Lorem ipsum dolor sit amet, consectetur adipiscing elit lobortis arcu enim urna adipiscing praesent velit viverra sit semper lorem eu cursus vel hendrerit elementum morbi curabitur etiam nibh justo, lorem aliquet donec sed sit mi dignissim at ante massa mattis.
Vitae congue eu consequat ac felis placerat vestibulum lectus mauris ultrices cursus sit amet dictum sit amet justo donec enim diam porttitor lacus luctus accumsan tortor posuere praesent tristique magna sit amet purus gravida quis blandit turpis.
At risus viverra adipiscing at in tellus integer feugiat nisl pretium fusce id velit ut tortor sagittis orci a scelerisque purus semper eget at lectus urna duis convallis. porta nibh venenatis cras sed felis eget neque laoreet suspendisse interdum consectetur libero id faucibus nisl donec pretium vulputate sapien nec sagittis aliquam nunc lobortis mattis aliquam faucibus purus in.
Nisi quis eleifend quam adipiscing vitae aliquet bibendum enim facilisis gravida neque. Velit euismod in pellentesque massa placerat volutpat lacus laoreet non curabitur gravida odio aenean sed adipiscing diam donec adipiscing tristique risus. amet est placerat in egestas erat imperdiet sed euismod nisi.
“Nisi quis eleifend quam adipiscing vitae aliquet bibendum enim facilisis gravida neque velit euismod in pellentesque”
Eget lorem dolor sed viverra ipsum nunc aliquet bibendum felis donec et odio pellentesque diam volutpat commodo sed egestas aliquam sem fringilla ut morbi tincidunt augue interdum velit euismod eu tincidunt tortor aliquam nulla facilisi aenean sed adipiscing diam donec adipiscing ut lectus arcu bibendum at varius vel pharetra nibh venenatis cras sed felis eget.
Electronic signatures have become an essential element of managing client tax filings. This comprehensive guide covers everything accounting and tax professionals need to know about IRS eSignature requirements to keep your practice compliant while improving efficiency.
The IRS recognizes electronic signatures as legally equivalent to handwritten signatures when they meet specific criteria outlined in Internal Revenue Manual 10.10.1. IRS-compliant electronic signatures can take several forms:
For an electronic signature to be valid, it must clearly identify the signer and demonstrate the signer's intent to sign the specific document. The signature method must also create a record that can be retained and reproduced when necessary.
Form 8879 (IRS e-file Signature Authorization) is the primary form taxpayers must sign to authorize electronic filing of their tax returns. This form serves as the taxpayer's declaration that they have reviewed their return and authorize the Electronic Return Originator (ERO) to transmit it electronically to the IRS.
Several variants of Form 8879 exist for different entity types:
Each of these forms must follow specific e-signature protocols if signed electronically rather than with traditional ink “wet” signatures.
For more detailed information on Form 8879 specifically, refer to our dedicated guide, "Form 8879 Electronic Signature Guide for Tax Preparers."
For any remotely collected electronic signature, the IRS mandates robust identity verification of the signer. This requirement is detailed in IRS Publication 1345, which specifies compliance with National Institute of Standards and Technology (NIST) guidelines at Identity Assurance Level 2 (IAL2).
In practical terms, this means accountants must implement one of these verification methods before accepting an electronic signature:
These measures ensure that the person electronically signing tax documents is truly who they claim to be, reducing the risk of fraudulent submissions.
For each electronic signature, the ERO must capture and maintain specific data elements that create a tamper-proof audit trail. This includes:
It is critical that the signature data be securely stored for a minimum of three years and be available for IRS inspection if requested. The audit trail creates an unbroken chain of evidence linking the signature to both the signer and the specific document they authorized.
The IRS distinguishes between signatures collected in person and those obtained remotely, with different requirements for each scenario:
When a taxpayer signs Form 8879 while physically present in the accountant's office, particularly for established clients, the ERO may use simplified verification procedures. The accountant can visually confirm the client's identity without implementing the full IAL2 authentication process each year.
When the taxpayer signs remotely (not physically present), the transaction falls under stricter "e-signature via remote transaction" rules. These require:
Remote signing offers convenience but requires more rigorous compliance measures to maintain security and meet IRS requirements.
Specific procedural details for handling these situations can be found in our guide "Form 8879 Electronic Signature Guide for Tax Preparers."
Implementing correct electronic signature procedures isn't just about regulatory compliance—it directly impacts your practice's efficiency and risk exposure in the following ways:
Understanding and following these requirements allows your accounting practice to confidently embrace digital workflows while maintaining IRS compliance.
In the sections that follow, we'll dive deeper into each aspect of e-signature compliance, including step-by-step implementation guides, troubleshooting common verification issues, and best practices for maintaining digital records as part of the tax audit trail.