Historically, the only option for tax professionals filing critical documents such as Forms 2848 and 8821 were paper based.
Tax professionals usually filled out the forms and their clients had to apply a “wet” signature with an ink pen during a face-to-face meeting. Then the signed document was mailed or faxed directly to the Internal Revenue Service (IRS) .
The Taxpayer First Act (TFA) of 2019 required the IRS to provide electronic signature options for Form 2848, Power of Attorney, and Form 8821, Tax Information Authorization. Up until now, however, the process has been left unchanged.
Given the huge impact of COVID-19 on the accounting and tax industry, the IRS has been pushed to adopt digital processes that protect the health and safety of tax professionals and their clients. Two of the processes I want to highlight are obtaining electronic signatures and submitting critical documents online.
Starting January 25, 2021, tax professionals will find the new “Submit Forms 2848 and 8821 Online” on the IRS.gov/taxpros page. This is the first step in the IRS’s ongoing effort to expand digital options for tax professionals, including electronic signatures and online submissions. Tax professionals must have a Secure Access account that includes a current username and password, or create an account prior to submitting an online authorization form.
Under the IRS guidelines, signatures on forms can be handwritten or electronic if a tax adviser is using a new online option. The taxpayer and tax advisor must sign Form 2848, while Form 8821 only requires the taxpayer’s signature.
If the tax professional uses the e-signature option for a new customer, they must first authenticate the customer’s identity. For details on this process, see “Authentication” in the online option’s FAQ. The online option can also be used to revoke prior authorizations.
While there is still an option to send authorization forms by mail and fax, electronic signatures are not allowed and a “wet” signature is still required when using these submission methods.
After submission, Forms 2848 and 8821 are saved in the IRS’s Centralized Authorization File (CAF). Authorization forms submitted online, by mail, or by fax will be processed on a first-in, first-out basis. The new online option eliminates the need for special equipment (e.g. faxes, scanners), saves tax professionals time in obtaining signatures, and reduces face-to-face contact.
With ImagineTime e-signature, requesting client signatures is simple and fast. Build client signature requests into a streamlined workflow using ImagineTime’s e-signature module. Verify signer identity with Knowledge-Based Authentication (“KBA”), capture a legally binding signature, and securely store completed documents — all at the push of a button.
In layman’s terms, an electronic signature is a string of virtual fingerprints that are used to verify the identity of a signer and intent to sign the document.
ImagineTime is a software company built by accountants for the accounting industry. We offer a full suite of Practice Management solutions for over 1,500 firms and nearly 10,000 users. We have solutions for Electronic Signature, Secure File Sharing, Time & Billing, Workflow, and Reporting to help you run the most efficient and profitable Accounting firm possible.
Contact ImagineTime at +1 877.520.1525 or email@example.com
Author: Carl Coe, CEO