You don’t want them to file your taxes or talk to the IRS on your behalf. They just need to see the details of your personal and business income and deductions for the past few years to secure the loan. So, they ask you to complete Form 8821. Before you do, let’s look at some details so you can make an informed decision.
The purpose of IRS form 8821
When a financial or tax professional asks you to complete an IRS Form 8821, they want to access your confidential tax information sheet but don’t need to act as your representative. So, you’ll need to include your information and the information about the third-party professional you authorize on the form. Once completed, they can file Form 8821 with the IRS, or you can file it yourself.
Since they aren’t acting as your representative, they can only see your tax info. They can view any tax returns you have filed and any other forms, including business or personal tax liens, in your IRS file. This does not grant them power of attorney, so they can’t negotiate with the IRS or sign any documents – except Form 8821.
How to file IRS form 8821 correctly
It’s always a worry as you try to complete tax forms correctly, but Form 8821 is relatively straightforward.
Identify yourself and your appointee
First, in Section 1, add your name, address, phone number, and tax ID number.
Then, in Section 2, the form has room for two “designees” – people you want to be able to see your IRS file. If you want more than two, just make a list and attach it to the form. You can have them complete the section themselves, adding their contact info, PTIN, and CAF numbers. Ask them for those details. There’s no way you could know!
Decide if you need to check the box that allows the IRS to send them copies of your tax notices. If they only need to look at your file to see if you have any tax liens, for example, you probably don’t want them getting your IRS communication, so don’t check that box.
Authorize Access
In Section 3, you may need to check the box authorizing access to your IRS records through an Intermediate Service Provider. If you don’t, they can still contact the IRS directly using the e-Services Transcript Delivery System for your information. If you do check the box, they can use a private service to access your information. Ask your designee what they need.
Then, complete the four columns:
- Column (a) Type of Tax Information – You can detail what you want them to see and leave out anything you don’t want them to see. If you don’t know what to write, your designee probably knows.
- Column (b) Tax Form Number – If you want them to see specific forms you have previously filed with the IRS, list them here.
- Column (c) Year(s) or Period(s) – Write in the tax years or periods you want them to view. 2020 to 2023 would cover the last three years of your taxes. If your company uses a non-calendar accounting year, outline the dates in this column using YYYYMM. Your form will not be accepted if you write something that isn’t specific, like “everything,” “every year,” or “all my taxes forever.” Be clear. Write the year. Oh, and you can’t designate someone to see information you haven’t filed yet, so keep the dates in the past.
- Column (d) Specific Tax Matters – If you are okay with your appointed person seeing everything as outlined in the other columns, add “not applicable” here. Otherwise, the IRS needs specific instructions, so let them know what you want them to do. If you have a tax lien and wish to share the outstanding balance, add that here. If you need to share details about your US residency from Form 8802, ensure your appointee is the same on both.
A common request might be to see your “Income” in Column (a) on “Form 1040” for Column (b) and 2023 in Column (c) and “not applicable” in Column (d).
Is your request special?
For Section 4, you’ll need your designee’s help. Their CAF number connects to specific authorizations in the IRS system. Sometimes, your request on Form 8821 won’t be covered. If you want information given to a university or private school, a lender, employment or 1099 info, exemption from tax as a minister, or a background check (and other situations), you’ll need to check this box. But if you do, skip Section 5 and go directly to Section 6.
Do you want to keep your previous appointees?
If you don’t check the box in Section 4, the IRS automatically revokes every authorization you’ve ever sent them before – unless you check the box in Section 5. If you want to get rid of everyone you have ever appointed before, do nothing with Section 5. If you’re going to keep any of your previous appointees, track down the form(s) you signed before and attach them to this one.
Now, it's time to sign It!
No big mystery here, but be absolutely certain you sign and date the form in Section 6 and write your name (legibly) under your signature. If you represent an organization, add your title. If you don’t, the IRS will send it back.
Revoking or changing access to your tax information
If you want to change access, go back to the beginning and resubmit Form 8821 with a new appointee. You specified on Form 8821 the period your assignee could access your account, so they automatically lose access once that expires or in seven years.
If you don’t want anyone accessing your confidential tax information sheet, file a new Form 8821 or write a note to the IRS saying so.
Should you be concerned about third party access?
Should you be concerned about third-party access to your confidential tax information? There is always a potential risk whenever you authorize anyone to view private details, so choose your designee carefully. Make sure they know the rules and follow them!
Fortunately, Form 8821 restricts their access to your taxpayer information, and the IRS monitors what they see.
In conclusion
If a financial professional asks you to complete IRS Form 8821, they will probably explain why they need to see your tax information. This way, they can confirm you have no tax liens before they lend your company funds as a business loan, but there are many other possibilities.
When you only want someone to see specific details of your personal or business tax file, complete Form 8821.
