The forms covered in the agency's Friday announcement include the Form 8453 series, the Form 8878 series, and Form 8879 series, the latter two of which are IRS e-file signature authorization forms, the agency said. Form 8802, Application for U.S. Residency Certification, and Form 8832, Entity Classification Election, are also among the forms for which digital signatures will be temporarily allowed, according to the IRS.
Sunita Lough, the IRS' deputy commissioner for services and enforcement, wrote in a Thursday memo released by the agency that the IRS understands the list of affected forms doesn't represent the full set of those filed or kept on paper that taxpayers and their representatives want to be covered.
"However, while we seek to maximize remote capabilities for taxpayers and their representatives during this time, we know that the acceptance of electronic/digital signatures presents elements of risk," she said. "These forms cannot be filed electronically and the IRS can accept the associated risks with these forms at this time in a limited duration under these circumstances."
In the statement announcing the IRS's move, Commissioner Chuck Rettig said the agency understood the importance of electronic signatures to the tax community.
"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," he said.
The American Institute of Certified Public Accountants welcomed the IRS' temporary acceptance of digital signatures on some forms in a statement.
"We greatly appreciate the IRS' decision to expand the scope of their e-signature requirements," said Edward Karl, the organization's vice president of taxation. "We encourage the IRS to continue to work to make this relief permanent."
In June, the organization sent a letter to Rettig calling for allowing all taxpayers to use an e-signature for the Form 8878 and 8879 series. That was just one of several recommendations in the group's letter.
Lough's memo on Thursday follows earlier actions. In March, she said the agency was temporarily allowing workers to accept scanned or photographed images of signatures or digital signatures on documents related to the determination or collection of tax liability. She issued another memo in June superseding the one in March, extending the expiration date from July 15 to Dec. 31, 2020.
While the AICPA welcomed the announcement by the IRS, Jeff Trinca, legislative counsel for the National Association of Enrolled Agents, said the forms it covered are "fine, but they do nothing to help taxpayers when the IRS takes enforcement actions against them as they are now doing again."
Rettig said last month that the IRS would phase in enforcement actions that were temporarily ceased because of the pandemic.
Trinca also said the agency needed to provide guidance for accepting electronic signatures on Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization.
The IRS was required under the Taxpayer First Act
to provide "uniform standards and procedures" in guidance for accepting electronic signatures on any request for disclosure of a taxpayer's return or return information or any power of attorney a taxpayer grants to a practitioner within six months of the law's enactment.President Donald Trump signed the act into law in 2019. The agency in December issued new language in the Internal Revenue Manual on electronic signatures, but it didn't cover either form.
Trinca said the NAEA and its members remained disappointed that the agency continued to ignore the law's requirements for providing guidance on accepting electronic signatures on those particular forms.
An IRS spokesperson told Law360 Friday the agency was working to implement the section of the IRS overhaul law that contains the electronic signature guidance requirement.
"Indeed, because of our concern about the health and safety of tax professionals and taxpayers during this pandemic, we are planning an interim solution that will allow tax professionals to obtain electronic signatures from clients on Forms 2848 and 8821 starting in January," the spokesperson said. "Our permanent solution for using digital signatures on those authorization forms should be available sometime next summer."
--Editing by Joyce Laskowski.
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