Every year taxpayers hire tax professionals to help out with a variety of IRS situations. Whether they’re facing an audit, dealing with a tax penalty, or are navigating years of tax debt, taxpayers want seasoned tax pros to guide them through the process.
IRS Form 8821 is a Tax Information Authorization that allows tax professionals to access their client’s private information. It’s similar to a power of attorney but doesn’t grant the same level of authority. The biggest difference between Form 8821 and Form 2848 is that Form 8821 does not allow tax professionals to represent their clients to the IRS.
However, IRS Form 8821 does allow tax professionals to act as a trusted guide to give clients everything they need to successfully represent themselves to the IRS.
IRS Form 8821 allows tax professionals to:
Table of Contents
- What is Tax Form 8821?
- When Can I File Form 8821?
- What Happens After I File Form 8821?
- What is the Process for Filing Form 8821?
- What is the Difference Between Form 8821 and Form 2848?
- Do Tax Resolution Companies Ask You to Submit a Form 8821?
- Form 8821 Benefits
- Form 8821 Frequently Asked Questions
- How Can a Tax Resolution Company Help?
In this everything you need to know guide about IRS Form 8821 we’re going to break down when to use it, the benefits of filing it, and how partnering with a professional tax resolution firm can expedite IRS issues and get you the best possible outcome for whatever you’re facing.
What is Tax Form 8821?
The official IRS Form 8821 is a single-page document that grants permission to any type of tax filing for any given tax year or years.
At the highest level, Form 8821 is a tax information authorization form. The IRS is required by federal law to keep your personal tax information confidential. If you hire a tax professional to look at your current or previous returns, you need to file Form 8821 to grant them access. Once the document is filed, the tax professional has the ability to receive and inspect your confidential information so they can carry out their services.
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When Can I File Form 8821?
There are no restrictions on when you can file Form 8821. There are a number of situations in which you could consider granting access for a third party access to review your taxes. The most common circumstance for most individuals is when they decide to work with a tax professional. However, it’s important to know the time limits placed on the different types of requests used within tax Form 8821.
For example, if you are authorizing access to your information for a reason that does not address a tax matter with the IRS (such as income verification), there is a period of 120 days from the document signing date in which the IRS must receive the form.
If the reason for submitting tax Form 8821 does address or resolve a tax matter with the IRS, that 120-day requirement doesn’t apply. For example, if you hire a tax resolution company to help you with a return that’s been flagged by the IRS, you have more than 120 days to file.
What Happens After I File Form 8821?
Tax Professionals Receive Copies of Your notices
The tax pro you’re working with will receive any IRS notices relating to the years listed in question on Form 8821. In most cases, the notices will arrive at your tax professional’s office before they reach your mailbox because they’re sent priority mail. This gives the tax expert a head start on your case and keeps up to date without the need to continually check in with you.
The Entire Tax Firm Can Be Listed
Unlike the power of attorney form where a specific individual must be named, Form 8821 allows you to list an organization. This means anyone currently working at the tax help firm will be able to access your information, speed up the process, and increase the chances for the best possible outcome.
Another great thing about Form 8821 is the automatic expiration. There is no need to be concerned about the tax firm having continued access to your records after your case is completed. Form 8821 automatically expires after the set designated period, and your information becomes sealed again. This is the opposite of granting a power of attorney, where access would need to be officially revoked.
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What is the Process for Filing Form 8821?
The easiest way to file Form 8821 is to go online and submit your request through the IRS website. The process of filing out the form isn’t too complicated.
The first step is easy. Just enter your personal information. This includes your name, address, phone number, taxpayer identification number, and or social security number.
Step two is to fill out the name of the individual or firm to which you are granting access to your tax information. If you’re granting access to a licensed professional, they must provide a Central Authorization File (CAF). This is a unique nine-digit number that the IRS issues. If the company or individual does not have one, you may write “NONE,” and the IRS will assign one. All reputable tax resolution firms will have a CAF ready to go.
The next step is very important and can get a bit complicated. You’ll need to enter the specific details of the information you are granting access to. This will include tax type, form numbers, specific tax issues, and a set period. Setting the time range is important, as it only grants access for the time range you indicate.
You should only check this box if your authorization is for a specific use not recorded on CAF. It’s best to talk to your appointee about whether or not this situation applies.
