The IRS Advisory Council (IRSAC) is asking for temporary relief from physical signatures on tax returns and other measures for coping with the coronavirus pandemic in addition to deadline extensions and waived penalties.
“Certain business tax return filings that are not permitted to be electronically filed must be physically signed and dated by an officer of the company,” according to IRSAC’s March 16 letter to IRS Commissioner Charles Rettig. “In a pandemic environment where teleworking is encouraged or required, business taxpayers are faced with the challenge of delivering a paper copy of each tax return to the applicable authorized signatory, and then collecting those signed paper tax returns to timely mail them to the IRS.”
IRSAC urged the IRS to accept the paid preparer standard instead, which would allow signatures by rubber stamp, mechanical device, or computer software program.
The IRS should allow electronic signatures on powers of attorney and similar documents until at least June 15, according to IRSAC. Written communications should also be replaced with fax and email when possible, the council said, adding that this would ease burdens on IRS employees and the postal service.
“Such a communication might require some mechanism to authenticate it to avoid fraud, including advance telephonic agreement of both parties to communicate in that way,” IRSAC noted. “Secure communication would be best, but might not be available to all taxpayers or tax professionals at this time.”
Stranded in the U.S.
The council also noted that some non-U.S. individuals could be stranded in the United States and end up inadvertently being deemed tax residents under the substantial presence test. The IRS should offer relief in those cases, IRSAC said.
IRSAC also called for automatic extensions of filing and payment deadlines, or an automatic abatement of penalties.
Treasury Secretary Steven Mnuchin announced March 17 during the White House’s daily coronavirus briefing that individuals and corporations can defer tax payments for 90 days, although he didn’t announce a change to the April 15 filing deadline.
IRSAC also asked that the IRS offer penalty-free extensions for non-statutory deadlines. “Taxpayers with installment payment plans or other extended payment arrangements and taxpayers who are on the verge of severe collection activity may be particularly vulnerable to the sudden economic shift,” the council said.
Formal payment agreements shouldn’t be defaulted because of missed payments, and the IRS should put a three-month hold on collection activity that could result in extraordinary economic harm, IRSAC said.