What is a CAF Number? Why it matters for tax resolution professionals and how to get one

If you are a tax resolution professional or an authorized specialist, a Centralized Authorization File (CAF) number is a must-have. Whether it is your first client or you are working to grow your practice, this is a straightforward and important step that eases communication with the Internal Revenue Service (IRS).
In this guide, we will explore everything you need to know about the CAF number, its importance, how to get one, and common mistakes to avoid.

What is a CAF number?

A CAF number is a 9-digit identifier assigned to professional tax specialists and serves as a unique reference code for the IRS. It ensures quick and efficient communication with the IRS by linking to the file containing legal authorizations submitted by tax professionals, helping the IRS verify them.
A CAF number provides a layer of security and ensures smooth transactions, allowing you to represent your clients in tax matters.

How to get a CAF number?

You can apply for a CAF number using either of the two methods below.

Option 1: Apply online

• Sign in or create a Tax Pro account on the IRS website.
• Once logged in, use the “get one now” link to request your CAF number.
• If your request is approved, you will receive a confirmation message along with your CAF number.
• To verify your identity, you need to use ID.me.

Option 2: Apply by form submission

• Determine your eligibility.
• Complete Form 2848 (Power of Attorney and Declaration of Representative) or Form 8821 (Tax Information Authorization).
• Fill in all your personal and business information as an authorized representative. You don’t have to fill in your CAF number if this is your first time applying.
• Have the taxpayer fill out and sign the form. Make sure all fields are completed.
• Send the completed form to the IRS office by email or fax.

Note: If you have trouble requesting a CAF number or lose your existing one, you can reach out to Practitioner Priority Service or call 866-860-4259 for assistance.

What are Form 2848 and Form 8821?

Form 2848, also known as the Power of Attorney and Declaration of Representative, is used when a taxpayer authorizes a qualified representative to act on their behalf in tax-related matters with the IRS.

Form 8821, on the other hand, is used when a taxpayer wants a third party to help with filing or reviewing their taxes and needs to give them access to confidential tax information.

What are the benefits of a CAF number?

A CAF number provides multiple benefits not just for your clients, but also for you as a tax resolution professional. Here are some key advantages:

• It gives you quick and easy access to your client’s tax information when preparing their tax returns or representing them before the IRS.
• It shows your commitment to IRS regulations and promotes trust among clients, increasing your credibility as a tax professional.
• It makes communication with the IRS seamless. You can submit authorization requests, receive important notices, and engage in productive discussions on behalf of your clients.
• It allows you to offer a wider range of services, helping you diversify your practice and increase potential revenue streams.

What are some common mistakes and errors to avoid?

Getting a CAF number is crucial for tax professionals, but even a small error or misinformation can lead to delays or rejection. Here are some common mistakes to avoid:

• Make sure you fill in all the information correctly. Errors or misinformation in your details can result in your request being rejected by the IRS.
• Your client’s information is as important as yours, so provide accurate details to avoid delays or rejection.
• Before applying, check your eligibility to act as a representative before the IRS, as only individuals authorized to practice before the IRS can be representatives.
• The signature must meet IRS criteria. Using a digital signature, stamps, or not adding a signature at all can lead to rejection. Review the IRS requirements carefully.
• Include all relevant documents and details when completing the power of attorney form. Incorrect or missing documents can lead to rejection.

Bottom line

A CAF number plays a crucial role for tax resolution professionals. Having one not only lets you handle your clients’ tax documents with ease, but also improves trust and credibility. While applying for a CAF number might seem overwhelming since you need to have all client documents and details in order, using a practice management software like Zoho Practice streamlines the process by keeping your documents, records, and tasks organized. This makes managing your CAF number much easier and hassle-free.