New eSignature Guidance for IRS E-file – Lacerte Tax

In this tutorial, we will learn about proper new eSignature Guidance for IRS efile because in an effort to make electronic filing more comfortable and flexible, new guidance has been equiped that will enlarge the use of electronic signatures on two authorization forms for all type of individual income tax returns, Forms are 8878 and 8879. These authorization forms are used when the Professional PIN method is used or when the taxpayer sanction the electronic return originator (ERO) to enter or generate or produce the taxpayer or client’s PIN on his or her e-filed individual income tax return.

Electronic signatures are accepted on:

• Form 8878, IRS e-file Signature Authorization used by taxpayer’s of extension requests, that is, Form 4868 or Form 2350. The application form is for taxpayers or clients that are living outside the United States; • Form 8879, IRS e-file Signature Authorization used by taxpayer’s of Form 1040, 1040A, Form 1040EZ or Form 1040-SS.

The e-signature guidance adds another signing option for taxpayers or clients. For example, taxpayers can e-sign either Form no 8878 or Form no 8879 from their home computer itself. Taxpayers can also physically sign the sanctioned form in their electronic return originator’s office or physically sign and mail that filled form to their ERO.

Taxpayers may e-sign and e-file their tax returns after they properly verify their identity with the ERO. If the taxpayer is completing an in-person transaction, and the ERO and the taxpayer do not have a multiple -year business relation with each other, then the ERO must perform the various steps to identify and validate the taxpayer. If a taxpayer is completing an in-person transaction, and the taxpayer and the ERO have a multiple-year business relationship with each other, the ERO should, but is not required, to take the steps to verify the taxpayer’s identity. Neither Form 8878 nor Form 8879 is submitted to the IRS, but must be maintain with the clients’ records

Electronic Signature Software:

The new guidance gives an opportunity for proper innovation or revolution from the software industry. It does not specifies how the e-signature should occurs. Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns, offers enlightenment on currently acceptable to all e-signature methods, identity verification requirements and electronic record requirements in the “Signing an Electronic Tax Return” section. The software industry also advised to review the National Institute of Standards and Technology, Special Publication 800-63, Revision 2 for electronic authentication guidelines

Benefits for Electronic Return Originators and Taxpayers:

Use of e-signatures is optional or exceptional for electronic return originators or ETO’s. The e-signature option helps us to remove or reduce office resources or expenses like paper, postage and physical storage space and time-consuming efforts which spent by obtaining a physically signed authorization form.

The new guidance reduces burden or pressure on taxpayers or clients who had to physically or objectively sign the authorization form either in their ERO’s office or mail them. Identity verification requirements support efforts or try to protect taxpayers from identity theft or any kind of fraud.

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