Understanding Form 8821: Tax Information Authorization

As a lawyer, there may be times when you’ll need to access your clients’ tax information from the IRS. To make this happen smoothly, your clients will need to fill out and sign Form 8821: Tax Information Authorization. This form gives you the necessary authorization to view their tax forms, records, and other essential information. By having this form filled out, you’ll be better equipped to provide your clients with the best possible advice and support. 

Find the form here: IRS Form 8821, Tax Information Authorization

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What is Form 8821?

Form 8821 is your clients’ way of telling the IRS you are allowed to receive and view their confidential tax information. Without this form, you can’t go to the IRS directly for tax information, you have to go through your client. By submitting form 8821, your client gives the IRS permission to share their records directly with you, making it easier for you to collect and review all necessary tax and financial information. 

How to complete Form 8821 accurately

Although government forms are often complicated to fill out, IRS Form 8821 Tax Information Authorization is fairly straightforward. Your client will need to fill out the form with their information and will likely need some information from you. 

Section 1: Taxpayer information

This section requires your clients’ name, address, phone number, and tax ID number. 

Section 2: Designees

This section is for the name, address, and information of anyone your client wants to name a designee–essentially any third party they are allowing to access their tax information, in this case, you. Your CAF (Central Authorization File Number) Number and/or PTIN (Preparer Tax identification Number) should be included if you have such numbers. If you do not have a PTIN, you can apply for one via the IRS website. Although there are spots for up to two people on the form, a list including the information of more people can be attached to the form. 

If clients want you to receive copies of their tax notices, they should check the box under the name and address field. This enables you to receive IRS communications.

Section 3: Tax information

Section 3 designates which information and which tax matters you are authorized to access. If you only need access to tax information for a specific period or related to a specific matter, that should be clearly stated in the four columns of this section of form 8821. Filling this section out accurately ensures the taxpayer, you, and the IRS understand exactly what is being authorized. 

• Column (a) Type of Tax Information: Only tax information that is included here will be authorized. This might include income, for example. 
• Column (b) Tax Form Number: Clients should list the specific forms they authorize you to see. In the case of income, if they want you to see their past forms filed with the IRS, they would write “Form 1040.” 
• Column (c) Year(s) or Period(s): This should cover the tax years or periods you will be allowed to view. Specific dates must be written clearly, meaning clients can’t write “Five years ago.” 
• Column (d) Specific Tax Matters: Clients can write “Not applicable” in this section if they are okay with you seeing everything that falls under the guidelines of the first three columns. If they only want you to see something specific they should state that clearly. For example, if they want you to see information related to an audit, they should write “Audit issues.”

Section 4: Specific use not recorded on the CAF

The IRS uses the CAF system to record tax information authorizations. This box should be checked if the authorization is in relation to a specific issue or matter that isn’t recorded. For example, requests regarding certain forms or requests for information to be disclosed to loan companies are not recorded. 

Section 5: Retention/revocation of prior tax information authorization

If the box in section 4 isn’t checked and this box is not checked, the IRS will revoke any and all previous tax information authorizations. If the client wants to retain any pre-existing authorizations, the box must be checked and details of those authorizations must be provided. This section is skipped if the box in section 4 is checked. 

Section 6: Taxpayer signature

The taxpayer (your client) must sign and date form 8821 otherwise the form will be returned. 

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When to File Form 8821

Some instances where IRS form 8821 is beneficial:

Estate planning and probate: An estate lawyer might want to view past tax returns and financial records to provide advice to clients on estate planning strategies, minimizing tax liabilities, and ensuring compliance. 

Business transactions or structuring: If your business client is involved in a merger or acquisition, you may need to review business tax records to identify potential tax implications, ensure due diligence, and properly advise your client on structuring the transaction. 

Bankruptcy proceedings: When clients file for bankruptcy, you need to understand their tax liabilities to address them in the bankruptcy plan. By reviewing the tax records, you can ensure all tax debts are accurately represented and managed. 

Important deadlines and timelines

Although there are no specific deadlines related to form 8821 Tax Information Authorization, there are important factors to keep in mind regarding the timing of the form. It can take a few weeks–longer during peak tax times–to process the form. The form should be submitted as soon as possible, to avoid delays in your receiving and viewing necessary information. 

The form also requires the taxpayer to specify the tax years or periods you’re authorized to receive  documents. This section should be filled out correctly to ensure you have access for as long as needed. 

Situations where a power of attorney may be more appropriate

Power of attorney is designated through IRS form 2848. This is used when you or any third party is required to act on the taxpayer’s behalf. This includes situations where you would be negotiating, making decisions, and signing forms on behalf of your clients. 

Such circumstances include:  

• Negotiating with the IRS in an audit
• Responding to IRS queries
• Arguing tax assessments
• Negotiating settlements or payment plans with the IRS
• Signing documents if the taxpayer is ill, absent, or incapacitated
• Appealing an IRS decision

Understanding tax information authorization

Rights and limitations of authorized individuals

When you’re authorized through IRS form 8821, you’re only allowed to receive and view confidential tax information. You aren’t given the authority to make any decisions, represent your client to the IRS, or sign any documents. If you need the ability to represent or act on your clients’ behalf, you’ll need form 2848.

Benefits and risks associated with sharing tax information

Before your clients share their tax information with you, they may have questions about the benefits and risks of doing so. Among the benefits:

• More accurate and informed advice: You’ll have access to their tax information based on what the IRS has. If your client has filled out a number of Form 1099‘s for example, this can help ensure you’ve got access to them all.
• Streamlined processes: You can obtain the information directly from the IRS, rather than asking your clients to obtain the information for you, saving you time. 
• Reduced workload for your clients: After they fill out form 8821: Tax Information Authorization, you can access the records without their input or involvement. 
• Faster help: You may receive your client’s IRS notices before they do, giving you a chance to work more efficiently to help them resolve their issues. If your client has a tendency to ignore or forget about IRS notices, having you receive those communications ensures the matters aren’t forgotten. 

Of course, when information is shared, there are some risks. Your clients might be concerned about their confidentiality, data security, or misuse of information. They may also be concerned that you will accidentally obtain information you weren’t meant to have, if they don’t fill out the form properly. 

Remind them of your duty of confidentiality and your duty to safeguard their information. It may also help if you double check the form after it’s filled out, to ensure it accurately represents your client’s wishes regarding tax information authorizations. 

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Disclaimer: This article is provided for informational purposes only. It does not constitute legal, business, or tax advice.