Form 8821 | All You Need To Know

What is tax Form 8821 IRS, what does it entail and why do you need to file IRS Form 8821?

Every tax expert is aware that they require specific authorization to access private information on their client’s behalf. A lot of tax professionals employ IRS Form 2848, a power of attorney that enables them to represent the client before the IRS.

There is a case to be made for proactively submitting IRS Form 8821 with them first, even if you will ultimately need to file a power of attorney for clients you are representing with the IRS.

This article contains everything you need to know about Form 8821, what it does, how to file it as well as the difference between the form and power of attorney.

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What Is Form 8821?

The paperwork allowing an outsider access to your personal tax information is known as Form 8821 (Form 8821 IRS). It is otherwise known as Tax Information Authorization and is a form that gives authorization for any of the tax returns you file for any given year. Additionally, it nullifies earlier permissions.

Tax specialists must assist taxpayers in a variety of circumstances involving the IRS. Basically, Taxpayers want help from tax experts to get through the process and as well, deal with the IRS on their behalf. This is regardless of what they are facing; an audit, a tax penalty, or a complex tax situation that spans several years.

What Can You Do With Form 8821 IRS?

Although similar to a power of attorney (Forn 2848), Form 8821 IRS grants you specific access to your client’s information, however, the latter tends to grant less authority than the power of attorney.

Here are things the form allows you to do:

Get customer transcripts
Obtain client account details
View payments made to an account
Verify the status of return filings
Revoke all prior tax exemptions
Check the data for the specific tax type and years that the customer specifies.

The key to completely grasping what Form 8821 entails and using it at the right time is understanding the difference between the two forms.

Why Do You Need Form 8821 IRS?

You will most likely need to complete Form 8821 if you have engaged a tax expert to assist you with any tax-related issues. They will require access to certain of your private tax data in order to carry out their duties effectively. They will have access to this data via Form 8821, but there are a few other benefits as well, such as:

You will receive IRS Notifications: If you submit Form 8821 with a customer, any IRS notices the client receives for the years specified will also be forwarded to you, often earlier than your client, giving you time to work with them to remedy their IRS issue before they do. Clients who aren’t fantastic about taking care of their notices may find this useful. It’s a terrific method to demonstrate to your clients your worth to them outside of tax season.

It expires automatically: Form 8821 expires automatically, while Form 2848 needs to be manually canceled. Typically, this makes it especially helpful for routine chores that don’t require complete representation, including asking for your client’s tax information.
Firm listing: The company as a whole may be listed. In contrast to the power of attorney form, which requires a single person to be identified, Form 8821 allows identifying a whole business. Anyone who is actively employed by the company will thus have access to your information. As a result, there will be more participation in your case and more teamwork among the firm’s employees.

What Is The Difference Between IRS Form 8821 And Form 2848?

Typically, both of these forms automatically allow tired-part access t a client’s personal tax information and history and for this reason, both forms are often confusing and when not careful, one might mistake one for the other.

However, there are tons of differences between the two forms. We will list them below:

Form 8821 is otherwise known as Tax Information Authorization while Form 2848 is known as the Power of Attorney form.
Form 8821 will grant a person, company, or organization access to view a client’s records and information such as their personal information, payment history, previous transcripts, specific types of taxes, and the years designated by the client as well as the revocation of prior information authorizations. While Form 8821 only allows viewing a client’s personal information with no form of action taken, Form 2848 will allow a tax expert access to do the following:

Speak for a client and act as their advocate in court
Reveal their private information to arbitrary third parties
Choose additional people to serve as your representatives.
Negotiate for yourself when it comes to tax-related concerns.
Have your tax refund cheques sent.
Sign contracts and agreements to resolve your tax-related difficulties.

3. Form 8821 has an expiration date. It expires automatically and can be revoked over time. On the hand, Form 2848 has no expiry date. It continues and can only be canceled manually.

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What Is The Process For Filing Form 8821?

Three distinct methods exist for submitting Form 8821. The simplest method of filing would be to make your request online. However, the phone number and address will vary depending on where you are if you choose to use fax or mail.

Below is a step-by-step process to fill out the form:

Enter your personal information such as your name, phone number, address, and taxpayer identification number or social security number.
Enter the name of the individual, company, or organization you are granting access to your personal tax information and provide their Central Authorization File (CAF) if it applies, especially for a licensed professional.
Carefully enter the specific information you are allowing them access to. This can include the type of tax, form numbers, exact tax matters as well as a set period or time range.
Check the ‘Specific Use’ box if you are authorizing a specific use that is not recorded on the CAF.
Only two distinct appointees may get copies of the notices and correspondence you provide to the IRS. The IRS will immediately stop transmitting any information to the prior appointees if you have already authorized several additional appointees. You must provide a copy of the prior Form 8821 that you want to keep open if you don’t want these authorizations to be withdrawn.
Then sign, print, and date the form to officially seal it.

When Should You File IRS Form 8821?

