esignatures for BUSINESS returns

Software. Marketing. Training. Running your business.
#1
LDCPA  
Posts:
169
Joined:
8-Aug-2022 8:04pm
Location:
CA
What's your take on esignatures for business tax returns? There are a few threads on here already on this topic, but they're dated.
 

#2
Posts:
7894
Joined:
4-Mar-2018 9:03pm
Location:
The Office
LDCPA wrote:but they're dated.


I'm not aware of any updates on the topic.

What is comes down to is law and what the parties agree.

There are a couple federal laws that have given electronic signatures the same weight as a manual signature. Those laws are why you're able to execute a mortgage agreement from your living room in your sweat pants and slippers.

My engagement letters state that esignatures are valid and have the same effect and force as a manual signature. Both parties agree to that.

I have no hesitation allowing the relevant party to esign efile authorizations for business and trust returns. It's standard practice for me. I've seen nothing nothing from the IRS that indicates this is unacceptable.
 

#3
Posts:
2570
Joined:
24-Jan-2019 2:16pm
Location:
North Shore, Oahu
My takes:


1) Do not have your clients e-sign an 1120s or a 1065 and then mail it to the IRS. It will likely be kicked back and it is not approved.


2) The IRS says you can get an electronic signature specifically for form 8879 (with KBA), but it does not say you can do this for an 8879-PE or an 8879-S. It does not seem that anyone really knows if 8879-S and 8879-PE are included or not. The IRS says:

Taxpayers, who currently use Forms 8878 or 8879 to sign electronic Forms 1040 federal tax returns or filing extensions, can use an e-signature to sign and electronically submit these forms to their Electronic Return Originator (ERO).

It does not really say you can do this with other forms.

In other areas, the IRS specifies the suffix of the forms approved for electronic filing.

So I'm not sure that e-signature is legit for these forms.



3) The IRS says that you need KBA on an 8879 as follows:

Identity verification must be completed every time a taxpayer electronically signs Form 8878 or 8879, with two exceptions. If a taxpayer e-signs the form in the physical presence of the ERO, and the taxpayer has a multi-year business relationship with the ERO, then no further identity verification is needed. 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.

So to me, it does not seem as KBA is required for subsequent years, though there are arguments on that subject too.
 

#4
Posts:
7894
Joined:
4-Mar-2018 9:03pm
Location:
The Office
I've asked this here before, and I'll ask it again: how does turbotax business work? Are they requiring every 8879 to be printed to hardcopy, hand signed and dated, scanned to PDF, and uploaded to turbotax?

Or do they do a simple esignature?
 

#5
Posts:
5911
Joined:
22-Apr-2014 3:06pm
Location:
WA State
Esigs are ubiquitous for biz returns and have been for years.

IRS knows this. If it were an issue, they'd have clarified that some time ago.
~Captcook
 

#6
Posts:
2852
Joined:
21-May-2018 7:50am
Location:
Northern MI and Coastal SC
I'd love to use eSigs for business returns. I have not seen anything that specifically prohibits it, but nothing that allows it. That leads into what ItDepends brought up--KBA or not?

Federal law states eSigs are binding.

None of my clients sign in my presence so I cannot bypass identity verification based on also having multi-year relationships.
 

#7
Posts:
1173
Joined:
3-Sep-2021 4:01pm
Location:
OH
I use e-sigs for business returns and the firm I worked for before I left did too. Welcome to 2023!
 

#8
LDCPA  
Posts:
169
Joined:
8-Aug-2022 8:04pm
Location:
CA
ManVsTax wrote:I've asked this here before, and I'll ask it again: how does turbotax business work? Are they requiring every 8879 to be printed to hardcopy, hand signed and dated, scanned to PDF, and uploaded to turbotax?

Or do they do a simple esignature?


Don't know how turbotax business works, but Intuit seems to run KBA on the signing representative of the business based on this article https://proconnect.intuit.com/support/e ... d=ldkkp6vc

"How does knowledge-based authentication (KBA) work?
The signing representative will be asked questions to verify their personal identity before they can view and sign the return. The questions aren't based on data about the business."
 

#9
Posts:
7894
Joined:
4-Mar-2018 9:03pm
Location:
The Office
https://www.irs.gov/pub/lanoa/pmta-2018-08.pdf


Section 6061(a) of the Code provides the general rule that any return, statement, or
other document required to be made under any provision of the internal revenue laws or
regulations shall be signed in accordance with forms or regulations prescribed by the
Secretary. Section 6061(b)(1) provides that the Service shall establish procedures for
accepting signatures in digital or other electronic form. The Code does not provide
detailed rules for the use of electronic signatures beyond authorizing their use in section
6061(b)(1).

Unless specifically provided for in published guidance, signatures on Service
documents must be manually signed. Electronic signatures on Service documents are
legally valid only if specifically allowed in published guidance. Notice 2007-79, 2007-42
I.R.B. 809, authorizes electronic return originators (EROs) to use alternative methods to
sign...

Notice 2007-79 only authorizes the use of alternative signature methods on the Form
8879, U.S. Individual Income Tax Declaration for an IRS e-file Return, and not other
members of the Form 8879 family relating to business. And it only authorizes use of
alternative signature methods by EROs, not by individuals.


How incredibly backward.

So how many firms, including large regional firms and Big 4 offices do we estimate are out of compliance with this? As well as Turbotax it seems...
 

#10
JAD  
Posts:
3931
Joined:
21-Apr-2014 8:58am
Location:
California
I tell my clients that they must print, manually sign, and send back to me by whatever method works for them. But no electronic signatures. When I get push back, I tell them that e-signatures require me to be responsible for technology that I don't understand. It is a cost of having a CPA who doesn't have her own IT department. Old school works for me, and so far, I haven't lost anyone because of it.
 

#11
sjrcpa  
Posts:
6270
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
 

#12
Posts:
5911
Joined:
22-Apr-2014 3:06pm
Location:
WA State
sjrcpa wrote:https://www.irs.gov/newsroom/details-on-using-e-signatures-for-certain-forms

HAHA!
~Captcook
 

#13
Posts:
56
Joined:
23-Oct-2018 2:59pm
Location:
Hawaii
Good through 10/2023 at a minimum.
 


Return to Business Operations and Development



Who is online

Users browsing this forum: No registered users and 5 guests