Sales tax powers of attorney: what you need to know
by December 20, 2023
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
In some cases when TaxJar AutoFile’s your sales tax return, a power of attorney form is required for TaxJar to AutoFile your return. This blog post explains why that is, what actions a power of attorney allows (and limits), and which states require that TaxJar obtain a power of attorney from customers.
What is a power of attorney?
A power of attorney (POA) is a document that gives a 3rd party rights to act or negotiate on your behalf. For example, you may have heard of a medical power of attorney, which allows a relative to make medical decisions on behalf of an ill or incapacitated person.
In sales tax, a power of attorney simply allows a 3rd party, like a CPA or, in the case of TaxJar, a sales tax filing partner, to act on your behalf when it comes to filing and paying sales tax returns.
Also, though the language would seem to suggest it, the person or agent holding a “power of attorney” doesn’t necessarily have to be an actual attorney-at-law.
What does a power of attorney allow?
When it comes to filing sales tax, a power of attorney allows a third party, TaxJar in this case, to file sales tax returns on your behalf. TaxJar’s goal with AutoFile is to make sales tax filing a behind-the-scenes chore that you can put on autopilot. With a power of attorney, we’re able to handle the details so you can get back to doing what you do best – running your business.
Let’s look at an example. According to the power of attorney form provided by the Colorado Department of Revenue, an agent with power of attorney can:
- Provide sales tax related information
- Prepare, sign, execute, file and inspect sales tax returns
- Execute statute of limitations extensions
- Execute closing agreements
Further, states like Colorado only allow entities with power of attorney to file sales tax returns on a business’s behalf.
Most other states have similar power of attorney requirements. To view your state’s power of attorney form and instructions, do a web search for “[State] + sales tax + power of attorney.”
What actions are not allowed with a power of attorney?
There can be all types of powers of attorney, but in the case of sales and use tax filing, a power of attorney is very limited in scope.
When a company like TaxJar holds your power of attorney regarding sales tax filing, we can represent you on the very specific tax matters named in that power of attorney agreement. In other words, TaxJar can file and pay your sales tax returns and communicate with the state taxing authorities on your behalf. This does not mean that TaxJar can do things like make business decisions on your behalf.
The power of attorney that TaxJar requires is very limited and only involves getting the access we need to file your sales tax returns and pay on your behalf sales and use tax due to the state.
Which states require a power of attorney?
Currently, the following states require a power of attorney in order for TaxJar to be allowed to AutoFile sales tax on your behalf:
- Colorado
- New Mexico
- Idaho
- Utah
Which states will require a power of attorney in the future in order to AutoFile?
In the coming months, TaxJar will need to obtain a power of attorney form in certain states so we may continue to provide the best AutoFile experience on your behalf:
- Kansas
- Michigan
And in the future, TaxJar will require a power of attorney in all US states in which we AutoFile sales tax. For that reason, keep an eye on for communications from TaxJar. Having your power of attorney allows us to better serve you by not only filing and paying your sales tax, but by communicating with the state on your behalf. For a list of power of attorney forms for each state, visit this blog post.
Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.
