The Internal Revenue Service has approved the use of e-signatures on certain forms that can’t be filed electronically. The move comes in response to the coronavirus pandemic, in order to protect the health of taxpayers and tax professionals alike.
The change helps reduce in-person contact while lessening the risks to taxpayers and tax professionals by allowing them to work remotely and file forms in a timely manner.
"We take the health and safety of the nation's taxpayers, the tax professional community and our employees very seriously," said IRS Commissioner Chuck Rettig. "Expanding the use of digital signatures is an important step during COVID-19 to help tax professionals. We understand the importance of digital signatures to the tax community, and we will continue to review our processes to determine where long-term actions can help reduce burden for the tax community, while appropriately balancing that with critical security and protection against identity theft and fraud."
The Form 1040, U.S. Individual Income Tax Return, already uses an electronic signature when filed electronically, either by using a taxpayer self-selected PIN if self-prepared, or a tax-preparer selected PIN if using a tax professional.
More than 90% of Form 1040s are filed electronically. The IRS recommends taxpayers consider e-filing forms this year whenever possible due to COVID-19.
Which forms will temporarily accept e-signatures?
At least 10 forms have been earmarked to take a digital signature if mailed by or on Dec. 31, 2020:
- Form 3115, Application for Change in Accounting Method;
- Form 8832, Entity Classification Election;
- Form 8802, Application for U.S. Residency Certification;
- Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
- 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.
These forms cannot be e-filed and are generally printed and mailed. The IRS will not specify which digital signature product tax pros have to use.
The IRS also assures it will monitor this temporary option for e-signatures and determine if additional steps are needed.