With the updated version of IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (rev. 3/11/14), the IRS provides new methods for taxpayers to electronically sign Form 8878, IRS e-file Signature Authorization for Form 4868 and Form 2350, the e-file signature authorization form.
Taxpayers can use one of two methods to electronically sign tax returns. One involves using a self-selected personal identification number (PIN) and requires taxpayers to provide their prior-year adjusted gross income or PIN to the IRS. The second method requires the taxpayer to sign Form 8878 permitting an electronic return originator (ERO) to input the taxpayer’s PIN and e-file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, or Form 2350, Application for Extension of Time to File U.S. Income Tax Return. Taxpayers may now sign this authorization form electronically using an electronic signature pad, but that signature pad must be in the ERO’s office; taxpayers cannot sign remotely.
To be valid, the IRS says, the electronic signature process “must be able to generate evidence of the person the electronic form of signature belongs to, as well as generate evidence that the identified person is actually associated with the electronic record.” If more than one taxpayer is associated with the electronic record, the electronic signature process must be able to separately identify and authenticate each one. The ERO must retain the forms containing the taxpayer’s signature and must provide a copy to the taxpayer upon request.
Publication 1345 cautions EROs that they must confirm the identities and tax identification numbers of taxpayers and any spouses and dependents listed on taxpayers’ returns. If an ERO does not know the taxpayer, he or she should ask the taxpayer to provide two forms of identification with the taxpayer’s name and current address on them.
The IRS is also requiring EROs to employ systems that will ensure that once an electronic record is signed, it cannot be tampered with. Electronic documents must be locked in such a way that they cannot be modified, and there must be secure access control. Electronic signatures must be linked to the associated electronic record to ensure that signatures cannot be excised, copied, or otherwise transferred to falsify an electronic record.
Finally, electronic record storage systems must contain a retrieval system with an indexing system and be able to reproduce legible hard copies of the electronically stored records.
Alistair M. Nevius (
) is the JofA’s editor-in-chief, tax.