The IRS on August 28 announced in IR-2020-194 that it temporarily will allow the use of digital signatures on certain forms that cannot be filed electronically. This change is intended to protect the health of taxpayers and tax professionals during the COVID-19 pandemic by reducing the need for in-person contact and allowing both groups to work remotely to timely file tax forms. Tax professionals previously expressed concerns about securing handwritten signatures during the pandemic for forms that are required to be filed or maintained on paper.
The IRS’s announcement of this temporary option was well-received in light of the continuing impact of COVID-19 on the in-person availability of individuals who otherwise would have been required to use a handwritten signature on a return. It is important to note that this temporary relief is limited solely to the list of returns identified above; therefore, a paper filing of a return that is covered by the Form 8453 series still requires a handwritten signature. Although the list is limited, this is positive news in light of the upcoming tax filing deadlines.
The ability to electronically sign impacts taxpayers, the IRS and tax advisors. Taxpayers and tax advisors should both assess process and technology solutions to properly execute requirements, including multi-factor authentication of identification. While the IRS does not point to specific technology for electronic signature at this time, future guidance may address this issue if electronic signatures continue to be accepted beyond 2020.
Ruth Perez Kim
Partner, Tax Controversy and Regulatory Services, PwC US