CCA 1214027: IRS advice rejects altered powers of attorney and authorizations

Plain-English summary

Chief Counsel advice recommended rejecting Forms 2848 and 8821 because taxpayers had signed them as executors for themselves, even though no estate or other entity was involved. The advice also said that adding the phrase “All Rights Reserved UCC 1-308” made the taxpayers' intent to grant authority unclear. It relied on Treas. Reg. § 601.502(a)(6), which requires a clear expression of the taxpayer's intention about the scope of authority granted to a representative. The advice recommended that unaltered forms be submitted before the IRS discussed the taxpayers' case with the representatives.

Ruling snapshot

• Question: Should the IRS accept Forms 2848 and 8821 that were signed in an unclear capacity and altered with a reservation-of-rights phrase?
• Outcome: Advice given
• Key authorities: Treas. Reg. § 601.502(a)(6)

Full text (IRS public release)

ID: CCA_2012030111334945 Number: 201214027
Release Date: 4/6/2012
Office: ----------------------------
UILC: 6061.00-00

From: -----------------------
Sent: Thursday, March 01, 2012 11:33:55 AM
To: ------------------
Cc: --------------------------------------------
Subject: Invalid POA/Authorization

This is to confirm our conversation regarding the taxpayers' Power of Attorney and Tax Authorization. As
discussed, the Forms 2848 POA and 8821 Authorization should not be accepted by the IRS as a result of
two flaws, each of which render the POA and Authorization invalid or at a minimum call into question the
validity of the documents.

First, the taxpayers signed the documents as "Executor For" themselves. There are no estates or other
entities involved in this case, only individual taxpayers. The taxpayers' names in Box 1 must match the
names of the taxpayers in the signature box and be signed by the taxpayers on their own behalf. These
taxpayers appear to be signing the forms on behalf of a trust rather then themselves (the personal trust
being an argument and strategy used by tax defiers). For the POA and Authorization to be valid and
accepted by the IRS there must be no question as to who is granting the POA/Authority and that person
must unequivocally sign the documents attesting to the granting of the POA and Authority. These
taxpayers have not done so and the Forms 2848 and 8821 should be rejected.

Second, the taxpayers have altered the Jurats on the forms by adding the phrase "All Rights Reserved
UCC 1-308". UCC 1-308 states that:

    A party that with explicit reservation of rights performs or promises performance or assents to
    performance in a manner demanded or offered by the other party does not thereby prejudice the
    rights reserved. Such words as "without prejudice," "under protest," or the like are sufficient.

The addition of this phrase to documents is another tax defier argument/strategy that is used for various
arguments including the individual is a sovereign person not subject to federal law. In this case, it
appears that the taxpayers do not intend to unequivocally grant authority to
the named representatives, believe they are doing so under duress, etc., enabling them to argue in future
court proceedings that the actions taken on their behalf by the POAs are invalid and unenforceable. This
is a frivolous argument that would not prevail in a court proceeding. Regardless, the addition of the
phrase puts the validity of the Forms 2848 and 8821 into question and, as such, should not be accepted
by the IRS.

Treas. Reg. section 601.502(a) lists the requirements for a Power of Attorney and subsection (6) of that
section requires "a clear expression of the taxpayer's intention concerning the scope of authority granted
to the recognized representative(s)." The taxpayers' additions to the forms makes their intention unclear
at a minimum. Based on the reasons discussed above we advise the IRS to reject the Forms 2848 and
8821 and advise the representatives that unaltered documents must be submitted before the IRS will
discuss the taxpayers' case with the representatives or allow the representatives to act on behalf of the
taxpayers.

Please let me know if you have any questions or would like to discuss further.