The IRS has broadened the list of forms that taxpayers can sign digitally to include some that can’t be filed electronically as a means of coping with the COVID-19 pandemic and related physical restrictions.
The IRS will now accept digital signatures for e-file authorization forms, as well as Form 3115, “Application for Change in Accounting Method,” and others through the end of the year, according to an August 28 release.
“The change will help to reduce in-person contact and lessen the risk to taxpayers and tax professionals during the COVID-19 pandemic, allowing both groups to work remotely to timely file forms,” the release says.
Other forms included in the temporary allowance are Form 8832, “Entity Classification Election”; Form 8802, “Application for U.S. Residency Certification”; Form 1066, “U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return”; and subsets of Form 1120, "U.S. Corporation Income Tax Return," including forms 1120-RIC and 1120-L.
In an August 19 letter to IRS Commissioner Charles Rettig, the American Institute of CPAs asked the agency to permit electronic signatures on forms in the Form 8453, 8878, and 8879 series, as well as other forms, making signatures easier to attain during the pandemic while many taxpayers are social distancing or under stay-at-home orders.
“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,” AICPA Vice President of Taxation Edward Karl said August 28.
NAEA Is Disappointed
While the AICPA welcomed the expansion, the National Association of Enrolled Agents is “extremely disappointed that the IRS continues to ignore the specific requirements of the Taxpayer First Act [of 2019 (P.L. 116-25)] when it comes to providing guidance for the use of electronic signatures on powers of attorney (Form 2848) and disclosure authorization (8821) forms,” NAEA legislative counsel Jeffery S. Trinca told Tax Notes.
“The forms on this list are fine, but they do nothing to help taxpayers when the IRS takes enforcement actions against them as they are now doing again,” Trinca said.
“The IRS allows the use of electronic signatures for the banking industry to the tune of 30-million-plus a year, but is ignoring a specific mandate from Congress when it comes to the basic taxpayer right to be represented by a tax practitioner,” said Trinca.
In an August 27 memorandum, Sunita Lough, IRS deputy commissioner for services and enforcement, said the IRS recognizes that the list of forms doesn’t represent all that taxpayers and their representatives would like to see covered by the new guidance.
“However, while we seek to maximize remote capabilities for taxpayers and their representatives during this time, we know that the acceptance of electronic/digital signatures presents elements of risk,” Lough said. “Therefore, this temporary deviation is limited to the list of forms set forth [in the memorandum].”
According to an IRS spokesperson, the agency is planning an electronic signature option for forms used for power of attorney and third-party authorizations for rollout by early 2021.