The Internal Revenue Service (IRS) has announced that it will allow the use of E-signatures on certain tax forms that cannot be filed electronically. This is a temporary move intended to reduce in-person contact and lessen the risk to taxpayers and tax professionals during COVID.
What does that mean? Well, some forms, like Form 1040, U.S. Individual Income Tax Return, are already set up to allow e-signatures when filed electronically. More than 90% of Form 1040s are filed electronically.
But others, like Form 3115, are not: they’re intended to be signed on paper. Forcing tax professionals and taxpayers to sign by paper – and then asking the IRS to process that paper – just isn’t practical right now. As a result, the IRS is taking these temporary steps.
“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.”
So, which forms can you sign digitally (for now)?
For now, the following forms can be submitted with digital signatures:
- 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.
This is a temporary measure and applies to those tax forms that are signed and postmarked beginning on or after August 28, 2020, through December 31, 2020. The IRS plans to monitor the submissions and determine if additional steps are needed.
And if you’re wondering whether you have to use a specific brand or type of e-signature, the answer is no. According to an IRS memorandum, electronic and digital signatures may be created by many different technologies and they are not specifying a particular technology for this purpose.
