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In response to COVID-19 and remote working environments, the IRS notified its employees in a memo (attached) that they may accept digital signatures and images of signatures and can receive documents by email in specified situations. In a new memo issued on June 12, 2020 (attached), the IRS extended the expiration date of the guidance until December 31, 2020 (from July 15, 2020).

IRS employees may accept images of signatures (scanned or photographed) and digital signatures on certain documents related to the determination or collection of tax liability through tiff, jpg, jpeg, pdf, Microsoft Office suite, or Zip files.

In addition, IRS employees may accept documents from taxpayers via email if the taxpayer does not have access to eFax or established secure messaging systems. However, IRS employees must transmit documents to taxpayers using SecureZip or other established secured messaging systems.

The memo noted that the "choice to transmit documents electronically is solely that of the taxpayer." Taxpayers who are not able to use eFAx or secure messaging systems methods may use email with attachments as long as the taxpayer and IRS employee take proper steps, including having the IRS employee authenticate the taxpayer's identity by phone, make a record of the email in the case file, and forward documents requiring a manager's signature via encrypted email. With taxpayer consent, IRS employees may also transmit documents with SecureZip or other IRS established secured messaging systems to taxpayers or IRS employees with no eFax capability.

These guidelines apply to the following documents only:

• Extensions of statute of limitations on assessment or collection
• Waivers of statutory notices of deficiency and consents to assessment
• Agreements to specific tax matters or tax liabilities (closing agreements)
• Any other statement or form that needs the signature of a taxpayer or representative and is traditionally collected by IRS personnel outside standard filing procedures (such as a case-specific powers of attorney)

Implications

With few exceptions, the IRS does not accept digital signatures on documents transmitted to the agency. The "wet" signature requirement is particularly burdensome for taxpayers who are not permitted to e-file returns and can pose challenges to practitioners trying to collect multiple signatures on powers of attorney. Since the onset of the COVID-19 crisis, taxpayers and tax professionals have been seeking guidance from the IRS regarding the temporary use of digital signatures (and email), as most Americans have been ordered to work from home, where they do not have access to the technology and support systems normally available in their offices. The attached memo does little to alleviate those concerns, as it excludes tax returns and all other documents filed through "standard filing procedures." It does, however, indicate a willingness on the part of the IRS to accommodate the current challenging work environment, while balancing the IRS's need to minimize fraud, identity theft and unintentional disclosure of taxpayer information. According to statements to the press, the IRS will continue to consider whether digital signatures should be accepted on other documents and may issue additional guidance.

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ATTACHMENTS

Digital Image Signature

IRS Memo