You are awarded special rights and protections by the federal government specifically designed to keep your personal and financial information confidential. This information is not to be used for purposes other than what you allow and can not be viewed by others unless granted special permission. 

These protections prevent lawyers, banks, corporations, or anyone else from viewing any of your current or previous tax returns or information. These laws will even apply to your own lawyers and consultants if you have any. 

If you are consulting with a tax professional to help you with an issue, you will need to grant them specific permission to access your private information. One popular way to allow this access is by granting your tax lawyer power of attorney by filing Form 2848. However, there is a much easier way to allow them to view your information, and that’s by filing Form 8821. 

What Is Form 8821?

Form 8821 is the document that will permit an outside party to access your personal tax information. Also known as a Tax Information Authorization, the one-page document grants permission to any of your tax filings for any given year. It also revokes previous authorizations. 

The authorization to view your personal information can be granted to lawyers, firms, organizations, or even your friends and family members as long as they are specifically named. These are a few examples of the type of information that can be accessed whenever a Form 8821 is filed:

Why Would You Need Form 8821?

The most common reason you will need to file Form 8821 is that you have hired a tax professional to help you with any issue regarding your taxes. To perform their job to the highest of their abilities, they will need to access some of your sensitive tax information. Form 8821 will grant them access to this information, but it can also be beneficial for a few other reasons, including:

What Is the Difference Between Form 8821 and Form 2848?

In many cases, an individual will file Form 2848 when they need to file Form 8821. Both of these forms will grant third-party access to your personal tax information, and so they are sometimes confused. However, there are plenty of key differences that separate the two forms. For starters, the names of the forms can help to illustrate the differences. 

Form 8821 is known as Tax Information Authorization, and Form 2848 is known as Power of Attorney. Granting someone access to your personal information is a serious decision, but granting them Power of Attorney can be a much more consequential decision. 

Form 8821 will allow a person or company to view your financial records, but Form 2848 will allow them to:

Form 8821 does not agree to any of the above terms and strictly prohibits any action being taken other than simply viewing your personal financial information. 

Another key difference is that Form 8821 will have an expiration date. The rights will be revoked when the specified time period is over. Form 2848 will continue in perpetuity unless the Power of Attorney is specifically revoked. 

What Is the Process for Filing Form 8821?

There are three different ways to file Form 8821. The easiest option for filing would be to go online and submit your request there. However, if you prefer a fax machine or mail, the number and address will depend on your location.

The overall process of filling out Form 8821 isn’t complicated. The step by step process will involve the following:

  1. Personal Information. The first step is the easiest and will require you to enter your personal information. This will include your name, address, phone number, and taxpayer identification number/Social Security number. 
  2. Appointee. The next step will be to fill out the name of the individual or firm in which you are granting access to your tax information. If you are granting access to a licensed professional, they must provide a Central Authorization File (CAF). This is a unique nine-digit number that the IRS assigns. If they do not have one, you would simply write “NONE,” and the IRS assigns one.
  3. Tax Information. This part is very important and can get a bit complicated. You will need to enter the specific details of the information you are granting access to. This will include tax type, form numbers, specific tax matters, and a set period. You will have to set a particular time range.
  4. Specific Use. You will only be required to check this box if your authorization is for a specific use not recorded on CAF. It’s best to talk with your appointee about whether or not this situation would apply to you.
  5. Retention or Revocation of Tax Information. You will only be permitted to send copies of various notices and communications with the IRS to two different appointees. If you have had previous 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 would need to attach a copy of the previous Form 8821 that you would like to remain open.
  6. Taxpayer Signature. The final step would be to sign, print, and date the form to seal it officially. If the bottom is not signed, then the IRS will return the authorization.

The Takeaway

There are hundreds of various forms used by the IRS to monitor your taxes efficiently. With so many of them performing similar tasks, it can be easy to confuse them. This seems to be especially true for Forms 8821 and 2848. The key difference between the two is that Form 8821 will only allow someone to view your tax information, while Form 2848 will allow them to act on your behalf with this information. 

If you are experiencing any financial issues with the IRS, it’s important to know the distinction between the two. An easy way to think about it is that Form 8821 will allow a houseguest to sleep over for a set amount of time. Form 2848 would allow them to move in, join the lease, and have their own key. It’s important to know what you are authorizing and who is being granted permission. 

The tax professionals at Coast One Tax Group specialize in taxes and disagreements with the IRS. For them to help you get a fresh start financially, you will need to fill a Form 8821 before they can get started. You will most likely not need to file Form 2848 and grant them Power of Attorney, but it’s possible depending on your specific situation. 

Sources:

Bank Records and Financial Privacy Laws

Forms and Publications (PDF)

Power of Attorney (POA) Definition

About Form 8821, Tax Information Authorization

Submit Forms 2848 and 8821 Online

Instructions for Form 8821 (09/2021)