The IRS ruled in a chief council advice memorandum (CCA 2015-22-005) that a corporate officer of a common parent of a consolidated group must sign Form 2848, "Power of Attorney and Declaration of Representative" (POA) when the member manager of a limited liability company LLC is an indirect subsidiary of the common parent and is included on the consolidated tax return. The ruling applies to an LLC not covered by the Tax Equity and Fiscal Responsibility Act (TEFRA).
Under Treas. Reg. Sec. 601.503(c)(5) and the instructions to Form 2848, the POA authorizing representation of the partnership before the IRS must be signed by the partner(s) who are duly authorized to act for the partnership. A partner is duly authorized to act on behalf of a partnership if state law allows the partner to bind the partnership.
Publication 3402, Taxation of Limited Liability Companies, defines a member-manager as any owner of an interest in an LLC who, alone or with others, has the continuing authority to make the management decisions necessary to conduct the business for which the LLC was formed.
Under Treas. Reg. Sec. 601.503(c)(3), an officer may sign the POA if he or she has the authority to bind the corporation and has certified that he or she has that authority. However, if the corporation is part of an affiliated group, under Treas. Reg. Sec. 1.1502-77(a), the common parent is the sole agent for each member of the group for all matters related to income tax liability, unless a matter is reserved for a subsidiary under Treas. Reg. Sec. 1.1502-77(a)(3). Executing a POA is not such a matter.
Accordingly, the IRS advises that LLC member-managers who are subsidiaries in an affiliated group and must execute a POA on behalf of the partnership must have a corporate officer of the parent company of the affiliated group execute the POA.
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