The Complete Guide to IRS Form 8821 (Tax Information Authorization)
Your tax information can reveal a lot about you, so it’s no wonder that the IRS considers your tax documents to be confidential. But sometimes, you want other people to have access to your tax information. Luckily, there's a tax form for that — IRS Form 8821.
Maybe you hired a tax professional to help you with a tax problem. Or perhaps you need a bank to review your tax information when applying for a loan. Either way, the confidential nature of your tax information prevents others from easily accessing it. However, by filing Form 8821, you can authorize other people to see your tax returns.
What Is IRS Form 8821?
Also known as a tax information authorization, Form 8821 allows a taxpayer to authorize almost anyone else to access the taxpayer’s tax information. Usually, this will be a CPA, attorney, enrolled agent, or bank, but it could include a business, family member, or a friend.
Once the form has been filed, the authorized party can then review or receive tax information on behalf of the taxpayer. Form 8821 does not permit someone else to endorse a tax refund check or receive a taxpayer’s refund via direct deposit. It also doesn't allow the authorized party to make any decisions on behalf of the taxpayer.
When to Use the 8821 Form from the IRS
Form 8821 is most commonly used when you're applying for a loan or sharing information with a tax professional. Here are more details.
- Applying for a loan. If you were applying for a business loan or a mortgage from a bank, they will likely need to review your tax information. One option is to provide the information yourself, but permitting them to access the information directly from the IRS is another option. This latter approach is common because it saves you some work and the financial institution might prefer it because they can more quickly access and review your income information.
- Sharing info with a tax pro. If you don't have copies of your old tax returns or income statements, a tax professional may file this form to request your tax information from the IRS. For example, if your tax pro wants to look at your business’ payroll returns for the past three years, they can file Form 8821 to request those returns from those years. When your tax pro files this form, they'll also receive IRS notices related to the tax periods and returns listed on the authorization form.
Completing Tax Form 8821
As far as IRS forms go, 8821 is fairly short and straightforward. The IRS has a comprehensive set of 8821 instructions on its website that should help you fill out the form and answer any questions you might have. If you’re still not sure how to properly fill out the form, whoever is asking you to complete the form should be able to help you.
When you’ve filled out Form 8821, you can send it to the IRS by mail or fax or upload it into your online account. If your tax professional has given you Form 8821 to complete, most likely they’ll send it to the IRS for you. They might even complete the entire form for you, and all you need to do is sign it.
What’s the Difference Between Tax Forms 8821 and Form 2848?
Form 2848 names someone as your power of attorney for tax issues, while Form 8821 only provides authorization to review and receive tax information. In other words, Form 2848 authorizes someone else to do a lot more concerning your tax matter than Form 8821.
A power of attorney (POA) is a type of legal authorization that lets someone else act on your behalf in legal or financial matters. Powers of attorney can be general in that someone else will have authorization to do almost anything on your behalf, such as take out a loan, make a medical decision, or decide financial matters on behalf of your business.
POAs can also be specific in that the power of attorney is limited to a specific context, like handling a federal tax matter. In this situation, you’d be granting someone an IRS power of attorney. They can file forms and contact the IRS on your behalf.
If you grant your tax professional power of attorney to handle an IRS matter, you’ll complete Form 2848. It is a little bit more complicated than Form 8821, but it's still pretty straightforward. Also, if you need this form, the tax professional you’ve hired will probably complete most of it for you or help you through the process of filling it out.
Just to reiterate, completing Form 8821 only lets someone access your tax information. Form 2848, in contrast, lets someone else (who’s authorized to practice before the IRS) communicate with the IRS on your behalf.
For example, you may remit Form 8821 if you need to share old tax documents with a tax pro who's helping you catch up on back taxes. Howeve, if you're hiring a tax pro to help you apply for an offer in compromise or to attend a hearing before the IRS on your behalf, you will need to file a POA form instead.
When Does the Tax Information Authorization Expire?
The 8821 tax information authorization form doesn’t automatically expire. If you’re completing Form 8821 for a reason other than dealing with a tax issue with the IRS (like income verification), then the IRS must receive Form 8821 within 120 days of you signing the form.
A properly completed Form 8821 will stay in effect until you revoke it or the person (or entity) you’ve authorized withdraws it.
