Form 8821, or Tax Information Authorization, is an IRS form that allows taxpayers to authorize a third party, such as a tax professional, to access their confidential tax information. This authorization grants the third-party permission to receive and inspect the taxpayer’s tax data but not to act on their behalf.
Unlike a power of attorney, Form 8821 provides less authority to the designated person, only allowing them to access and view the taxpayer’s information. This ensures that the taxpayer maintains control over their private information while still enabling them to receive assistance from a tax professional.
There are several situations in which a taxpayer may need to use Form 8821. For example, a client might authorize their tax professional to access their tax information to help them prepare their tax return. In this case, the tax professional can obtain the client’s exact tax information without being granted the power to act on their behalf.
Another use case involves lenders requesting tax information from borrowers to verify income for loan applications. By submitting Form 8821, borrowers can authorize the lender to access their tax information for a specific tax year or a designated period, ensuring that the lender has the necessary information to process the loan application.
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