General question form 8821


I read in an internet blog post that preparers should consider asking all of their clients before tax season to sign a form 8821. What is the wisdom of that? It seems you are asking the client to give you permission to access information that is not needed since the IRS is not telling the client there is an issue. Thoughts?


It seems to me that the possible motivation of having clients sign form 8821 might be the idea that you are getting them to legally allow you more rights to their info- I think a good engagement letter can do the same - if done right- I think. This is just a guess as to the 8821? I am not saying I necessarily agree with the idea- if that is what it is?


What I am attempting to do is inform the client that I would review their tax records to find out if any penalties had been paid by them and, if so,is the penalty is possible to be removed (primarily) as a first time abatement. The thought of gathering information for no reason was not part of my thought process - although I understand that I am wrong to have blindly not even considered those implications and the possible problem by inquiry creates.

I am offering to do this for the experience.


I don’t think it’s necessarily a bad idea, especially as regards new TP’s, for which a practitioner has no historical information.

With products like Canopy (yeah, I know… shameless plug), it’s very easy to pull reports and transcripts to pick up errors on prior returns, inconsistencies between prior and current filings, and opportunities for refund claim/penalty abatement.

Part of a tax prep engagement should always include at least a cursory look at prior periods.

Most of my clients are representation, so a 2848/8821 is completed ‘first thing’ with engagement agreement most of the time. However, I try to pull transcripts on just about everyone, including simple tax prep, for reasons above.