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On August 28, 2020, the IRS announced that it will temporarily accept electronic or digital signatures (collectively, "e-signatures") for certain forms that must be filed or maintained in paper form. Taxpayers may choose the specific technology used to create the e-signatures. This temporary deviation from the rules for the forms identified below is effective through December 31, 2020.

Taxpayers and their representatives may use e-signatures when signing the following forms, all of which currently require a handwritten signature:

• 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
• Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file signature authorization forms

In limiting the list of forms that temporarily do not require a handwritten signature, the IRS said "[t]hese 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." After the temporary deviation expires, the IRS will evaluate its impact to determine the future of the handwritten signature requirement.

Implications

The IRS has long required ink (so-called wet) taxpayer signatures on returns. Since the COVID-19 outbreak, the IRS has received many requests to relax this requirement but had cited concerns regarding fraud and other risks in declining to provide relief. While the IRS did provide limited e-signature relief earlier this year, that guidance was extremely limited in scope and generally did not apply to tax returns (See Tax Alert 2020-0841).

In an environment where taxpayers and preparers alike are still largely working remotely, this new development will make it easier for taxpayers to sign returns and other IRS forms. Taxpayers should exercise the same diligence in reviewing returns before affixing electronic signatures as they do when using wet signatures.

It is also important to note what the e-signature exception does not cover, notably paper-filed Forms 1040 and 1120, and other IRS forms such as Form 2848, Power of Attorney and Declaration of Representative. For these forms, taxpayers should continue to use wet signatures until instructed otherwise by the IRS.

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