When applying for a small business loan, the paperwork can feel overwhelming. Among the forms for financial statements and credit checks, you may encounter IRS Form 8821, also called the Tax Information Authorization.

Think of it like giving a doctor permission to access your medical records – the IRS requires formal consent to share your tax information with third parties, including lenders. Understanding why lenders need this form – and how it differs from other IRS documents – can help you navigate the loan process faster and with confidence.

What Is IRS Form 8821?

IRS Form 8821 is a document that authorizes an individual, business, or organization you designate to access your confidential tax information. This authorization can cover specific types of taxes and time periods that you list on the form.

It is important to note the difference between Form 8821 and a Power of Attorney (Form 2848):

  • Form 8821: Allows the lender to view your tax data only. No authority to act on your behalf.
  • Form 2848: Gives a representative the right to speak or negotiate with the IRS for you.

Your lender cannot sign documents, negotiate payments, or access refunds – they can only verify your income and tax compliance.

Why Lenders Request IRS Form 8821

Lenders rely on accurate tax data to assess your ability to repay a loan. While you can submit your tax returns yourself, lenders prefer direct access through Form 8821 because it provides:

  • Fraud Prevention: Eliminates the risk of altered or fake documents.
  • Efficiency: Direct IRS data reduces delays from inconsistent or large files.
  • Accuracy: Ensures lenders see the same information the IRS has on record, avoiding underwriting errors.

Form 8821 vs. Form 4506-C: The Competitive Edge

Many lenders historically used Form 4506-C to request tax transcripts. However, Form 8821 is now preferred for faster, more thorough underwriting.

Advantages of Form 8821:

  • Speed – While Form 4506-C can take weeks through IRS’s Income Verification Express Service (IVES), Form 8821 can retrieve transcripts in as little as four hours through specialized services.
  • Depth of Information – Provides insight into tax compliance over a decade, including unpaid taxes, payroll deposits (Forms 940/941), and filing statuses.
  • Risk Mitigation – Early detection of tax debt helps lenders manage risk. Studies show small business loans with pre-identified tax debts have a 37% higher chance of charge-off, rising to 130% if debts are found within two years.

Form 8821 and SBA Loans

If you’re applying for an SBA 7(a) or 504 loan, Form 8821 is increasingly part of the process. As of March 2022, the SBA allows both Form 8821 and Form 4506-C to verify tax information, helping lenders streamline approvals and provide a better experience for small businesses.

Key Components of Form 8821

To complete Form 8821 accurately, you must provide:

  • Line 1: Taxpayer Information – Your name, address, and Taxpayer Identification Number (TIN), which could be an SSN, ITIN, or EIN.
  • Line 2: Designee – Full name and address of the lender or organization authorized to access your data.
  • Line 3: Tax Information – Specify the tax type (e.g., Income), tax form number (e.g., 1040), and exact years or periods. Avoid general terms like “All years.”
  • Line 4: Specific Use – Indicates limited use, such as a one-time loan verification not recorded on the IRS Centralized Authorization File (CAF).

Important Filing Rules

  • Timing: Submit Form 8821 within 120 days of signing for loan applications.
  • Signature Method: Hand-signed forms must be mailed or faxed to the IRS; electronic signatures are submitted online via the IRS website.

Is IRS Form 8821 Safe?

Sharing your tax information can feel intrusive, but Form 8821 is secure and IRS-approved. Key safety points:

  • Access is time-limited and specific to the purpose you indicate.
  • Lenders cannot act on your behalf or see unrelated tax years.
  • Data handling complies with federal regulations for privacy and financial security.

Benefits of Using Form 8821 for Loan Applications

  • Speeds up underwriting and approval
  • Reduces errors and document requests
  • Provides lenders with a complete, accurate view of your financial health
  • Enhances credibility with SBA or traditional lenders

Conclusion

IRS Form 8821 is a secure, standardized way to share your tax information with lenders. By granting access, you help speed up your loan approval, improve accuracy, and give lenders the confidence they need to fund your small business.

Ready to apply for a business loan? Ensure your Form 8821 is completed correctly to streamline the process. Schedule a consultation
or download our SBA loan guide today.

FAQs

Q1: Do I have to sign Form 8821 for all loans?

No. It’s generally required for small business loans, SBA loans, and some high-value personal loans.

Q2: How long does it take for lenders to access my tax data?

Depending on services used, access can take anywhere from a few hours to a few days.

Q3: Can my lender see all my tax years?

No. You specify the years and tax types you authorize. Lenders only see what you allow.

Q4: Is my information secure?

Yes. The IRS limits access to your authorized data, and lenders follow federal data protection rules.