IRS has been accepting federal income tax returns with an “electronic” signature for some time as individual income tax returns are filed. Usually the “signature” is a form of a personal identification number (PIN) which is used to authenticate the electronically filed return. According to a recent internal memo, IRS (in response to COVID-19) is accepting digital signatures on some other forms of IRS correspondence and documents effective immediately.
According to the memo, IRS recognizes that taxpayers and their tax professionals are working from remote locations. Similarly, IRS employees are working remotely, however, the work of IRS continues.
Images of taxpayer’s signatures may be scanned or photographed and placed on the required documents which are related to the determination of collection of a tax liability (see list below). Additionally, IRS is allowing IRS employees working cases to accept email and to transmit documents via a secure means.
The taxpayer or tax professional must include a statement, which can be in the form of a cover letter or within the body of an email. The statement must be something to the effect: “The attached (name of document) includes (name of taxpayer)’s valid signature and the taxpayer intends to transmit the attached document to the IRS.” To transmit documents for allowed purposes is solely at the discretion of the taxpayer.
At this time, the documents which are allowed to be signed via electronic means are:
- Extensions to statute of limitations on assessment of collections,
- Waivers of statutory notices of deficiency and consents to assessment,
- Agreements to specific tax mattes or tax liabilities (closing agreements)
- And any other statement of form needing the signature of a taxpayer or representative usually collected by IRS personnel working outside a standard filing procedure, e.g., case specific Power of Attorney.
IRS Deputy Commissioner for Services and Enforcement, Sunita Lough, stated that IRS is continuing to monitor the COVID-19 situation and review methods to lessen the burden for taxpayers and tax professionals. The review continues regarding standards for electronic signatures and other documents which may be allowed to be received with an electronic signature.