United States: Electronic Signatures Are Here To Stay: IRS Indefinitely Extends COVID-Era Accommodation For Certain Tax Forms

On October 17, 2023, the Internal Revenue Service ("IRS") extended the ability of taxpayers and their representatives to digitally sign or use an image of their signatures to sign certain forms and documents, including Form 8832: Entity Classification Election, as well as elections made pursuant to Internal Revenue Code Section 83(b).¹

In August 2020, in response to the COVID-19 pandemic, the IRS temporarily allowed taxpayers and tax professionals to use electronic signatures when signing certain forms that generally required a handwritten signature.² Such relief was extended to include Section 83(b) elections in a memorandum issued by the IRS on April 15, 2021.³ This temporary relief was set to expire on October 31, 2023;⁴ however, the IRS recently updated Section 10.10.1 (IRS Electronic Signature (e-Signature Program)) of the Internal Revenue Manual ("IRM") to indefinitely extend these electronic signature policies and procedures.

As updated, Section 10.10.1 of the IRM provides that electronic signatures can take many forms and can be created by different technologies. No specific technology is currently required, and as a result, it is permissible to use various methods, including, a scanned or digitized image of a handwritten signature and third-party software such as DocuSign. However, these updates to the IRM do not modify the other requirements for filing the applicable forms and documents such as the requirements listed in Section 301.7701-3 of the Treasury Regulations for filing a Form 8832 or in Section 1.83-2 of the Treasury Regulations for making a Section 83(b) election (i.e., the requirement that the 83(b) election be filed with the IRS no later than 30 days after the date the restricted property that is the subject of the election is transferred). Moreover, taxpayers are still required to print out and timely mail the signed election form—whether it is signed electronically or in wet ink—to the appropriate IRS address. Finally, it is worth noting that the IRS permits electronic submission/signature for certain other forms that are not specified in Section 10.10.1 of the IRM, such as the Form 2848: Power of Attorney and Declaration of Representative, which may be electronically signed when it is submitted to the IRS online at https://www.irs.gov/tax-professionals/submit-forms-2848-and-8821-online.

Key Takeaways

Permitting the use of electronic and digital signatures for various commonly used tax forms, such as Form 8832 and Section 83(b) elections, eases some of the administrative burdens of executing and filing these documents. Nonetheless, in light of how the IRS implemented this policy change through revisions to the IRM, it is advisable that taxpayers and their advisors periodically consult IRM Section 10.10.1 in order to ensure full, ongoing compliance with the IRS's electronic signature policies.

Footnotes

1. IRM 10.10.1, Identity Assurance, IRS Electronic Signature (e-Signature) Program.

2. IR-2020-194 (August 28, 2020).

3. Control Number NHQ-10-0421-0002 (April 15, 2021).

4. Control Number NHQ-10-1121-0005 (November 18, 2021).

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