Any chance IP PIN will replace e-signature KBA?

Technical topics regarding tax preparation.
#1
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Any chance the IRS will waive the KBA requirement for e-signatures if the taxpayer has opted into the IP PIN program?

An IP PIN provides much stronger authentication than KBA, for sure.

(KBA can often be reasonably guessed via publicly-available information. IP PIN can't.)
 

#2
sjrcpa  
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But the preparer enters the IP PIN. There is no involvement of the taxpayer.
KBA is to ensure the taxpayer is actually the one signing the document. Granted, I guess some of the information could be known to 3rd parties. But the times I've used it even I had trouble with some of the questions. (Which cars have I owned, what streets have I lived on, etc. It seems to include some from 20 years ago or more).
 

#3
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sjrcpa wrote:But the preparer enters the IP PIN. There is no involvement of the taxpayer.

Taxpayer provides IP PIN to tax preparer at the time of signature, thereby authenticating. The involvement is providing the IP PIN.

sjrcpa wrote:KBA is to ensure the taxpayer is actually the one signing the document.

Taxpayer is the only person who should be in possession of the IP PIN. So, if they provide the IP PIN at the time of signature, then that ensures they're the one actually signing the document.

(Heck, the IP PIN could even suffice as a signature, as far as I'm concerned, but I'm just talking about avoiding the KBA step in the electronic signature process. KBA is a hassle, it's not free, and it can often be passed using publicly-available info by someone who knows how to navigate that stuff. Not always, but far more often that ought to be possible for an "authentication" process.)
 

#4
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You know what they say....wish in one hand...what in the other?

I'm assuming those without IP PINs would still have to go through the KBA process? Or will IP PINs become mandatory? What say you IRS Commissioner WilsonCA?

If the former, it's going to be an administrative headache. One process for all clients is efficient. There's not a lot of room for error. One of two paths based on whether or not a client has an IP PIN isn't something we should fight for or support, unless you like lower realization and more mistakes.

If the latter, aren't we going to love helping all those clients get an IP PIN in the first two weeks of April for the year of transition?
 

#5
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ManVsTax wrote:I'm assuming those without IP PINs would still have to go through the KBA process?

Yes, if they want to e-sign remotely without an IP PIN.

ManVsTax wrote:One process for all clients is efficient.

KBA is inefficient to begin with, so one inefficient process for all clients is still inefficient. IP PIN would be much more efficient. It costs less (free), it's more secure, it's simple to use, and the functionality is already built into the software.
 

#6
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WilsonCA wrote:KBA is inefficient to begin with, so one inefficient process for all clients is still inefficient. IP PIN would be much more efficient. It costs less (free), it's more secure, it's simple to use, and the functionality is already built into the software.


This is your personal opinion or practice's observation. It's not a general truism for all firms, and it certainly isn't fact.

On my end, it takes a few seconds to toggle the KBA button on or off if a signature package needs it.

What would be inefficient, on my end, is adding another step in this process -- the need to open up the client's return in the return software and see if there's an IP PIN in there, then based on that variable make a decision about whether to toggle on the KBA button. And again, this extra step invites the opportunity for error that wasn't there before.

If a large percentage of your client base have issues authenticating with KBA, or it's costly for you, perhaps you should just implement hand signatures and scans for ALL client efile authorizations? Seems like that would be a more practical way to deal with your issue, but that's just my opinion.
 

#7
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I struggle to see how this works in practice. The basic idea is sound until you get to the point that the client must have their IP PIN to sign the electronically-delivered 8879. So either they have copied/scanned the letter from the IRS or they rely on you to provide them with a copy.

I am reminded of the first Managing Partner I worked for in this profession. "This work would be great if it weren't for the clients."
 

#8
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ManVsTax wrote:
WilsonCA wrote:KBA is inefficient to begin with, so one inefficient process for all clients is still inefficient. IP PIN would be much more efficient. It costs less (free), it's more secure, it's simple to use, and the functionality is already built into the software.


