Powers of Attorney: Specific Information Must Be Provided.

• Author: Josephs, Stuart R.
• Position: Fed Tax

Chief Counsel Advice (CCA) Memorandum 201736021, Sept. 8, 2017, considered the following issues:

1. If Line 3 on Form 2848, Power of Attorney and Declaration of Representative, lists an income tax return to which an International Information Return (IIR) must be attached, such as Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, does this Form 2848 also cover the civil penalty associated with that IIR, thus allowing the IRS to discuss the IIR penalty with the designated representative?

2. If Line 3 on Form 2848 lists an income tax return to which an IIR is not required to be attached, such as Form 3520, Annual Return To Report Transactions With Foreign Trust and Receipt of Certain Foreign Gifts, does this Form 2848 cover the civil penalty associated with that IIR, thus allowing the IRS to discuss the IIR penalty with the designated representative?

3. If a representadvc designated on Form 2848 prepared Form 1120, U.S. Corporation Income Tax Return and Form 5471, and the taxpayer subsequently submits another Form 2848 designating a different representative and listing Form 5471, but not Form 1120, may the IRS discuss with the second representative the penalties associated with both Forms 1120 and 5471 or only those penalties associated with Form 5471 ?

   Background

   Many IIRs must be filed with the IRS, such as Form 3520, Form 5471, Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation and Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.

   In some cases, the IIR should be attached to an income tax return. Examples include Form 5471, which must be filed with the filer's income tax return. In other cases, the IIR should not be filed with the filer's income tax return, but should be filed separately, such as Form 3520.

   When an IIR is incomplete when filed, filed late or not filed at all, a civil penalty under IRC secs. 6038, 6038A, 6038B, 6046, 6048, 6677 or 6679 may apply. The taxpayer may have already designated a representative on Form 2848, for a certain tax return, but not specifically for the IIR that has given rise to those penalties.

   Because a civil penalty may become an issue, the taxpayer may want an already designated representative to discuss the applicable penalty with the IRS. Or, an examiner during an audit of a taxpayer who has designated a representative for a specified tax return and a specific year, may discover that the taxpayer may be...