Which statement correctly distinguishes the authority granted by Form 2848 from the authority granted by Form 8821?
- AForm 2848 lets the named person inspect and receive confidential information only, while Form 8821 lets that person argue the taxpayer's position and sign agreements before the IRS on the taxpayer's behalf.
- BForm 2848 appoints a recognised representative who may act for the taxpayer before the IRS, whereas Form 8821 only authorises the IRS to disclose confidential tax information to a designee who may not represent the taxpayer. Correct
- CBoth forms appoint a representative who may advocate for the taxpayer, but Form 2848 is used for individual taxpayers and Form 8821 is used for business entities filing employment or excise tax returns.
- DBoth forms authorise the designated person to receive the taxpayer's confidential information, and either form may then be used to represent the taxpayer at an examination or appeals conference.
Why A is wrong: This option reverses the two instruments, which is tempting because both grant third-party access; in fact Form 2848 confers representation and Form 8821 confers disclosure only, so the roles are swapped and the statement is wrong.
Why B is correct: Form 2848 is the Power of Attorney that names a representative authorised to act before the IRS, while Form 8821 is a Tax Information Authorization that merely permits disclosure to a designee with no representation; this correctly separates acting from receiving information.
Why C is wrong: An individual-versus-entity split sounds like a plausible filing rule, but the two forms are distinguished by the authority granted, not by taxpayer type, and only Form 2848 confers representation, so this misstates the distinction.
Why D is wrong: It is true that both forms allow a third party to receive information, which makes this attractive, but a Form 8821 designee cannot represent the taxpayer, so treating either form as a basis for representation is incorrect.