April 5, 2021
Tom Edeus | [email protected]
On January 25th, 2021, the IRS announced a new way to submit Forms 2848/8821 with appropriate electronic signatures now accepted. The announcement was an IRS response to the Taxpayer First Act (TFA), enacted on July 1st, 2019. The TFA includes 45 legislative provisions with a goal to modernize and improve functionality at IRS along with enhancing the taxpayer experience.
The improvements in IRS functionality will be evolutionary not revolutionary. TFA will take ten years to implement at a cost of over $2 billion. The IRS has systems in place which date back to the 1960’s. There are 60 case management systems which do not talk to each other. Progress will be slow. The new direction is encouraging. Over 450 new IT staff have been hired. Funding is in place for at least the time being.
In addition to allowing electronic signatures in January, by the summer of 2021, the IRS will launch a new tax pro account. If both the client and the tax pro have online IRS accounts, authorizations can be electronically signed by each party independently. The wait time for CAF approval will be almost immediate. This will be helpful in instances where time is of the essence. It does require the client to have an online account, with Secure Access, as discussed more fully below.
For the evolution of the authorization process over the entire ten-year implementation period, see publication 5426, pages 43-45.
The new options for Forms 2848/8821:
Tax pros will now have the option of using commercial digital signature products to obtain client e-signatures on Forms 2848/8821.
The TFA required the IRS to establish uniform standards and procedures for the acceptance of taxpayers’ electronic signatures.
An electronic signature is an electronic symbol attached to an electronic record used by a person with an intent to sign. A digital signature is a form of an electronic signature that includes encrypted data produced by a mathematical process applied to a record using a hash algorithm and public key cryptography.
No specific technology is required. Examples of acceptable electronic signature methods include:
- A typed name that is typed into a signature block
- A scanned or digitized image of a handwritten signature that is attached to an electronic record
- A handwritten signature input onto an electronic signature pad
- A handwritten signature, mark, or command input on a display screen with a stylus device
If the taxpayer electronically signs the authorization form in a remote transaction, the taxpayer’s identity must be authenticated, unless the individual has personal knowledge of the taxpayer’s identity (e.g., through a previous business relationship, a personal relationship such as an immediate family member, or similar-type relationship such as between an employer and an employee).
To authenticate the taxpayer’s identity for remote transactions, the individual must:
- Inspect a valid government photo ID and compare the photo to the taxpayer via a self-taken picture of the taxpayer or video conferencing. Appropriate photo ID,s include a driver’s license, employer ID, school ID, state ID, military ID, national ID, voter ID, visa or passport;
- Record the name, Social Security Number or Individual TIN, address, and date of birth of the taxpayer; and
- Verify the taxpayer’s name, address and Social Security Number through secondary documentation, such as a Federal or state tax return, IRS notice or letter, Social Security Card, or credit card or utility statement.
The authentication requirement is consistent with responsibilities under Circular 230 when preparing or assisting in the preparation of, approving, and filing documents relating to IRS matters or in determining the correctness of oral or written representations made by the practitioner to the Department of the Treasury.
The new “Submit Forms 2848 and 8821 Online” process will allow you to upload authorization forms with either electronic signatures or wet signatures to the CAF unit for normal processing as well as withdrawal requests. Use the new IRS page “Submit Forms 2848 and 8821 Online” which was created to receive the forms and uses a secure messaging platform. Identities must be verified using Secure Access with a Secure Access username and password. Forms can be submitted in either PDF, jpeg, or png but only one at a time. Forms are routed to CAF unit for normal processing.
To use the “Submit Form 2848 and 8821 Online” platform, an individual must register for Secure Access. Individuals already registered for secure access, including e-Services Online Tools for Tax Professionals or similar online tools, can use the upload platform to submit Forms 2848 and 8821. To register for Secure Access, you will need your personal information and mailing address from your most recently filed tax return, your financial account number, your U.S. based mobile phone to receive a one-time activation code which can be mailed if you do not have a mobile phone. Secure access offers a more rigorous identity check with two factor authentications.
Disclaimer: This article is designed to provide information in regard to the subject matter and has been prepared with the understanding that neither the Illinois CPA Society nor the author of this article is providing accounting, tax or legal advice or is performing any legal, accounting or other professional service. If accounting, tax or legal advice or other expert assistance is required, the services of a competent professional person should be sought.