Trying to Help Your Parent With IRS Problems? You May Need a Durable Power of Attorney

Many adult children step in to help their parents with financial and tax matters as they age. Whether it’s responding to IRS notices or organizing paperwork, families often assume they can simply speak with the IRS on a parent’s behalf if needed.

Unfortunately, many discover during a stressful situation that the IRS may refuse to discuss a parent’s tax matters without proper legal authorization already in place. One important document that can help families avoid these complications is a Durable Power of Attorney (DPOA).

When Families Suddenly Run Into IRS Barriers

Let's start with a real life example:

A parent begins experiencing cognitive decline, is hospitalized, or simply becomes overwhelmed managing their finances. Naturally, an adult child steps in to help handle bills and taxes.

Then comes an unexpected problem: The IRS refuses to speak with them.

Many families are surprised to learn that being a son, daughter, or even spouse does not automatically give someone authority to discuss another person’s tax matters with the IRS. Even when the family is only trying to help, strict privacy rules often prevent the IRS from sharing information or allowing action on the account.

Unfortunately, families often discover this during an already stressful situation.

Why the IRS May Not Speak With Family Members

The IRS is required to protect taxpayer information, which means it generally cannot discuss tax matters with another person unless proper authorization is in place.

This can come as a shock to families. Many people assume that if a parent becomes ill or unable to manage finances, their children can simply step in and help. In reality, the IRS often requires legal documentation before allowing someone else to speak on the taxpayer’s behalf or resolve tax issues.

In many cases, the IRS requires authorization through documents such as Form 2848, Power of Attorney and Declaration of Representative.

The challenge is that if the taxpayer is already mentally or physically incapacitated, they may no longer be able to legally sign the required forms.

That is where a Durable Power of Attorney can become extremely important.

What Is a Durable Power of Attorney (DPOA)?

A Durable Power of Attorney (DPOA) is a legal document that allows someone to appoint a trusted individual to handle certain financial or legal matters on their behalf.

The word “durable” means the authority continues even if the person later becomes incapacitated.

In practical terms, this can allow an adult child, spouse, or other trusted individual to help manage important matters if a parent becomes unable to do so independently.

For tax matters, a properly drafted DPOA may allow the appointed person to work with the IRS, sign certain forms, and coordinate with a CPA or tax professional. However, the document must typically include authority broad enough to cover financial and tax-related matters.

This is why planning ahead is so important. A DPOA generally needs to be created while the individual still has legal capacity to sign documents.

Common Situations Where Families Need a DPOA

These situations are more common than many people realize.

Families often encounter these issues when a parent experiences:

• dementia or cognitive decline,
• hospitalization,
• stroke,
• serious illness,
• mobility limitations,
• or increasing difficulty managing finances independently.

Business owners can face similar problems as well. If the person responsible for handling taxes suddenly becomes unavailable, unresolved IRS notices or tax deadlines can quickly create additional complications.

Even temporary medical situations can create challenges if proper authorization is not already in place.

How Families Can Prepare Before a Crisis

The best time to discuss these issues is before an emergency occurs.

Families may benefit from:

• reviewing existing estate planning documents,
• discussing who would handle financial matters if needed,
• confirming that Durable Power of Attorney documents include financial and tax authority,
• keeping important documents organized and accessible,
• and coordinating with both an estate planning attorney and tax professional.

While these conversations are not always easy, proactive planning can help families avoid unnecessary stress and delays later.

Many people purchase insurance hoping they never need it. A Durable Power of Attorney serves a similar purpose: it provides protection during unexpected situations.

Planning Ahead Can Prevent IRS Delays

No family expects to suddenly face IRS complications while helping an aging parent through a medical or cognitive crisis. However, these situations occur more often than many people realize.

Proper planning can make a significant difference in helping families manage tax matters smoothly and avoid unnecessary legal or administrative obstacles during stressful times.

At DRS Accounting, we have seen how proactive planning and proper authorization can help families navigate IRS matters more efficiently when unexpected situations arise.

While every situation is different, discussing these issues early with qualified legal and tax professionals can help provide peace of mind for both parents and their families.