This is your personal opinion or practice's observation. It's not a general truism for all firms, and it certainly isn't fact.

  1. costs less (free)
  2. more secure
  3. simple to use
  4. functionality already built into software.
These are all either fact, or very close to it.

I understand that KBA may be easy for you (the firm), since you don't have to do anything other than toggle a button and add a couple of bucks to your bill. But that doesn't make it efficient for the client.

My point is that for the client, having an IP PIN should eliminate the need to pass KBA. And maybe that's the best way to think about it: if the client has an IP PIN, then you simply toggle KBA off. Saves time/money/effort for the client, and provides a more secure result, without making life any more difficult for the preparer.

(That is, unless you think that IP PINs already make things more difficult for you, in which case I can't really argue. Do you charge extra to clients who have IP PINs?)
 

#9
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WilsonCA wrote:costs less (free)


Are costs always cash out the door? What about opportunity costs? Drain due to inefficiency and mistakes? Aren't those "soft" costs on a practice?

WilsonCA wrote:more secure


Debatable. Are they still sending IP PINs through the mail? Anyone can snag a letter out of grandpa's mailbox. Not likely they'll be able to pass grandpa's KBA test reliably. They've gotten a lot better. Around 25% of my older client's have trouble passing their own KBA tests because they ask about a relative's address from 30 years ago.

WilsonCA wrote:simple to use


So we have: (1) one process for all 1040 clients --- open up the e-signature platform and toggle the KBA button to on for return e-file authorizations OR (2) two different potential processes for 1040 clients --- open up the e-signature platform and get it 90% done, then switch windows, open up the return software, confirm there is at least one IP PIN in there, then switch windows back to the e-signature platform, and make a decision about whether to toggle on KBA or leave it off based on what was in the return software.

You're asserting #2 is more simple than #1? Is that right?

WilsonCA wrote:functionality already built into software.


Irrelevant. Doesn't negate that what you're proposing will create more inefficiency and pain points for the average firm.

WilsonCA wrote:But that doesn't make it efficient for the client.


So the solution to a minor inefficiency for the average client is to make things much more inefficient for the greater industry?

WilsonCA wrote:My point is that for the client, having an IP PIN should eliminate the need to pass KBA.


It doesn't though. An IP PIN can be intercepted just like any other document or data delivery. KBA is a higher level of authentication, as it is based on the knowledge of the client.

I'm not going to go back and forth with you forever. What you're proposing isn't going to happen. And it's not a great idea.

If you have that much trouble with KBA, why not FedEx overnight the signature pages to each client along with a return envelope and prepaid postage. Sure, it's going to cost you megabucks, but it aligns with your primary motivation of making things most efficient for your clients. Please don't wish for industry-wide changes to cure a firm-level issue.
 

#10
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ManVsTax wrote:I'm not going to go back and forth with you forever.

I won't respond, then. I'm not going to go back and forth with you forever. ;) You're more than welcome to keep KBA toggled 'on' for all of your clients, even if the IRS were to not require it.

For the rest of us (and anyone who's willing to consider things from a point of view other than that of entrenched/intransigent tax preparer), I'll pose the question differently: If the client has an IP PIN, and provides it to the tax preparer at the time of e-signature, is there any reason why an e-signature should require KBA?

KBA is intended to ensure that the person signing the "Declaration" is the person whose name/SSN is on the 8879, but -- and this is well-acknowledged -- it's far from fool-proof. The 8879 could be slightly redesigned to allow the taxpayer to enter the IP PIN on the 8879 as their signature, as an alternative (third) option to the other two options/checkboxes. Wouldn't this ensure, at least as well as KBA, that the person signing the "Declaration" is the person whose name/SSN is on the 8879?
 

#11
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Well, yes, that would work in theory. However, I refer you, as modestly as possible, to post #7. A client who is smart enough to keep a copy of the IP PIN letter is also likely to be smart enough to do "regular" KBA.
 


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