On Aug. 28, 2020, the IRS issued a memorandum that it would temporarily allow the use of e-signatures on certain forms due to the ongoing COVID-19 pandemic. In the spring of 2020, the IRS announced that it would permit the use of electronic signatures for certain documents. However, tax practitioners, including tax professionals from RSM’s Tax Quality and Risk Management team, have continued to request that the IRS expand the use of e-signatures. RSM US LLP professionals were instrumental alerting the IRS to the need for changes to the IRS’s signature requirements to take into account the social distancing needs during the COVID-19 pandemic. RSM US LLP was the first organization to contact the IRS and recommend changes to the IRS’s signature requirements. That letter was specifically referenced in a separate letter sent to the IRS by the American Institute of CPAs (AICPA). Additionally, RSM professionals took part in discussions with IRS leaders regarding these changes to the signature requirements.
In response, the IRS issued the above-linked memorandum to permit e-signatures for a number of tax forms. The permitted forms are:
- 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.
The memorandum states that the IRS does not require taxpayers or representatives to use a particular technology or service to create the electronic signature. Presumably, taxpayers and their representatives are able to use any of the technologies previously deemed acceptable. That would include using signatures that are .tiff, .jpg, .jpeg, .pdf files, as well as services like docusign. Indeed, the official memorandum itself appears to have been signed using an adobe certificate based e-signature.
The memorandum only permits the use of e-signatures for the period of time between Aug. 28, 2020 and Dec. 31, 2020. However, the memorandum states that the IRS will review the impact of permitting e-signatures, and will evaluate their future use. Lastly, the memorandum does not permit e-signatures for some of the most commonly filed forms, such as Form 1040 U.S. Individual Income Tax Return, Form 1120 U.S. Corporation Income Tax Return or Form 1065 U.S. Return of Partnership Income because the IRS was concerned that the acceptance of e-signatures ’presents elements of risk.’
Taxpayers with any questions or concerns with using an e-signature to sign their tax filings should contact their tax advisor to determine whether an e-signature is permitted, and to determine whether there are any risks associated with that e-signature.