Calling all accountants! As part of a pandemic-related effort to reduce in-person contact for accountants and taxpayers ahead of tax season, the IRS has extended its policy that loosens restrictions and allows eSignatures for certain forms. Previously, the policy was set to expire on Dec. 31, 2021. Now, the policy has been extended to Oct. 31, 2023.
Prior to the temporary policy, the IRS required wet signatures on all forms on this list except for Forms 8878 and 8879. Those two forms could be hand-signed, eSigned in person, or eSigned remotely. If signed remotely, the IRS required Knowledge-Based Authentication eSign, or KBA for those forms.
But now, with the temporary policy in place, the IRS will accept a “wide range of electronic signatures” for any of the forms on the list. Acceptable eSignature methods include:
- A typed name typed on a signature block
- A scanned or digitized image of a handwritten signature that's 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
- A signature created by a third-party software
It appears KBA is not mandated under this temporary policy and regular eSignatures should suffice on Forms 8878 and 8879.
What is Knowledge-Based Authentication eSign?
Knowledge-Based Authentication, or KBA, is a process used to verify someone’s identity before allowing them to sign documents digitally. Canopy’s Document Management software offers two eSignature options, our standard eSign and an IRS-compliant eSignature option that uses KBA to meet the government’s strictest standards.
With this change from the IRS, Canopy users may choose to use our standard eSignature instead of paying for KBA eSignature.
If Canopy users choose to no longer use KBA eSignature while this temporary IRS policy is in place, it means they no longer would need to pay for KBA credits.
Here is the list of forms eSignatures are now approved for:
- Form 11-C, Occupational Tax and Registration Return for Wagering;
- Form 637, Application for Registration (For Certain Excise Tax Activities);
- Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
- Form 706-A, U.S. Additional Estate Tax Return;
- Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distributions;
- Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Trust;
- Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations;
- Form 706-QDT, U.S. Estate Tax Return for Qualified Domestic Trusts;
- Form 706 Schedule R-1, Generation Skipping Transfer Tax;
- Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
- Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;
- Form 730, Monthly Tax Return for Wagers;
- Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons;
- Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
- Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
- Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation;
- Form 1120-H, U.S. Income Tax Return for Homeowners Associations;
- Form 1120-IC DISC, Interest Charge Domestic International Sales – Corporation Return;
- Form 1120-L, U.S. Life Insurance Company Income Tax Return;
- Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons;
- Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return;
- Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
- Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;
- Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B);
- Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship;
- Form 1128, Application to Adopt, Change or Retain a Tax Year;
- Form 2678, Employer/Payer Appointment of Agent;
- Form 3115, Application for Change in Accounting Method;
- Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts;
- Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner;
- Form 4421, Declaration – Executor's Commissions and Attorney's Fees;
- Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes;
- Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues;
- Form 8038-G, Information Return for Tax-Exempt Governmental Bonds;
- Form 8038-GC, Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales;
- Form 8283, Noncash Charitable Contributions;
- Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms;
- Form 8802, Application for U.S. Residency Certification;
- Form 8832, Entity Classification Election;
- Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent;
- Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement; and
- Elections made per Internal Revenue Code Section 83(b).
Keep in mind, some states may still require KBA or wet signatures for their equivalent forms. For more details on the IRS policy change, click here.
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