CAF Numbers in “Pending Review” Status
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OPR ResourcesCircular 230 Tax Professionals Circular No. 230 (Rev. 6-2014) |
Issue Number: 2024-05Inside This IssueCAF Numbers in “Pending Review” Status To fulfill their professional obligations, practitioners—attorneys, certified public accountants, enrolled agents, and tax return preparers who participate in the Internal Revenue Service’s Annual Filing Season Program—must comply with Circular 230, Regulations Governing Practice before the Internal Revenue Service (31 CFR Subtitle A, Part 10), which is administered and enforced by the IRS’s Office of Professional Responsibility (OPR). Only the OPR has authority to suspend or revoke, through disbarment, a practitioner’s eligibility and authority to practice before the IRS. To enhance taxpayer confidentiality and to facilitate interaction between practitioners and IRS personnel, each practitioner is assigned a nine-digit CAF number.[2] CAF numbers, which are different from a tax professional’s preparer tax identification number (PTIN) or their Social Security number (SSN), are used by the IRS to determine and verify the extent of a practitioner’s authority to represent a taxpayer before the IRS and receive and inspect the taxpayer’s confidential tax information. The IRS also uses CAF numbers to fulfill and keep track of requests for client information (like transcripts) while safeguarding both the client’s and the tax professional’s personal information. Thus, consistent with the taxpayer privacy provisions of IRC 6103, IRS employees will check the CAF to ensure they are dealing only with someone with actual authority to act on behalf of a taxpayer and to request disclosure of the taxpayer’s return information. The CAF number itself is personal identifiable information (PII) and should, as much as possible, be kept secure. Given the sensitivity of taxpayer information, the IRS is continually reviewing and strengthening its practices to guard against identity theft and the improper disclosure of taxpayer information. In connection with those effort to authenticate an individual’s identity and authorization to receive sensitive information, the IRS has long requested personal information, in addition to their CAF number, from practitioners (or anyone accessing tax-related information by means of a Form 8821). The purpose of the authentication process, including the validation of the individual’s SSN, is to protect both taxpayers and the tax professionals who are working on their behalf.[3] Beyond this basic authentication step, the IRS has a process for IRS employees to refer authorizations with suspicious characteristics for further review. Under this process, the status of the affected CAF account will be coded to “P” for “pending review,” indicating that the CAF number is currently under review for potential compromise and may be subject to fraudulent use. To safeguard taxpayer information pending the review, the practitioner to whom the CAF number was assigned will be unable to rely on the CAF or IRS employees to authenticate the practitioner’s authority to represent taxpayers until the review process is complete. For security reasons, IRS customer service representatives assigned to the Practitioner Priority Service (PPS), or other call sites cannot, for example, interact with the practitioner about a represented taxpayer’s tax matter. The process is akin to the freeze that a credit card company imposes when their fraud-prevention measures are activated, though for a compromised CAF number, the confidential information of multiple clients as well as the practitioner could be at stake.
For those CAF holders whose CAF number is confirmed to be compromised, the IRS will work with the CAF holder to assign them a new CAF number and move their clients to the tax professional’s new CAF number. [1] In addition to submitting a Form 2848, a practitioner may submit a more limited authorization request—Form 8821, Tax Information Authorization—signed by the taxpayer, to authorize any individual, corporation, firm, organization, or partnership a taxpayer designates to inspect or receive that taxpayer’s confidential information verbally or in writing for the type of tax and the years or periods listed on the form (or to delete or revoke a prior Form 8821). [3] If the IRS concludes that a CAF number is, in fact, compromised, the CAF status will be recoded to “Confirmed Fraud.” Attempts to access taxpayer data using a CAF number with a status of “confirmed fraud” will be unsuccessful. Thank you for subscribing to the IRS Newswire, an IRS e-mail service. If you know someone who might want to subscribe to this mailing list, please forward this message to them so they can subscribe. This message was distributed automatically from the mailing list IRS Newswire. Please Do Not Reply To This Message. |