Today guest blogger James Creech returns with an update to his previous post on IRS acceptance of digital signatures. As James notes, there continues to be confusion over which forms may be accepted with a digital signature, and for what purpose. Christine
The IRS recently made two announcements dated August 28, 2020 and September 10, 2020 expanding the list of documents that are temporary eligible to be filed using electronic signature due to the ongoing pandemic. These two announcements add 16 forms to the list of documents that can be submitted with electronic signatures.
read more...What is notable about these forms, is that they are forms that were previously barred from using an electronic signature because they were subject to standard filing procedures. Since these forms had standard filing procedures, they were outside of the scope of the March 27, 2020 (and superseded with minor changes on June 12th) internal IRS memo that originally permitted electronic signatures on a number of forms used by the IRS to resolved cases at the exam or collection stages. A full list of the forms can be found here.
The expanded use of electronic signatures for more routine forms is a welcome development even if, as the memo notes, it does not “represent the full universe of forms filed or retainer on paper that taxpayers and their representatives would like to see covered”. Some of the forms such as the 706 family of tax returns are particularly useful because they allow an executor who may be at high risk from COVID to sign the return without having to come into contact either with other people by having to travel to the return preparer’s office or without having to physically go into the post office.
The expanded use of electronic signatures does not change any of the other filing requirements. Generally speaking most of the document on the expanded electronic signatures list still require that they be physically mailed to the IRS although some of the forms such as Form 3115 are also subject to temporary acceptance by fax. The current expiration for electronic signature acceptance on both the listed forms as well as for documents provided for exam and collection is December 31, 2020. In the case of a form filed though normal channels an electronic signature is valid as long as the form is signed and postmarked prior to January 1, 2021.
These announcements by the IRS are a recognition that while life is returning to normal it is not the normal that existed in January. Overall the IRS has done a good job of adjusting to our shared existence of social distancing. The agency’s flexibility with electronic signatures, accepting documents via email, expanding e-filing for forms such as the 1040x are all recognition that the tools for remote work exist and have value.
While the rollout of the prior electronic signatures has not gone without its hitches, such as continued CAF rejections of 2848’s due to electronic signatures despite the form being specifically identified as eligible for electronic signature is in the March 27th memo, and there are some tradeoffs with security and identity verification, these changes are a net positive. Hopefully the IRS spends some of the next few months working out ways to reduce these risks to acceptable levels so that when taxpayers and their representatives can safely meet again they will not have to return to signing paper forms.
“Hopefully the IRS spends some of the next few months working out ways to reduce these risks”
Let’s not kid ourselves. The IRS needs to spend all of the next few months finishing the processing of 2019 returns. Don’t expect it to be ready for the next tax season. For example, one practitioner message board reports multiple examples of delays in processing checks. A Form 1041 with payment sent to the Kansas City service center on July 9 included a check that was not cashed until September 7. I have two Form 1040 clients whose returns, filed in March and April, have been “under review” according to the IRS refund inquiry website since June. Users of Intuit and CCH e-filing software programs reported failed attempts to transmit corporate returns shortly before the September 15 extended deadline – although this may have been caused by hackers, not due to any IRS fault.