One non-medical COVID-19 side-effect will have a long-lasting side effect on everyone. More electronic transactions in our every-day lives.
That includes our tax lives.
About this time last year, the Internal Revenue Service approved the temporary use of electronic signatures for 10 tax forms on 10 tax forms. When announced, the IRS said the e-sig shift was temporary.
Then, just a few weeks later, the tax agency expanded the use of electronic John Hancocks to more tax forms. That incremental e-signing trend is part of what many see as the logical endpoint of the process, an eventually fully digital tax filing process.
We're still a ways from that, but IRS Fact Sheet 2021-12, updated Sept. 2, provides the latest list of tax forms that can be signed electronically and the acceptable ways to do so.
41 tax forms now can be e-signed: The section of greatest interest to most taxpayers and tax preparers is the list of those certain forms. Here you go —
- Form 11-C, Occupational Tax and Registration Return for Wagering;
- Form 637, Application for Registration (For Certain Excise Tax Activities);
- Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
- Form 706-A, U.S. Additional Estate Tax Return;
- Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distributions;
- Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Trust;
- Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations;
- Form 706-QDT, U.S. Estate Tax Return for Qualified Domestic Trusts;
- Form 706 Schedule R-1, Generation Skipping Transfer Tax;
- Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
- Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;
- Form 730, Monthly Tax Return for Wagers;
- Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
- Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
- Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation;
- Form 1120-H, U.S. Income Tax Return for Homeowners Associations;
- Form 1120-IC DISC, Interest Charge Domestic International Sales – Corporation Return;
- Form 1120-L, U.S. Life Insurance Company Income Tax Return;
- Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons;
- Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return;
- Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
- Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;
- Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B);
- Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship;
- Form 1128, Application to Adopt, Change or Retain a Tax Year;
- Form 2678, Employer/Payer Appointment of Agent;
- Form 3115, Application for Change in Accounting Method;
- Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts;
- Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner;
- Form 4421, Declaration – Executor's Commissions and Attorney's Fees;
- Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes;
- Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues;
- Form 8038-G, Information Return for Tax-Exempt Governmental Bonds;
- Form 8038-GC; Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales;
- Form 8283, Noncash Charitable Contributions;
- Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms;
- Form 8802, Application for U.S. Residency Certification;
- Form 8832, Entity Classification Election;
- Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent;
- Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement; and
- Elections made per Internal Revenue Code Section 83(b).
The IRS says taxpayers and representatives can use electronic or digital signatures on these paper forms.
Note the paper forms limit. These forms, available to download at IRS.gov or through tax professionals' software products, cannot be submitted using IRS e-file.
Why the e-expansion: The IRS says it's expanding the use of electronic signatures to help out taxpayers and the tax preparation community.
Quoting from the Fact Sheet:
"To help reduce burden for the tax community, the IRS allows taxpayers to use electronic or digital signatures on certain paper forms they cannot file electronically. The agency is balancing the e-signature option with critical security and protection needed against identity theft and fraud. Understanding the importance of electronic signatures to the tax community, the IRS offers an overview about using them on certain forms."
But it also helps move even more of IRS activity into the digital realm. That's been an aim of the agency for years.
Types of e-sigs that are acceptable: The IRS says in the Fact Sheet that it will accept a wide range of electronic signatures. They include —
- A typed name typed on a signature block,
- A scanned or digitized image of a handwritten signature that’s attached to an electronic record,
- A handwritten signature input onto an electronic signature pad,
- A handwritten signature, mark or command input on a display screen with a stylus device, and
- A signature created by a third-party software.
The IRS also says it will accept images of signatures, scanned or photographed, including common file types supported by Microsoft 365 such as tiff, jpg, jpeg, pdf, Microsoft Office suite or Zip.
Not an Apple of the IRS eye: However, one popular image format doesn't make the IRS list.
Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs who writes for Kaplan Financial Education's Current Federal Tax Developments blog, points out that High-Efficiency Image Format (HEIC) is missing. That's notable because the HEIC image format is used by default by iPhones and other Apple products running recent versions of the company's later operating systems.
"Apple switched to that format as it is more space efficient, but support outside of Apple products is more limited, specifically causing issues for Windows users who don’t resort to third party software," writes Zollars. "The lack of native Windows support likely explains why the IRS does not list this format in its list of clearly acceptable formats."
If a HEIC signature is used, Zollars suggests it be converted to JPEG or PDF for permanent storage.
You also might find these items of interest:
- Digital IRS is costing those who can least afford it
- IRS approves e-signatures for 10 tax forms, temporarily
- 6 more tax forms added to IRS digital signature list
- Tax Forms Fiesta! Popular tax forms added or revised
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