Chief Counsel Questions Use of Electronic Signatures Where Not Specifically Authorized

(Parker Tax Publishing January 2017)

According to the Office of Chief Counsel, an electronic signature should only be accepted by the IRS when there is published guidance or Internal Revenue Manual (IRM) provisions that specifically authorize use of an electronic signature for the specific form involved. With respect to Form 2678, Employer/Payer Appointment of Agent, because there is no guidance or IRM provisions authorizing the use of an electronic signature on Forms 2678, the Chief Counsel's Office recommended that the IRS not accept Forms 2678 signed electronically. CCA 201650019.

Code Sec. 6061(a) generally provides that any return, statement, or other document required to be made under any provision of the Code or regulations must be signed in accordance with forms or regulations prescribed by the IRS. Although the Internal Revenue Code does not define the term "signature," 1 U.S.C. Section 1 provides that a "signature" includes a mark when the person declaring the same intended it as such, and Code Sec. 6061(b)(1) provides that the IRS must establish procedures for accepting signatures in digital or other electronic form. That provision states that, until such time as such procedures are in place, the IRS may waive the requirement of a signature for, or provide for alternative methods of signing or subscribing, a particular type or class of return, declaration, statement, or other document required or permitted to be made or written under the Code and regulations. The Code does not provide detailed rules for the use of electronic signatures beyond authorizing their use in Code Sec. 6061.

In CCA 201650019, the Office of Chief Counsel was asked by the IRS Examination Division whether the IRS could accept a Form 2678, Employer/Payer Appointment of Agent, which displays an electronic signature. Under the proposed electronic signing procedure, an enrollee would fill out the Form 2678 online and sign it with a mouse or stylus. The signature would created by the person with a live signature, but it would be a digital image of the actual signature. The form would be mailed to the IRS, and the vendor would maintain a digital image of the completed form.

The Chief Counsel's Office recommended that an electronic signature only be accepted by the IRS when there are published guidance or Internal Revenue Manual (IRM) provisions that specifically authorize use of an electronic signature for the specific form involved. Since there is no guidance or IRM provisions authorizing the use of an electronic signature on Forms 2678, the Chief Counsel's Office said, it recommended that the IRS not accept Forms 2678 signed electronically until the IRS authorizes its use for Forms 2678 either in published guidance or in the IRM.

The Chief Counsel's Office noted that it is a business decision whether to accept the use of electronic signatures on any specific form and, although electronic signatures are legally valid, the utility of using electronic signatures on specific documents or forms must be balanced against the risk of disavowal by the signer.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!

Sincerely,

James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com