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Third Party Designee: When can you use it and how?

Third Party Designee: When can you use it and how?

You have gone past the last date, April 18, for filing your return. The return has been sent to the IRS and you are waiting for your refund. According to the IRS website, if you have e-filed your return, the refund should take no more than 21 days to reach you. If you have mailed your return, you may have to wait six weeks, on average, for the refund. If you have waited longer than the average waiting period, you can visit the IRS website and use a tool called “Where’s My Refund?” The tool will inform you about the status of your refund. Quite possibly, you may have waited more than a month beyond the recommended deadline, and yet the status reads, “in process.” Quite understandably, you are anxious and would like to call the IRS to find out what’s gone wrong.

In such instances, you can complete what is called the Third Party Designee (also known as the “Checkbox Authority”) section of the return. Under the Third Party Designee scheme, the IRS allows you to designate a person to discuss the status of your return/ refund with the IRS. Such authority to discuss your confidential tax matter with the IRS is vested with your designee for no more than one year from the due date of the relevant return. You can refer to your tax return form if you want additional information about the third party designee.

This "Checkbox Authority" is not intended as a replacement for Form 8821, Tax Information Authorization (PDF), or Form 2848, Power of Attorney and Declaration of Representative (PDF). Note: Publication 947, Practice Before the IRS and Power of Attorney, and Topic No. 311 contain additional information on Form 2848 and powers of attorney.

You may wish to appoint a third party to discuss more than just a particular tax return or refund. Fill up Form 8821 if you wish to allow the third party designee to discuss not only the status of your return/refund with the IRS but also matters pertaining to more than just the processing of your return. Such additional matters could include information needed for a loan application or a background check. However, merely filling up Form 8821 will not suffice if you want to appoint a person to represent you before the tax collecting agency. If you want more information on how to appoint such a representative, you may refer to Publication 947 and Topic No. 311 which contain the information you seek.

In certain instances, the IRS may disclose information to a third party about your tax returns based on an oral authorization that could arise when such third party is present during your conversation with the IRS. The conversation could be either a face-to-face interview or a telephonic conversation. Such oral authorization must be preceded by clear identification of the return filer (yourself) as well as the third party. But such authorization to discuss information about your return will not go beyond the conversation in which such authorization is given to the IRS by you. If you wish to allow the IRS to continue to discuss your confidential tax return information with such third party after the initial conversation is over, you can use Form 8821.

Should you employ a tax preparer?

You can use your Form 1040 return to designate a CPA firm to talk to the IRS on your behalf. Such discussion could include checking the status of your refund.

But before you decide to use the services of a tax professional in preparing your return, ensure that you have all your relevant documents gathered and organized. Such documents could include charitable contributions, bank and mortgage statements, 1099 forms, and W-2 forms, among other papers.

Keeping all your papers ready, and in good order, could save time while preparing your return and would in turn ensure that you don’t end up paying the tax preparer a higher fee than necessary. 

You can seek the help of the professional tax preparer to organize the papers. These professionals bring sufficient expertise to the table whether in keeping up with the tax code or in ensuring that the taxpayer gets all the credits and deductions he is eligible for.

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