Editor: Uzell T. Freeman-Williams, CPA
As if contacting the IRS by telephone for assistance was not already difficult enough, the recent pandemic shutdowns made it almost impossible to accomplish any basic task that required IRS assistance. Well aware of this problem, the government, to its credit, has been making more and more services available online so that a practitioner need not sit on the telephone on hold for hours waiting for the inevitable recorded message to “try again later.” Allowing online access to taxpayers’ confidential information through new online services, of course, must be balanced against the fear of hackers and identity theft. With this concern in mind, the IRS in November 2021 announced the launch of an improved identity verification and sign-in process to obtain secure access to the IRS’s online tools. The Service announced that for this purpose it would be using a third-party technology provider, ID.me.
The new, mobile-friendly verification procedure through ID.me was designed to allow taxpayers and their representatives easy access to valuable online services, including the Child Tax Credit Update Portal, Online Account, Get Transcript Online, Get an Identity Protection PIN (IP PIN), and Apply Online for a Payment Plan. The IRS also created a portal for tax professionals who want to submit a Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, online, rather than using the traditional methods of mailing or faxing in such forms.
This column first discusses ID.me and then describes how practitioners can use the “Submit Forms 2848 and 8821 Online” portal to send clients’ third-party authorization forms to the IRS. The Service also has created a separate, all-digital, non–form-based method, through Tax Pro Account, for tax professionals to initiate a request for a third-party authorization from their account that is then sent to the client’s online account for an electronic signature. This column, however, focuses on how to upload the forms themselves using the “Submit Forms 2848 and 8821 Online” portal.
The IRS’s initial intention was that by the summer of 2022, ID.me would replace the old system and usernames currently in place to log in to IRS online services. The old system was going to remain available as a parallel access method until then, after which everyone would be forced to create an ID.me account in order to access any online services. These plans have changed because of a controversy over the use of biometric verification.
In order to use ID.me as the Service explained back in November, taxpayers and practitioners had to first establish their identity using their Social Security number (SSN) and some form of government-issued photo identification, specifically a driver’s license, a state-issued ID, or a passport. Then the person would have to verify their identity by taking a selfie with either a smartphone or a computer with an enabled webcam — and that selfie picture would be matched to their previously provided photo identification.
Numerous commentators, and several members of Congress, raised concerns about the use of facial-recognition technology and the collection of such biometric identification by the IRS. In response, in February 2022, the IRS announced the availability of an alternative method to verify a user’s identity other than the “selfie” method. While taxpayers and practitioners still use ID.me to register for an online IRS account, they are now able to verify their identity via an alternative method through a live online interview with an ID.me agent rather than submitting photo identification. While the live interview with the ID.me agent is recorded, ID.me has stated that the video record is deleted after 30 days. Additionally, for those people who had signed up for ID.me prior to the implementation of this new verification procedure, there is an option to allow them to have their previously submitted selfie deleted from the ID.me files if they so choose.
Taxpayers and practitioners can elect to verify their ID.me account under either method. Note that submitting the photo identification and verifying with a selfie generally takes a few minutes, while working with an ID.me agent requires the applicant to produce at least two primary identification documents, and the wait time has been known to often exceed an hour.
Once individuals are registered and verified, not only can they access certain IRS information, but also 27 states use ID.me for their unemployment benefits and other programs ID.me is also used by several other federal agencies, including the Social Security Administration and the Department of Veterans Affairs, and can be accessed using the same login information.
Uploading Form 2848 and Form 8821
One major advantage of having an online account is that you can upload and submit a client’s third-party authorization forms (Form 2848 and Form 8821) through the IRS’s “Submit Forms 2848 and 8821 Online” portal. In order to take advantage of this alternative to faxing or mailing in the form, you must: (1) authenticate that your client is who he or she claims to be and (2) have the person properly execute the form. You also need to know how to upload the form to the portal and, if the situation arises, how to revoke or withdraw the form. These matters are discussed below.
