What is the significance of Form 8821?

Form 8821 is significant because it serves as a Tax Information Authorization form. This form allows taxpayers to authorize another individual or organization to receive or inspect their tax information. By completing Form 8821, taxpayers can designate someone—such as a family member, tax professional, or volunteer tax preparer—to access specific tax information from the IRS on their behalf. This ensures that the designated individual can obtain the necessary data to assist the taxpayer without needing to file a power of attorney, which is what Form 2848 does.

The usefulness of Form 8821 particularly shines in VITA/TCE settings, where preparers need access to a taxpayer’s relevant tax information but may not need to act on the taxpayer's behalf in a formal legal capacity. It streamlines communication and helps in effectively preparing tax returns or providing related assistance.