By Dan Davidson and Destiny Reese
PLI Chronicle
March 2021 Issue
Over 70% of federal tax filings in 2019—including almost 90% of individual income tax returns—were filed electronically. Yet, as tax practitioners know, many federal tax forms continue to require “wet” signatures. Even before the COVID-19 pandemic, there were calls for the Internal Revenue Service (IRS) to modernize its approach to electronic signatures. Such appeals recognized the tension in a system where many avail themselves of opportunities to electronically file documents but cannot always electronically sign documents. COVID-19 dramatically exacerbated this tension by transforming an inconvenience in the best of times—obtaining wet signatures when required—into an impossibility, given the safety implications of interpersonal interactions.
Against this backdrop, in late January 2021, the IRS unveiled a new system for submitting Forms 2848 and 8821 online and will now permit electronic signatures on those forms. These changes follow an array of temporary measures taken last year by the IRS permitting electronic signatures on certain forms.
The ability to electronically sign Forms 2848 and 8821 is a welcome development. It will facilitate contactless signing and submission of the forms, which will be convenient going forward and especially important while the COVID-19 pandemic continues. The change is also overdue: before the pandemic began, the IRS had already missed a January 1, 2020 deadline (pursuant to the Taxpayer First Act) to publish guidance on electronic signature protocols for Forms 2848 and 8821.
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