Technical topics regarding tax preparation.
electronic signature on e-filed returns
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19-Mar-2020 12:05pm

I would like to use the electronic signature stamp that is in acrobat pro for the paid preparer signature, so I am not printing out and scanning docs to send to clients, especially in light of reduced office capacity that we are faced with now. I imagine a client or two might ask if they can do the same thing?

Am I, and are clients, required to place "wet" signatures on e-filed documents?

19-Mar-2020 12:12pm

A preparer signature can be typed. That is what I do. Clients who sign electronically (ie, without printing the 8879, signing with a pen and scanning back in) must be validated and a log maintained. I decided I could not afford this without confusing the heck out of clients by using one service for e-signatures and another for secure exchange of paperwork with PII on it.

19-Mar-2020 2:33pm

Lacerte keeps advertising all forms can be electronically signed, but I have not found any evidence of that being true. I think they're trying to use some sort of gray area that I am not willing to risk.

Accordingly, only Federal and South Carolina 1040/SC1040 eFile forms are offered for eSignature by my firm, unless I can also verify other states allow KBA-based eSignatures. Business entities still have to print and sign with a wet ink signature, date it, and upload it to their portal. I've noticed a few more states are relying on the Federal 8879, so hopefully it keeps expanding to where we can use eSignatures w/ KBA for ALL filings.

20-Mar-2020 6:51am

Cornerstone -- do you have a cite for the statement that business efile authorizations must be wet signed?

Individual e-file authorizations (8879s and 8878s) must use Knowledge Based Authentication (KBA) if remotely e-signed. If e-signed in your office KBA is not required. Clients can opt out of the remote e-signature KBA requirement by printing and wet signing.

20-Mar-2020 7:50am

ManVsTax wrote:Cornerstone -- do you have a cite for the statement that business efile authorizations must be wet signed?



I have not found any evidence from the IRS that the business entity eFile authorizations CAN be eSigned, so therefore my conclusion is they cannot. I'd love for someone to post evidence of it so I can just use DocuSign for Forms 8879-S and 8879-PE, but I have yet to locate it.

Example, this link only references Forms 8878 and 8879, but not their business entity variants such as 8879-S and 8879-PE: https://www.irs.gov/e-file-providers/frequently-asked-questions-for-irs-efile-signature-authorization

20-Mar-2020 8:20am

I wonder how TurboTax Business does it.

Are efile authorizations for Partnership and S Corp returns DIYed in TurboTax required to be printed out, wet signed, and scanned in? Seems like TurboTax would have a lot of liability exposure here and would want to get it right.

Those are genuine questions, not sarcasm. And it kind of makes you think doesn't it?

I hesitate to interpret no evidence one way or the other to mean e-signature of business efile authorizations is a no-no.

I've been interpreting that the individual efile authorizations have a higher remote e-signature requirement, not that they are the only returns that can be e-signed. Perhaps I'm flat out wrong though...
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