How Do You Revoke IRS Form 8821?
When you complete Form 8821, unless you instruct the IRS otherwise, it will automatically revoke any tax information authorizations you submitted in the past. If you’re looking to simply add another person or firm as an authorized designee, then when you complete Form 8821, you’ll need to check the line 5 box and attach a copy of the earlier Form 8821 you want to remain in effect.
If you’re not seeking to update tax Form 8821 and just want to cancel an existing authorization, get a copy of the 8821 form in effect and write “REVOKE” across the top of it. Then, sign and date the form.
If you don’t have a copy of the tax information authorization you want to revoke (and it isn’t a specific-use authorization), you’ll mail a notification letter to the IRS (the specific address depends on where you live). In that letter, you’ll list the name and address of the person or firm with authorization, list the applicable tax matters and time periods, and explicitly state that the authorization is being revoked. You’ll also need to sign and date the letter.
If you’re not sure exactly what tax matters or time periods you previously granted authorization for, you can say that you’re revoking “all years/periods.” Also, if you want to revoke a specific-use tax information authorization, you’ll follow the above instructions, but send the notification letter to the IRS office handling your case.
Using Another Type of IRS Authorization Besides Form 8821
As useful as the 8821 form is, it’s not the only way to permit someone else to help you handle a tax matter. Here are some additional options.
- Power of Attorney
If you need to grant someone authorization to do more than just review your tax information, such as represent you before the IRS, then you might want to grant an IRS power of attorney, as briefly discussed above in this article.
- Third Party Designee
But what if you need the other person to do more than review your tax information, but you don’t want to grant them power of attorney? That’s where the Third Party Designee authorization might be useful.
This allows the authorized individual to communicate to the IRS if the IRS has questions about your tax return, such as providing missing information or getting status updates from the IRS about a tax refund. You can grant someone this authority by checking the “Yes” box (and providing the designee information) in the “Third Party Designee” section of your tax return form.
- Oral Disclosure
The last form of authorization is oral disclosure. This lets you choose any other individual to join in on a telephone conversation or interview with the IRS. The IRS is then allowed to share your confidential tax information with that other person. Unless you state otherwise, this oral authorization ends when the conversation or interview ends.
To grant someone else oral disclosure authorization, you will need to confirm:
- The identity of yourself and the other person;
- The tax matters to be discussed;
- The tax information to be disclosed to the other person.
When to Use Form 8821: Guidance for Tax Pros
As a tax pro, you may want to use Form 8821 in situations that don't require a Power of Attorney (POA). In particluar, you may want to use this form to stay abreast of IRS notices sent to clients, gather old tax documents for your clients, and authorize your firm to access tax info. Here are more details on each of these use cases:
- IRS Notices — When you file Form 8821, the IRS will send you the notices associated with the tax return and year listed on the form. Some tax pros file this form everytime they file a tax return. Then, if the IRS sends your client a notice about filing errors, changes to the return, or other issues, you will receive the notice. In most cases, you will receive the notice a day or so before your client, making it easy to stay on top of their tax issues.
- Onboarding New Clients — If dealing with tax prep or tax resolution issues, you may want to see how a client's previous returns were filed. For instance, in some situations, you may be able to lower a client's tax bill by amending errors on old tax returns. Form 8821 lets you request access to this information.
- Firm Authorization — When you're working on a big project for a client, you may need everybody in your firm to be able to access your client's IRS account records. You can use Form 8821 to authorize your firm as an appointee.
Because Form 8821 gives you fewer rights than a POA form, some clients are more comfortable with this form. Note that this form lets you access your client's tax return details through the IRS's e-services. If your client wants a copy of their own tax return, you should tell them to set up an online account to request a transcript or file Form 4506-T (Request for Transcript of Tax Return).
Need Help With a Tax Issue Involving Form 8821?
If you’re thinking about using tax Form 8821 to let someone access your IRS tax information, you might be facing a tax problem. Hopefully, you’ve already hired a tax professional to handle this issue or it’s a simple problem that you can easily handle.
If neither situation applies, TaxCure can help you find a local tax professional with experience handling your unique tax challenge. Start looking for your local tax pro by clicking on the “Find a Local Tax Pro” button at the top of this page. Then, filter down your search to find a pro with the experience you need.