Final answer:
A Power of Attorney is a legal document that allows a representative to act on behalf of a taxpayer. It grants the representative the authority to communicate with the IRS and handle tax matters on behalf of the taxpayer.
Step-by-step explanation:
A Power of Attorney is a legal document that allows an individual (the agent or representative) to act on behalf of another person (the principal) in legal or financial matters. In the context of tax representation, a Power of Attorney is necessary when a qualified representative goes to the IRS to represent a taxpayer.
When a taxpayer appoints a representative through a Power of Attorney, it grants the representative the authority to communicate with the IRS, access the taxpayer's tax information, and handle tax matters on behalf of the taxpayer. This includes, but is not limited to, representing the taxpayer in audits, responding to IRS inquiries, and negotiating tax settlements.
For example, if a taxpayer is unable to appear in person before the IRS due to illness or travel limitations, they can appoint a representative, such as a tax attorney or enrolled agent, to act on their behalf.