Basically, there is no stipulated time set to file 8821. The point is that as a tax professional, you should be filing IRS Form 8821, regardless of when you choose to do so. It puts you in a position to be aware of what is happening with your client and as well, provides you lots of chances to enhance your customer service. One approach to using Form 8821 is to submit it yearly for each client together with their return.

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What Are The Instructions For Form 8821?

Below are the Form 8821 instructions according to IRS.gov

Taxpayer Information

Your last known address with the IRS will not change as a result of the address information you submit on Form 8821. Use Form 8822 for your residential address and Form 8822-B for your company address to update your last known addresses.

Individual: In the space provided, provide your name, TIN, and street address. The name and address of your designee should not be entered in the Taxpayer information field. When filing a joint return, the designated designee(s) is/are solely permitted for you. To name a designee, your spouse or ex-spouse must file a separate Form 8821.
Corporation, partnership, or association: Enter the name of the firm, EIN, and business address.
Employee plan or exempt organization: Enter the exempt organization, bond issuer, or plan sponsor’s name, address, EIN, or SSN. If applicable, provide the three-digit plan number. See the instructions pertaining to the trust if you are the plan’s trustee and you are giving the IRS permission to release the trust’s tax information.
Trust: Along with the name and EIN of the trust, provide the trustee’s name, position, and address.
Estate: Enter the estate’s name and location. Enter the decedent’s SSN or ITIN if the estate lacks a unique taxpayer identification number.
Tax-advantaged bonds: Type the name and address of the bond issuer. For others, such as conduit borrowers, follow the instructions on the form. Visit IRS.gov/Forms2848And8821 for more details on third-party authorization forms for tax-advantaged bonds.

2. Designee

Enter the complete name and postal address of your designee. On all submissions and correspondence, use the same complete name. For each designee, enter their nine-digit CAF number. Use a designee’s CAF number if they have one for any previously submitted Form 8821 or power of attorney (Form 2848).

Enter “NONE” and the IRS will give a CAF number to the person you’ve designated if none has been assigned. For inquiries to determine the status of employee benefit plans or exempt organization applications, the IRS does not issue CAF numbers.

Check the box on line 2 and attach a list of designees to Form 8821 if you want to designate more than two designees. Also, include the designated individuals’ addresses and phone numbers.

You must select the box next to the designee’s name and address if you want them to be sent copies of all notifications and correspondence that the IRS sends to you. No more than two people can be designated on Form 8821 as recipients of copies of notifications and correspondence that the IRS sends to you about the same subject. If you do not want copies of alerts and messages forwarded to your designee, do not tick the box.

3. Tax Information

Columns (a)–(c): Kind in the tax information’s type, the tax form’s number, the years or time frames, and the particular issue. For instance, you may list “Income, 1040” and “Excise, 720” for the year “2018.” (this covers all quarters in 2018). You can input, for instance, “2017 through 2019” or “2nd 2017-3rd 2018” for several years or a sequence of inclusive periods, including quarterly intervals. Enter the ending year and month for fiscal years in the format “YYYYMM”. Never refer to “All years,” “All periods,” or “All taxes,” for example. Any authorization for tax information that includes a broad reference will be returned. To read more about this line of instruction, visit IRS.gov.

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4. Specific Use Not Recorded On CAF

Tax information authorizations are typically kept on the CAF system by the IRS. However, certain concerns or topics do not have their authorizations documented. If Form 8821 is being submitted for a special purpose that the IRS would not note on the CAF, check the box on line 4. Read more about this instruction here IRS.gov.

5. Retention/Revocation Of Prior Tax Information Authorizations:

Skip line 5 if the line 4 box is ticked. Unless you specify differently, the IRS will immediately revoke any previously stored tax information authorizations if line 4 is left unchecked.

Attach a copy of the tax information authorization you wish to keep and check the box on line 5 if you do not want a previous tax information authorization submission to be canceled. You can read more here IRS.gov.

6. Signature Of Taxpayer

If you submit Form 8821 by mail or fax, your signature must be written by hand. Forms 8821 submitted by mail or fax cannot accept signatures that are digital, electronic, or written in a particular typeface. You must submit your Form 8821 online if you utilize an electronic signature. Read more about this here IRS.gov.

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FAQs Form 8821

Form 8821 is paperwork that allows a tax professional access to a client’s personal tax information.

Does 8821 expire?

Form 8821 has no expiration date and is valid until it is revoked by the taxpayer or the appointee.

Can I use 8821?

Form 8821 has no expiration date and is valid until it is revoked by the taxpayer or the appointee.

How long does it take the IRS to process form 8821?

Estimated to be five weeks

What is the difference between 2848 and 8821?

Form 8821 is otherwise known as Tax Information Authorization while Form 2848 is known as the Power of Attorney form.

Form 8821 has an expiration date. It expires automatically and can be revoked over time. On the hand, Form 2848 has no expiry date. It continues and can only be canceled manually.