IRS temporarily allows e-signatures on some forms

By Paul Bonner

The IRS in an internal memo Friday identified a range of forms for which it will temporarily allow required signatures in electronic or digital form.

The forms are fileable only on paper but otherwise require a handwritten signature. Allowing them to be e-signed remotely before being printed out and mailed to the Service will help tax professionals and their taxpayer clients maintain public health safety during the COVID-19 pandemic, the IRS said in a news release announcing the action. The authorization is effective for forms mailed to the IRS on or after Aug. 28 through Dec. 31, 2020.

The forms covered are:

  • Form 3115, Application for Change in Accounting Method;
  • Form 8802, Application for U.S. Residency Certification;
  • Form 8832, Entity Classification Election;
  • Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return;
  • Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;
  • Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
  • Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
  • Form 1120-L, U.S. Life Insurance Company Income Tax Return;
  • Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and
  • Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file signature authorization forms.

Friday’s action follows an IRS temporary policy change on March 27 (effective through July 15) and again on June 12 (extending it through the end of the year) allowing IRS employees to accept digital signatures and images of signatures on certain documents related to determining or collecting a tax liability: extensions of the statute of limitation on assessment or collection; waivers of statutory notices of deficiency and consents to assessment; agreements to specific tax matters or tax liabilities (closing agreements); and other statements or forms outside standard filing procedures.

In a June 4 letter to the IRS, the AICPA requested that, in addition, the Service allow e-signing by taxpayers and electronic return originators of Forms 8453, 8878, and 8879 and to allow e-signing by preparers of non–income tax returns (see prior coverage). Although the pandemic, coinciding with income tax filing season, rendered the measure urgent, the AICPA said, it should be made permanent as an overdue update. The AICPA noted in this regard that the IRS was directed to develop procedures for accepting electronic signatures by the Internal Revenue Service Restructuring and Reform Act of 1998, P.L. 105-206.

The latest memo acknowledged that it does not cover all forms that cannot be e-filed but said that electronic or digital signatures pose a risk to tax administration. It did not further specify the extent or nature of that risk but said the policy limits it to an acceptable level under the circumstances. And the IRS said it will evaluate the effects and implications for future signing requirements.

In its own news release Friday, the AICPA applauded the action and reiterated its call for e-signing modernization.

“We greatly appreciate the IRS’s decision to expand the scope of their e-signature requirements. By expanding the scope of relief beyond collection activities, the IRS is lessening the burden on taxpayers and tax practitioners in a significant way,” said Edward Karl, CPA, CGMA, AICPA vice president–Taxation. “The steps taken by the Service help the nation navigate difficult circumstances. We encourage the IRS to continue to work to make this relief permanent.”

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page.

— Paul Bonner (Paul.Bonner@aicpa-cima.com) is a Tax Adviser senior editor.

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