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IRS Form 8821 Everything You Need To Know

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:

  • Personal information about a taxpayer such as Social Security number
  • History of payments made to an account
  • Previous transcripts involving the taxpayer
  • Current filing status for returns
  • Access to specific types of taxes and years designated by the taxpayer
  • Revocation of prior information authorizations

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:

  • They will receive copies of your notices. Whenever you have filed Form 8821 and allowed permission to a tax professional, they will receive any IRS notices relating to the years in question. These notices will typically arrive at your tax professional’s office before they reach your door since they are sent via priority mail. This will allow the professional to get a head start on your case and stay aware of any updates without relying solely on you providing them. 
  • The entire firm can be listed. Unlike the power of attorney form where a specific individual must be named, Form 8821 permits listing an organization as a whole. That will mean that anyone currently working at the firm will be able to access your information. This will allow multiple people to become involved with your case and increase collaboration between the firm members.
  • It expires automatically. There is no need to be concerned about the individual or firm continuing to access your records and information after you have concluded business. Form 8821 automatically expires after the set designated period, and your information will become sealed again. This is the direct opposite of granting them power of attorney, as that will have to be revoked.

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:

  • Speak on your behalf and represent you in a court of law
  • 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 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?

The majority of people do not file tax returns because their taxes are more than their ability to pay. However, intentionally failing to report your federal taxes is considered a felony by the IRS. That is why the IRS charges you more for not reporting your taxes than the IRS charges you for paying your tax late. So, even if you are unable to pay your tax in full right now, it is preferable to report them in order to avoid penalties in the future.

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 Financial 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. 


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)

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