Retention or Revocation of Tax Information:
You will only be allowed to send copies of various notices and communications with the IRS to two different appointees. If you have had prior tax information authorizations with multiple other appointees, the IRS will automatically stop sending any information to the prior appointees. If you don’t want these authorizations revoked, you’ll need to attach a copy of the previous Form 8821 that you would like to remain open.
The final step is signing, printing, and dating the form. If the bottom is not signed, the IRS will return the authorization.
What is the Difference Between Form 8821 and Form 2848?
Sometimes taxpayers make the mistake of filing a Form 2848 when a Form 8821 is the more appropriate choice. Both forms grant third-party access to your personal tax information, so the confusion is understandable. However, there are major differences between the two forms.
Form 8821 is a tax information authorization form, while Form 2848 is a Power of Attorney form. Granting Power of Attorney gives much more power to the individual or firm compared to a Form 8821. Form 2848 allows the appointee to:
- Speak on your behalf and represent you in court
- Disclose your personal information to third parties of their choosing
- Appoint other parties as your representation
- Negotiate in your name for your tax-related issues
- Receive your tax refund checks
- Execute agreements and settlements for your tax-related issues
Form 8821 does not agree to allow for any of the above terms and strictly prohibits any action being taken other than simply viewing your personal financial information. It’s also important to remember that Form 8821 has an expiration date, while Form 2848 stays active until it’s revoked.
Each form serves specific functions when dealing with tax resolution, so make sure to ask your tax professional which one you’ll need to submit for your unique circumstances.
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Do Tax Resolution Companies Ask You to Submit a Form 8821?
It depends on your situation and specific needs. If you’re hiring a tax resolution firm to help you with tax debt resolution issues like installment agreements, offers compromise, penalty abatement, and other tax debt related issues, you’ll need to file Form 2848.
However, filing Form 8821 does allow your tax professional to get a clear picture of your situation and offer a quick and easy way to get a handle on your tax situation, whether it be taking next steps towards tax resolution or helping you get back on track on your own.
Form 8821 Benefits
Form 8821 allows your tax professional to receive your transcripts, account information, and payments made to an account. This allows them to get a clear picture on your financial situation and find the best solutions to whatever you’re facing.
Expedited Resolution Process:
Your tax resolution company will receive copies of IRS notices before they’re sent to you. This lets them get a jump start for resolving issues so you have immediate answers when your notices arrive.
Collaboration Saves Time:
Because Form 8821 allows you to appoint an organization, your tax resolution team can collaborate to deliver optimal results in much faster time than doing it on your own.
Form 8821 Frequently Asked Questions
How long does it take the IRS to process Form 8821?
Fax and mail options for submitting Forms 8821 are available, and using the online option doesn’t necessarily speed up the turnaround time for the IRS to process the authorization, which is currently estimated to be five weeks.
How long is 8821 good for?
The form can be filed for multiple years, including up to three years in advance. Form 8821 expires after seven years or until it is revoked.
Do I need a CAF number for Form 8821?
No. If an appointee has a CAF number already, use that number on the document. If a CAF number has not been assigned, write “NONE,” and the IRS will issue it directly to your appointee.
How do I withdraw from 8821?
You may withdraw an authorization at any time. To do so, you must write “WITHDRAW” across the first page of Form 8821 with a current signature and date below the annotation.
What is an authorized agent?
Those allowed to represent clients before the IRS, including tax attorneys, CPAs, and enrolled agents.
How Can a Tax Resolution Company Help?
Whether your circumstances call for filing a Form 8821 or Form 2848 a tax resolution company can help you with any tax related issue and save you a substantial amount of time, money, and stress.
If you’re behind on tax payments and the internal revenue service keeps sending you letters it can feel like it’s never going to end. Each new letter compounds, and before you know it you feel like you’re in a hole you can’t get out of. An experienced tax resolution company can evaluate your unique situation and recommend a way forward that is reasonable, and one you can achieve without hardship.
20/20 Tax Resolution are nationwide go-to experts when it comes to IRS tax resolution help. 20/20 Tax Resolution has helped over 32,000 businesses and individuals reach successful resolutions with their IRS and state tax liabilities.
The first step is contacting us for a free consultation. You tell us about your situation, and an experienced tax professional will lay out your options and the best way forward.