Richard J. Morgante
Commissioner, Wage and Investment Division
Internal Revenue Service
401 West Peachtree Street, NW
Atlanta, GA 30308
Re: An Extension of the Form 1040 Check Box Authorization Period
Dear Commissioner Morgante,
As President of the National Association of Enrolled Agents, I write on behalf of 46,000 enrolled agents nationwide. The purpose of this letter is to inquire about recent announcements—made both during a July IRS national phone forum and in the August issue of the issue management resolution system (IMRS) —IRS is considering extending the Form 1040 check box authorization period from 12 months to 24 months.
The check box authorization, which is only a few years old, allows a taxpayer to designate on his Form 1040 a third-party individual (typically his paid preparer, though it could be anyone) to help IRS resolve return processing issues that arise within a year of the return’s due date. It allows IRS customer service representatives to contact authorized designees by phone and was largely driven by a desire both to improve the Service’s processing efficiency and to reduce taxpayer burden. We note that a check-box designee may not represent the taxpayer before examination, collection, or appeals without the taxpayer signing a Form 2848 (Power of Attorney and Declaration of Representative [in short, a POA]).
The prospect of extending the authorization by a year raises several questions. Most significantly, we wonder why the change is under consideration at all. Is it possible that a substantial number of timely filed returns are taking longer than one year to process (or longer than six months, in the case of those who file for extensions)? Or is it possible that IRS believes those who file untimely returns are entitled to the convenience of an extended check box authorization? In the first case, we are hard-pressed based on our experience to believe that the agency cannot process timely filed returns before April 15 of the following year. In the second case, we suggest it is inappropriate to change standing policy simply to reward dilatory taxpayers.
Usually, unresolved return issues are in examination or collection after a year. We are concerned that extending the check box authorization beyond one year would confuse the roles of third-party designees by giving them a false sense of authority. Designees without a POA may be tempted to contact IRS on behalf of a taxpayer within the two-year period with respect to an exam or collection issue. Extending the authorization would likely blur the distinction between processing and exam/collection issues, and the ensuing confusion threatens to erase the burden-reduction achieved by the check box.
We realize that for taxpayers who file returns past the original due date, IRS has less than one year (and, in many cases, no time at all) to contact their designees. However, these surely must make up a small fraction of the taxpayers submitting returns. We suggest that the amount of confusion (for both preparers and IRS employees) and additional burden reduction achieved by giving IRS more time to contact late-filers’ designees must certainly be outweighed by the added complication arising from extending authorization for those designated by on-time filers. We also suggest that the check box authorization is achieving its original purpose to the greatest extent possible, and request the Service to refrain from changing the checkbox timeframe.
We hope that you will take into account these comments as you consider changing the Form 1040 check box authorization. If you would like to discuss our observations or concerns further, I encourage you to call NAEA Senior Director, Government Relations, Bob Kerr at (202) 822-6232.
Diana Thompson, EA