Internal Revenue Bulletin: 2013-4
January 22, 2013
Table of Contents
The IRS has supported the use of e-signatures on tax forms, statements, applications, information requests, and similar transactions. However, the IRS has never established a formal set of e-signature standards for the tax industry. E-signature standards will impact tax return preparers, taxpayers, business owners, and other stakeholders. The e-signature process benefits each of these groups and the IRS because it promotes efficiency, reduces burden and improves identity proofing methods to confirm the identity of the signer.
The IRS previously created work groups to study and advance e-signature alternatives, develop standards and business requirements, and identify industry best practices. In addition, the IRS has provided e-signature alternatives to industry partners and taxpayers on an ad hoc basis, including options based on signature requirements for electronic documents from the Restructuring and Reform Act of 1998 (RRA 98). More recently, IRS expanded the use of alternative signatures to include IRS issued Personal Identification Numbers (PINs), self-select PINs, individual identification information, and a number of other techniques. IRS has approved various signature methods based on their legal acceptability and appropriateness for specific transactions.
These options enable the IRS to expand its capabilities for receiving and storing electronic transactions using various types of electronic media. In order to provide improved customer service and thereby increase adoption of electronic filing, the IRS continues to explore and evaluate new e-signature technologies that are potentially suitable for all types of electronic communications.
Currently, the IRS has a review process in place for the approval of alternative signature methods. The use of e-signatures on IRS forms is approved on an ad hoc basis. If an e-signature proposal is approved, the IRS implements the appropriate policy change(s). Also, pilots have been conducted on specific IRS form types and transactions, specifically Form 4506-T (Request for Copy of Tax Return Transcript), Form 8879 (IRS e-file Signature Authorization), and Form 8655 (Reporting Agent Authorization) using signature methods such as a PIN, click-through, tablet PCs, a digital signature, and the electronic signature pad.
Approval of e-signature methods on an ad hoc basis and the testing and subsequent approval of pilots have been successful; however, the IRS needs to implement consistent standards for IRS partners and external stakeholders.
As a foundation, IRS proposes establishing five core signing requirements:
1. A person (i.e., the signer) must use an acceptable electronic form of signature;
2. The electronic form of signature must be executed or adopted by a person with the intent to sign the electronic record, (e.g., to indicate a person’s approval of the information contained in the electronic record),
3. The electronic form of signature must be attached to or associated with the electronic record being signed;
4. There must be a means to identify and authenticate a particular person as the signer; and
5. There must be a means to preserve the integrity of the signed record.
The signing requirements set forth above are similar to requirements implemented under both the Government Paperwork Elimination Act (GPEA) and the Electronic Signatures in Global and National Commerce Act (E-SIGN). Adopting these signing requirements would create consistency for IRS partners and external stakeholders, and promote efficiency regarding the use of e-signatures. In addition, adopting the standards would improve e-authentication and deter identity theft.
Before adopting these core requirements, the IRS requests recommendations from the public on these related issues:
1. Acceptable standards for use of an e-signature on transactions and forms based on the five core signing requirements listed above
2. How to accomplish the e-signature requirements which satisfy GPEA and E-SIGN
3. Requirements for creating a legally binding e-signature in electronic transactions
4. Factors the IRS should consider when deciding which signing process to use
5. How to apply e-signature standards for remote transactions on IRS forms which are not required to be sent to the IRS
6. Industry best practices for IRS consideration
|More Internal Revenue Bulletins|