Authentication: To use the “Submit Forms 2848 and 8821 Online” portal, you must first authenticate the taxpayer’s identity if the individual is electronically signing the form remotely (meaning not in person) and you do not already have a personal or business relationship with him or her. A best practice is to routinely authenticate the taxpayer’s identity even if he or she is signing in person. The objective behind this requirement is to ensure that the person signing the form is, in fact, the person they claim to be.
In order to authenticate the taxpayer’s identity, verification is done in a manner similar to that used by the ID.me registration platform. First, the taxpayer signing the form sends you for inspection a valid government-issued photo identification document. Then you have to compare the photo to the individual signing the form either via a selfie sent to you by the taxpayer or by videoconferencing with the taxpayer. Next, there is a further verification of the person’s name, address, and SSN or individual taxpayer identification number through some form of secondary documentation. The recommended secondary information includes a federal or state tax return or IRS notice or letter and, possibly, also a credit card statement or current utility bill. The current credit card statement or utility bill is needed if the taxpayer has moved since last filing a tax return and wants to use his or her updated address on the Form 2848 or Form 8821. In that situation, you will still need to see the tax return to verify the individual’s SSN, but then you would use the utility bill to verify the address that the person wants to use on the form. This helps protect taxpayers from identity theft.
For business-entity taxpayers signing a Form 2848 or Form 8821 remotely, not only do you have to authenticate the identity of the person signing the return, as explained above for individual taxpayers, but you also need to make sure that the individual has the proper authority to sign the form on behalf of the business-entity taxpayer. Documentation such as corporate minutes or an operating agreement could be used to satisfy this requirement. After verifying the signer’s identity, you would then need to record the name, employer identification number, and address of the business-entity taxpayer. This information must also be verified through secondary information, including a tax information reporting form, IRS notice or letter, or a utility bill issued to the business entity.
Execution: One advantage of submitting a Form 2848 or Form 8821 online is that the taxpayer does not have to physically sign a printed piece of paper and scan or fax it back to the practitioner. For this purpose, the IRS allows an electronic signature. The IRS provides several acceptable methods for affixing an electronic signature: a name that is typed on a signature block; a scanned or digitized image of a handwritten signature that is attached to an electronic record; a handwritten signature input onto an electronic signature pad; a handwritten signature, mark, or command input on a display screen with a stylus device; or a signature created by third-party software. The ability to use an electronic signature demonstrated its value during the pandemic with many taxpayers working from home without access to a printer and/or scanner, as Forms 2848 or 8821 that are mailed or faxed to the IRS must still be physically signed (i.e., a “wet signature”).
Submitting the form: The first step to upload the form after logging in to the “Submit Forms 2848 and 8821 Online” portal is to start a session by inputting the taxpayer’s taxpayer identification number (TIN). This number is used to track the progress of the authorization form. Then the completed form can be uploaded into the system in either a PDF, JPEG, JPG, or GIF file format. The IRS cautions not to upload any form that has already been submitted by fax or mail. The IRS says that the Centralized Authorization File unit processes all of the forms that it receives, be it by online, mail, or fax, on a first-in, first-out basis. Once the form is submitted, you will receive a confirmation email.
As the forms are tracked by TIN, only one form can be submitted at a time. You must start a new session each time you file an additional form, even if you are representing taxpayers who are married and file joint returns. This annoyance started a few years ago when the IRS stopped allowing married taxpayers to complete a joint Form 2848 and started requiring that each spouse prepare and sign a separate form.
Revoking or withdrawing the form: Generally, to revoke an authorization that is already in place, the taxpayer simply writes “REVOKE” across the top of the Form 2848 or 8821 and signs and dates below it. Similarly, a practitioner who wants to withdraw as a representative on a Form 2848 can write “WITHDRAW” across the top of the first page of the form and sign and date below it. Rather than having to mail or fax in the withdrawal or revocation, such form can now be submitted through the “Submit Forms 2848 and 8821 Online” portal by simply choosing “Revocation/ withdrawal of an existing authorization” and following the instructions set out therein.
Ellen Brody, CPA, J.D., LL.M. (Tax), is a partner with Roberts & Holland LLP in New York City. For more information on this column, contact firstname.lastname@example.org.