Don't Mess With Taxes

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Many of the accommodations we made for the COVID-19 pandemic were burdensome. Just ask parents who were forced into dual work-from-home and school teacher duties.

But two tax-related changes were more well-received, so much so that the Internal Revenue Service is extending them.

The agency extended indefinitely the option to use electronic or digital signatures on tax documents. The IRS says digital/e-signatures will be acceptable "until more robust technical solutions are deployed."

In addition, encrypted emails still can be used until Oct. 31, 2025, to communicate directly with IRS personnel with whom the taxpayers or their tax professionals have been working.

Allowable e-sig forms: The IRS' Internal Revenue Manual (IRM) notes that electronic and digital signatures appear in many forms when printed, and may be created by many different technologies. The agency doesn't require us to use any specific technology to create them.

It is more precise, however, in the tax paperwork that, for now, no longer requires a pen-to-paper John Hancock.

The documents the IRS says can be electronically signed are many (42) and varied and listed in full in IRM Exhibit 10.10.1-2. Below are some of the more common — OK, somewhat common — forms that still can be signed digitally.

• Form 706, U.S. Estate Tax Return
• Form 706-A, United States Additional Estate Tax Return
• Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return
• Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship
• Form 1128, Application to Adopt, Change or Retain a Tax Year
• Form 3115, Application for Change in Accounting Method
• Form 8283, Noncash Charitable Contributions

Certain emails approved: The IRS has long reminded taxpayers that it doesn't make first contact with taxpayers via electronic means. That outreach typically is done by criminals looking to lure taxpayers, and their identities, into fraudulent scams.

But in cases where taxpayers and their designated advisers were working in person with the IRS to resolve pre-pandemic issues, the IRS determined the efforts could continue electronically so as not to delay resolution.

The IRS details the parameters for authenticated electronic interactions in Interim Guidance Memorandum PGLD-10-1023-0002, which extends such communication for two more years.

Allowable encrypted emails generally apply to taxpayer/tax pro exchanges with IRS personnel with whom they've been talking in field compliance, Independent Office of Appeals, Counsel, and the Taxpayer Advocate Service.

As noted, the email option will be in effect until Oct. 31, 2025, or, in the IRS' words, the agency "fully implements long-term solutions for secure electronic communication capabilities with taxpayers as alternatives to encrypted email."

That extension period earns the 10/31/25 ending date this week's By the Numbers honor.

New life for new-to-IRS technologies: Both of these more modern ways of doing tax business took effect on March 27, 2020, two weeks after the United States initiated pandemic protocols nationwide. These digital flexibilities were supposed to expire this past Oct. 31st.

The decision to continue their usage was in response to requests from both the lay and professional tax world.

"We heard from tax professionals and taxpayers as well as our employees about how the flexibilities made it easier to comply with tax requirements and communicate with IRS compliance personnel," said Doug O'Donnell, IRS Deputy Commissioner for Services and Enforcement in announcing the extensions.

"While these digital flexibilities were critical during the pandemic, it's equally important to continue to offer options as the IRS moves toward a fully digital environment. We will continue to review our processes to identify areas where we can leverage technology to reduce burden on the tax community while maintaining critical security and protections against identity theft and fraud," added O'Donnell.

You also might find these items of interest:

• IRS approves e-signatures for 10 tax forms, temporarily
• IRS allows businesses to withdraw improper ERC claims
• New IRS bots available to help resolve tax payment notices

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