Tax Professionals Urge IRS to Expand New E-Signature Relief (2)

A temporary IRS policy to accept electronic signatures on certain tax forms that must be submitted on paper doesn’t go far enough, according to tax professionals.

The IRS on Friday announced it would allow taxpayers and representatives to use digital signatures on some paper-filed forms to “help to reduce in-person contact and lessen the risk to taxpayers and tax professionals during the COVID-19 pandemic.” The new policy applies to forms 3115, 8832, 8802, 1066, 1120-RIC, 1120-C, 1120-REIT, 1120-L, 1120-PC, and form series 8453, 8878, and 8879.

The announcement follows a previous decision to temporarily allow e-signatures on certain examination and tax collection documents.

Edward Karl, vice president of taxation of the American Institute of CPAs, applauded the latest action and called on the IRS to make the changes permanent.

But, at the same time, he and other tax professionals urged the agency to add other forms on its list, especially Form 2848. Taxpayers use that form to authorize tax professionals, such as CPAs, to represent them before the IRS.

“The 2848 is absolutely critical,” Karl said, noting that it allows representatives to interact with the agency on notices and enforcement actions their clients have received. That’s especially important now that the IRS has lifted a temporary freeze on most enforcement actions, he said.

Delayed Procedures

The IRS is required, under the Taxpayer First Act (Pub. L. 116-25), to establish uniform procedures for accepting electronic signatures on the Form 2848, as well as Form 8821, which taxpayers use to authorize others to view their tax return information.

Congress directed the IRS to publish that guidance within six months of the agency reform law’s July 1, 2019 enactment. But it still hasn’t done so, practitioners said.

“The fact the IRS continues to ignore the specific requirements of the Taxpayer First Act is outrageous,” said Jeff Trinca, vice president of Van Scoyoc Associates in Washington and legislative counsel of the National Association of Enrolled Agents.

“They can’t pick and choose what laws they want to enforce,” he said.

The IRS in a memo attached to the Friday news release said it’s aware that the current list of forms under the temporary e-signature policy doesn’t “represent the full universe of forms filed or retained on paper that taxpayers and their representatives would like to see covered by this deviation guidance.”

But the agency noted, in both the memo and the news release, that there are risks to accepting electronic signatures on tax forms, including identity theft and fraud.

The forms currently eligible under the new policy can be submitted with digital signatures if mailed by or on Dec. 31.

The agency said it will closely monitor the temporary relief and determine if additional steps are needed.

In addition, IRS Commissioner Charles Rettig noted in the news release that some long-term actions might be warranted.