On March 27, 2020, the IRS announced in a Memorandum to its Employees, effective immediately that it will temporarily accept scanned or digital signatures and allow the sharing of certain documents electronically via email. The purpose is to enable IRS employees to perform and complete critical duties where the IRS employees, taxpayers or taxpayers’ representatives are working in alternate locations.
The specific category of documents included within the scope of the memorandum are:
- Extensions of the statute of limitations on assessment or collection;
- Waivers of statutory notices of deficiency and consents to assessment;
- Agreements to specific tax matters or tax liabilities (closing agreements); and
- Any other statement or form requiring the signature of a taxpayer or representative traditionally collected by IRS personnel outside of standard filing procedures (for example a case specific Power of Attorney)
Please note that category four specifically excludes tax return filings from the documents covered by this memorandum.
Scanned or digital signatures
The authority granted to IRS employees allows the IRS to accept images of signatures (scanned or photographed) and digital signatures on documents “related to the determination or collection of tax liability.” Whether the taxpayer or a taxpayer’s representative uses an image or an encrypted digital signature, it must be transmitted via one of the following file types: .tiff, .jpg, .jpeg, .pdf, Microsoft Office suite or Zip.
Procedures for sharing documents electronically
The IRS already shares documents electronically via eFax and secure messaging systems. To eliminate mailing documents, the IRS will additionally be able to receive and send documents via Email with the taxpayer’s permission in the event a taxpayer cannot use an eFax or secure messaging system. The choice is solely up to the taxpayer.
If the taxpayer chooses to send documents via email with attachments, the IRS employee must still take the following steps via telephone: (1) authenticate the identity of the taxpayer or representative; (2) verify the email address; (3) advise the taxpayer or representative that unencrypted email sent via the internet are not secure; (4) provide specific instructions about minimizing sensitive information and recommending password –protected attachments. The taxpayer must submit the attachments using one of the above-described types, and include the statement in a cover letter or in the body of the email: “The attached [name of document] includes [name of taxpayer]’s valid signature and the taxpayer intends to transmit the attached document to the IRS.”
If the taxpayer chooses and consents to receive documents via email, the IRS will send it via Secure Zip or other IRS established secured messaging systems. IRS employees will never correspond with a taxpayer or a taxpayer’s representative using an employee’s personal email account.
This guidance is very helpful for those Taxpayers whose tax returns are currently under exam and who are responding to the IRS’s information document requests. Instead of mailing a thumb drive with the requested documents uploaded on it, or printing out the requested documents and mailing them to the IRS, the IRS will now be able to accept such documents via email, following the IRS’s instructions.
If you have any questions with regard to this guidance, please contact a Tax Controversy team member in Washington National Tax.