signature.
In case you want to revoke POA for multiple tax years, you must write ‘Revoke all years/periods on the document.
Representatives that want to revoke their POAs can do so by obtaining a copy of the original Form 2848 and writing ‘WITHDRAW’ on its first page. The document must be properly signed and dated before being sent to the IRS via fax or mail.
In either case, the IRS will add Code 961 to a taxpayer’s tax account transcript after it revokes the Power of Attorney associated with their account.
Frequently Asked Questions
The IRS doesn’t allow taxpayers to give POAs to more than two representatives.
In most cases, you don’t have to do anything if the IRS adds Code 960 to your tax account transcript because the code only suggests that the CAF has processed and approved Form 2848. Your representative will notify you if the IRS requires you to take action.
Taxpayers that want to give a representative the authority to access their tax information and represent them before the IRS must use Form 2848.
On the other hand, taxpayers who only want to authorize a representative to review their tax information have to file Form 8821.
You don’t have to notarize Form 2848 before filing it if you have a personal or professional relationship with the person you’re naming as your representative.
Contact a CPA
Code 960 will appear in your tax account return if you give a Power of Attorney to a representative. So, if you don’t want to file taxes on your own or deal with resolving a complex tax issue you can allow a tax representative to perform these acts for you.
Call 866-8000-TAX or visit choicetaxrelief.com to schedule a free meeting with a CPA who can represent you before the IRS.
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Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
