The IRS announced a limited, temporary relaxation of rules regarding the use of electronic or digital signatures for certain tax forms in lieu of handwritten signatures.[1] The relief will apply to forms signed and postmarked on or after August 28, 2020 through December 31, 2020.

The relief is limited only to the forms specifically listed in the memorandum.  Those listed are:

• Form 3115, Application for Change in Accounting Method;

• Form 8832, Entity Classification Election;

• Form 8802, Application for U.S. Residency Certification;

• Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;

• Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;

• Form 1120-C, U.S. Income Tax Return for Cooperative Associations;

• Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;

• Form 1120-L, U.S. Life Insurance Company Income Tax Return;

• Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and

• Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms.[2]

The memorandum seems to allow virtually any e-signature system to be used for the purposes of this specific relief:

Electronic and digital signatures appear in many forms when printed and may be created by many different technologies. No specific technology is required for this purpose during this temporary deviation.[3]

Since the individual electronic filing authorization Form 8879 is in the list, this presumably means that, until December 31, 2020, the requirement to use an e-signature system with knowledge based authentication (KBA) has been suspended. Previously issued guidance allowed the use of e-signature systems by taxpayers electronically signing this authorization form only when the taxpayers’ identity could be confirmed, normally by use of KBA.

The IRS explains the reason this relief was provided as follows:

As part of our response to the COVID-19 situation, we have taken steps to protect employees, taxpayers and their representatives by minimizing the need for in-person contact. Taxpayer representatives have expressed concerns with securing handwritten signatures during these times for forms that are required to be filed or maintained on paper. To alleviate these concerns while promoting timely filing, we are implementing a temporary deviation with this memorandum that allows taxpayers and representatives to use electronic or digital signatures when signing the following forms that currently require a handwritten signature…[4]

The list of forms allowed to be signed in this manner is far from a complete list.  The IRS explains why it is only allowing this option for this list of forms:

We recognize that this list of forms does not represent the full universe of forms filed or retained on paper that taxpayers and their representatives would like to see covered by this deviation guidance. However, while we seek to maximize remote capabilities for taxpayers and their representatives during this time, we know that the acceptance of electronic/digital signatures presents elements of risk. Therefore, this temporary deviation is limited to the list of forms set forth above. These forms cannot be filed electronically and the IRS can accept the associated risks with these forms at this time in a limited duration under these circumstances.[5]

The memorandum closes with a reminder that this current relief is limited, but the agency does indicate it will consider the status of e-signatures based on the experience the agency has with this program:

This memorandum is effective for the forms listed above, that are signed and postmarked beginning on or after August 28, 2020, through December 31, 2020. After the expiration of this temporary deviation, we will evaluate the full impact of this change to inform the future path for handwritten signatures, balancing flexibility for taxpayers and their representatives with ensuring that we do not introduce downstream risks for tax administration.[6]

[1] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020 https://www.irs.gov/pub/irs-utl/osee_e_wet_signature-deviation_8_27_2020.pdf (retrieved August 28, 2020)

[2] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020, pp. 1-2

[3] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020, p. 1 Footnote 1

[4] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020, p. 1

[5] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020, p. 2

[6] Sunita Lough, Deputy Commissioner for Services and Enforcement, IRS, “Memorandum for All Services and Enforcement Employees: Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” August 27, 2020, p. 2