Notices of deficiency can be sent to a Form 8821 designee, and a firm (not just a named individual) can be the designee

Plain-English summary

Form 8821 (Tax Information Authorization) lets a taxpayer authorize a third party to inspect and receive their confidential tax information. This Chief Counsel advice, written as an email answering two questions from the Office of Professional Responsibility, addresses how that works for notices of deficiency. First, a statutory notice of deficiency (issued under § 6212) is not excluded from the notices a taxpayer can direct the IRS to copy to a designee: if the taxpayer checks the Line 2 box, the notice should be sent to the designee, and even without the box, a designee can request and receive a copy because Line 3 broadly authorizes receipt of confidential tax information within the listed tax types, forms, and periods. Second, unlike Form 2848 (Power of Attorney), which only allows individuals as representatives, Form 8821 permits a taxpayer to name an entity, such as an accounting firm, as the designee. If a firm is named, its notices go to the firm at the address on the form; if a specific person at the firm is named, they go to that person. The advice cites the Form 8821 instructions, several Internal Revenue Manual provisions, and 26 C.F.R. § 601.506.

Ruling snapshot

• Question: Can a notice of deficiency be released to a Form 8821 designee, and may the designee be a firm rather than a named individual?
• Outcome: advice given (yes to both)
• Key authorities: IRC § 6103; IRC § 6212; Form 8821 instructions; 26 C.F.R. § 601.506; IRM 11.3.3 and 21.3.7.5

Full text (IRS public release)

ID: CCA_2022041220303632 [Third Party Communication:

UILC: 6103.00-00, 6103.03-00 Date of Communication: Month DD, YYYY]

Number: 202220015
Release Date: 5/20/2022
From: --------------------
Sent: Tuesday, April 12, 2022 8:30:36 PM
To: -----------------------
Cc: -----------------
Bcc:
Subject: FW: Disclosure Question

Andrea,

As mentioned, OPR’s Director asked me to respond to your two questions:

1. Are Notices of Deficiency considered as part of the notices/correspondence that can be
   released per the Form 8821?

2. When we say “designee” or “third party” can that be a firm or does it have to be the
   individuals named on the 2848/8821? For example, is it ok okay to send the notice to
   “PWC” in reference to taxpayer A or should it be to “John Smith POA at PWC” in
   reference to taxpayer A.

The answer to the first question is, yes, statutory notices of deficiency issued under IRC 6212
can and should be released per the taxpayer’s authorization on a Form 8821. As you know,
Form 8821 contains checkboxes in Line 2, under the name and address of the designees (up to
two), whereby a taxpayer can check the boxes to request that the designee(s) “be sent copies
of notices and communications.” The Instructions to Form 8821 state (p.3):
If you want to authorize your designee to receive copies of all notices and
communications sent to you by the IRS, you must check the box provided under the
designee’s name and address. You may not designate more than two designees on
Form 8821 to receive copies of notices and communications sent to you by the IRS
for the same matter(s). Do not check the box if you do not want copies of notices
and communications sent to your designee(s).
There is nothing I know of that provides or suggests that a notice of deficiency (NOD) is an
exception or is somehow excluded from a taxpayer’s direction to the IRS to send copies of
notices to designees. Further, even if the Line 2 box or boxes were not checked by a taxpayer,
any of the designees listed on a Form 8821 can request and receive a copy of a NOD issued to
the taxpayer because of the broad grant of authority conferred on the form, via Line 3 T(ax
information): “Each designee is authorized to inspect and/or receive confidential tax
information for the type of tax, forms, periods, and specific matters you list below.” Both Lines
2 and 3 are, of course, limited to notices and communications and to other items of confidential
tax information that are within the scope of what the taxpayer entered on Line 3 (e.g., if the
2

taxpayer listed on Line 3 “Form 1040,” “Income” (as the type of tax), and tax years “2018-
2020,” then a NOD for the taxpayer’s 2019 individual income tax should be sent to the one or
two designee(s) for which the boxes were checked on Line 2. Likewise, under the same facts, if
the taxpayer or a designee separately requests that a copy of the NOD be sent or given to the
designee, the request should be honored.

The reasoning above is consistent w/ the IRM subsection you referenced below, 11.3.3.5,
specifically par. (3). And see also IRM 21.3.7.5(2) (stating, “Form 8821, Tax Information
Authorization, or equivalent, can appoint any third party to receive and inspect account
information for the tax matter(s) specified.”).

