Tips For Filling Out IRS Form 8821, Tax Information Authorization

Tips For Filling Out IRS Form 8821, Tax Information Authorization

Hi and welcome to today’s video where we’re
talking about IRS Form 8821: Tax Information Authorization. We’ll point out some common mistakes with
this form and provide tips for how you can avoid them. Tip 1: What is Form 8821 and when should you
use it? When helping your client resolve an issue
with the IRS, you need access to their personal tax information. Form 8821 authorizes any individual, organization,
or tax professional to receive confidential tax documents for their client. It can also revoke previous tax information
authorizations that are no longer required. By accessing this information, you can identify
what returns your client needs to file, how much tax, interest, and penalties are due,
or if their account is in collections. However, there are several actions that Form
8821 does not authorize you to do. The biggest misconception with this form is
that it authorizes representative power. Form 8821 cannot authorize you to represent
your clients before the IRS. This includes speaking to the IRS on your client’s
behalf, executing waivers, consents, closing agreements, or any other representative matters. To receive this authorization, you need to
fill out Form 2848: Power of Attorney and Declaration of Representative. Go check out our video on Form 2848 to learn
more about it. Tip 2: Play it safe You’re probably wondering, why would I bother with the Form 8821 if you can just fill out Form 2848? Here’s why:
In many cases, clients don’t tell you the full story, right away. This can make it difficult to decide if you
want to take a client on. And in these instances, you want to start with Form 8821. The 8821 allows you to assess your client’s
tax situation before becoming more liable yourself. Once you file Form 2848, you are expected
to represent your client. If you do not meet the expectation of a rigorous
defense on behalf of your client, you may be subject to a professional liability lawsuit,
or “malpractice”. By filing Form 8821 first, you can get access to all the information you need to fully understand
your client’s situation and determine if full Power of Attorney is necessary to help
your client. Tip 3: Tax Information
A commonly misunderstood section in Form 8821 is found in Part 3: Tax Information. There are two parts of this section, and both
can cause confusion. The Intermediate Service Provider is the first part that instructs you to check a box if you want access to IRS records via an intermediate
service provider. By checking this box, tax information (such
as transcripts) can be easily accessed through third party software like Canopy. If this box is left unchecked, you must access
these forms directly from the IRS. If you’re not sure whether or not to check
this box – go ahead and check it. It allows you multiple options for retrieving
your client’s tax documents. Tax Information Details.
The second part of this section deals with the identification of the tax documents you
need access to. The difficulty is recognizing the difference
between column A and D. Column A asks for the type of tax such as
Income, Employment, or Payroll. In some cases, simply stating the type of
tax won’t provide all of the information you need. To access information outside of your client’s
tax transcripts, specify it in column D. For example, there may be a lien filing you
wouldn’t have access to through transcripts. You would need to write “lien information”
in column D for the IRS to provide access to this information. If no additional information is needed, you
can write “not applicable”. Also, as a general rule, make sure to be specific
when filling out this section. State the form number in column B and the
specific years or periods in column C. Terms such as “all forms”, “all years”,
or “all periods” will result in a rejected form. Well, that’s all we have for you today. Thanks for watching. If you had any other questions about Form
8821 please comment below. Also, if there is another form you would like
us to explain, mention that below as well. Canopy is here to help. See you next time! You know what’s easier than watching form videos on Youtube? Letting Canopy fill out the forms for you. Click now to get automated form filling with your free trial of Canopy.


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