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Electronic Signature Guidance for Forms 8878 and 8879 (Updated 11/06/2014)

Taxpayers have the option of using electronic signatures for Forms 8878 and 8879 if the software provides the electronic signature capability. If taxpayers use an electronic signature, the software and the ERO must meet certain requirements for verifying the taxpayer’s identity. 
Electronic signatures appear in many forms, and may be created by many different technologies.  No specific technology is required. Examples of currently acceptable electronic signature methods include:
    • A handwritten signature input onto an electronic signature pad;
    • A handwritten signature, mark or command input on a display screen by means of a stylus   
      device;
    • A digitized image of a handwritten signature that is attached to an electronic record;
    • A typed name (e.g., typed at the end of an electronic record or typed into a signature block 
      on a website form by a signer);
    • A shared secret (e.g., a secret code, password or PIN) used by a person to sign the 
      electronic record;
    • A digital signature; or
    • A mark captured as a scalable graphic.

The software must record the following data:
    • Digital image of the signed form;
    • Date and time of the signature;
    • Taxpayer’s computer IP address (Remote transaction only);
    • Taxpayer’s login identification - user name (Remote transaction only);
    • Identity verification: taxpayer’s knowledge based authentication passed results and for in
       person transactions, confirmation that government picture identification has been verified; 
       and
    • Method used to sign the record,(e.g., typed name); or a system log; or other audit trail that 
       reflects the completion of the electronic signature process by the signer.
Note: The ERO must provide this information upon request.

Identity Verification Requirements
The electronic signing process must be associated with a person, and accordingly, ensuring the validity of any electronically signed record begins with identification and authentication of the taxpayer. 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 there is more than one taxpayer for the electronic record, the electronic signature process must be designed to separately identify and authenticate each taxpayer..
The identity verification requirements must be in accordance with National Institute of Standards and Technology, Special Publication 800-63, Electronic Authentication Guideline, Level 2 assurance level and knowledge based authentication or higher assurance level.

Electronic Signature Via In-Person Transaction
An in-person transaction for electronic signature is one in which the taxpayer is electronically signing the form and the ERO is physically present with the taxpayer. The ERO must validate the taxpayer’s identity for in-person transactions unless there is a multi-year business relationship. A multi-year business relationship is one in which the ERO has originated tax returns for the taxpayer for a prior tax year and has identified the taxpayer using the identity verification process described below.
For in-person transactions, the ERO must inspect a valid government picture identification; compare picture to applicant; and record the name, social security number, address and date of birth. Examples of government picture identification (ID) include a driver’s license, employer ID, school ID, state ID, military ID, national ID, voter ID, visa or passport. Verify that the name, social security number, address, date of birth and other personal information on record are consistent with the information provided through record checks with the applicable agency or institution or through credit bureaus or similar databases. For in-person transactions, the identity verification through a record check is optional.

Electronic Signature Via Remote Transaction
A remote transaction for electronic signature is one in which the taxpayer is electronically signing the form and the ERO is not physically present with the taxpayer. For remote transactions, the ERO must record the name, social security number, address and date of birth. Verify that the name, social security number, address, date of birth and other personal information on record are consistent with the information provided through record checks with the applicable agency or institution or through credit bureaus or similar databases.
Note: An electronic signature via remote transaction does not include handwritten signatures on Forms 8878 or 8879 sent to the ERO by hand delivery, U.S. mail, private delivery service, fax, email or an Internet website.

Identity Verification
The software used for the electronic signature process may use credit records, also known as credit reports, to verify the taxpayer’s identity. Identity verification may consist of a record check with a credit reporting company. A credit reporting company uses information from the taxpayer's credit report to generate knowledge based authentication questions. This action may create an entry on the credit report called a “soft inquiry”.
The software used for the electronic signature process should include an advisory to taxpayers stating the use of third party data for identity verification; how third party data is used for identity verification; if a “soft inquiry” will be generated and the effect, if any, on the credit report, credit scores and reporting to lenders; and how the inquiry may appear on the credit report. The software should also include an advisory to taxpayers stating the IRS will not be given view of or access to a taxpayer’s credit report, nor will the credit reporting company or other identity verification third party have access to the taxpayer’s tax information.
The process of identity verification through the use of a record check with a credit reporting company  or other identity verification third party for purposes of electronically signing does not require additional consents from the taxpayer beyond those obtained for preparing and filing their taxes; nor does it violate the provisions of Internal Revenue Code section 7216 or its regulations.

Identity Verification Failure
The software will enable the identity verification using knowledge based authentication questions when an ERO uses tax preparation software to interact with the taxpayer for purposes of obtaining an electronic signature on Form 8878 or 8879. If the taxpayer fails the knowledge based authentication questions after three attempts, then the ERO must obtain a handwritten signature on Form 8878 or 8879.

Electronic Records
Electronic signatures must be linked to their respective electronic records to ensure that the signatures cannot be excised, copied or otherwise transferred to falsify an electronic record. After the electronic record has been signed, it must be tamper-proof. Therefore, techniques must be employed that lock a document and prevent it from being modified. Storage systems must have secure access control to ensure that the electronic records cannot be modified. Additionally, storage systems must also contain a retrieval system that includes an indexing system, and the ability to reproduce legible and readable hardcopies of electronically stored records.

Electronic Signatures for EROs

EROs must also sign with a PIN. EROs should use the same PINs for the entire tax year. The ERO may manually input or the software can generate the PIN in the electronic record in the location designated for the ERO Electronic Filing Identification Number (EFIN)/PIN. The ERO is attesting to the ERO Declaration by entering a PIN in the ERO EFIN/PIN field. For returns prepared by the ERO firm, return preparers are declaring under the penalties of perjury that they reviewed the returns and they are true, correct and complete.
EROs may authorize members of their firms or designated employees to sign for them, but the EROs are still responsible for all the electronic returns originated by their firms.
For returns prepared by other than the ERO firm that originates the electronic submission, the ERO attests that the return preparer signed the copy of the return and that the electronic return contains tax information identical to that contained in the paper return. The ERO must enter the return preparer’s identifying information (name, address, EIN,  and PTIN) in the electronic return.
EROs may authorize members of their firms or designated employees to sign for them, but the EROs are still responsible for all the electronic returns originated by their firms.
EROs may sign Forms 8878 and 8879 by rubber stamp, mechanical device (such as signature pen) or computer software program as described in Notice 2007-79. The signature must include either a facsimile of the individual ERO’s signature or of the ERO’s printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. This does not alter the requirement that taxpayers must sign Form 8878 and Form 8879 by a handwritten or electronic signature. The ERO must retain Forms 8878 and 8879 for three years from the return due date or the IRS received date, whichever is later. EROs must not send Forms  8878 and 8879 to the IRS unless the IRS requests they do so.

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Page Last Reviewed or Updated: 13-Nov-2014