IRM 11.3.3 additionally includes an exhibit that I think is somewhat informative for purposes of
your question, although it doesn’t explicitly include a NOD. IRM Exhibit 11.3.3-1 is the Quick
Guide to the Powers of Attorney and Tax Information Authorizations. It’s a table w/ “Task[s]”
and the various types of authorizations that a taxpayer can confer on a third party. Here’s an
excerpt:

     Task       Checkbox          Tax               Power of         Power of Attorney
                Designee –This    Information       Attorney who     who is Attorney, CPA,
                permission can    Authorization     is Non-          Enrolled Agent,
                coexist with      Designee –        Credentialed     Enrolled Actuary,
                power of          Form              (Unenrolled)     Enrolled Retirement
                attorney and      8821 (or          Tax Return       Plan Agent, Full-Time
                tax               equivalent) or    Preparer –       Employee, Officer,
                information       oral consent      Form 2848        Student
                authorization     tax               (or              Attorney/Accountant,
                                  information       equivalent)      etc. - Form 2848 (or
                                  authorization     Note: See        equivalent)
                                                    Rev. Proc.
                                                    2014-42 and
                                                    IRM
                                                    13.1.23.4.5,
                                                    Unenrolled
                                                    Return
                                                    Preparers
                                                    and Annual
                                                    Filing Season
                                                    Program
                                                    Participants
    ****             ****             ****               ****               ****
 Be advised          ****              Yes               ****               ****
 of a Balance
 Due
    ****             ****             ****              ****                ****
                                              3

 Receive                                   Yes
 information
 about
 taxpayer
 accounts

There is also a section in the IRS’s procedural regulations (26 C.F.R. Part 601, Subpart E,
Conference and Practice Requirements (reprinted as Pub. 216)) that, while specific to Forms
2848, seems equally relevant to Forms 8821. Section 601.506 (26 C.F.R.) states, in part:

  (a) General. Any notice or other written communication (or a copy thereof)
  required or permitted to be given to a taxpayer in any matter before the Internal
  Revenue Service must be given to the taxpayer and, unless restricted by the
  taxpayer, to the representative according to the following procedures—
  (1) If the taxpayer designates more than one recognized representative to receive
  notices and other written communications, it will be the practice of the Internal
  Revenue Service to give copies of such to two (but not more than two) individuals
  so designated. . . . .

Lastly, I discussed the first question w/ an attorney in CC:PA’s disclosure and privacy law
practice group and w/ a Deputy Associate Chief Counsel for PA who probably knows as
much or more as anyone in Counsel about stat notices, and both were in agreement w/
the proposed answer.

As to the second question, a taxpayer can designate an entity as their designee on Form
8821. See IRM 11.3.3.2(3) (“Permissible designees under this section include ‘individuals;
trusts; estates; corporations; partnerships; federal, state, local and foreign government
agencies, or subunits of such agencies; or the general public’ . . . .”); IRM 11.3.3.2.1(3)
(“An authorization for disclosure must contain all of the following items: . . . b. The
identity of the person or entity to whom disclosure is to be made[.]”); IRM 11.3.3.1.4(1)
(defining a “Designee” as “An individual, trust, estate, corporation, partnership, or other
third party entity that has the written consent of a taxpayer . . . to receive specific tax
information.”). (Conversely, taxpayers can only appoint individuals as their
representatives on Form 2848.)

According to a Note at the end of IRM 21.3.7.5.1(4) e.:
If a business entity is named as an designee authorized to receive tax information,
this will include all employees of the named business entity and a list is not
required. However, when a Form 8821 is submitted with a list of additional
designees attached and line 2 is annotated “see attached list” then each designee
on the attached listing shall be entered to the CAF database as requested. The
designees on the attached listing are authorized only for the tax periods and forms
listed on Line 3 of the submitted authorization. If line 2 is annotated and a listing is
not attached, only load the business and do not reject for the additional list. If a list
4

  of additional designees is attached and line 2 has not been annotated, process the
  business designee only and destroy the additional designee list as classified waste.

I spoke with W&I Accounts Management which oversees the CAF Units, and even if a list
of a business designee is submitted w/ the Form 8821 appropriately annotated, each
employee on the list will be recorded on the CAF, but only one CAF number is assigned
and that’s to the business entity. They’re understanding of where notices and
communications are sent depends on how the taxpayer has completed Line 2. In other
words, in your example, if the designee is PWC, systemically-generated notices are sent
to PWC at the address specified on the Form 8821. If the designee is John Smith at PWC’s
address, then the notice copy will be sent to John Smith at the business address. I would
think Appeals, in sending copies of NODs, would follow suit – follow the terms of the
Form 8821 designation(s).

I hope I’ve answered your questions. If not or if you have follow -on questions, please let
me know.

Thanks,
Stuart