IRS extends e-signature and encrypted email options

The Internal Revenue Service is extending two of its pandemic-related options for taxpayers and tax professionals, indefinitely extending the ability to use electronic or digital signatures for tax documents, and extending until Oct. 31, 2025 the ability to use encrypted email when communicating with IRS employees.

The IRS released guidance in March 2020 permitting acceptance of digital signatures, and receipt and transmission of documents via email during compliance interactions. The IRS also allowed use of electronic or digital signatures on certain paper forms that required a handwritten signature. 
The IRS had previously extended the e-signature option until the end of this month (see story). The flexibility of using digital signatures has been well received by tax pros and taxpayers and saved them time, the agency pointed out. The option has long been used during tax season even before the pandemic when e-filing tax returns, but it wasn't until the pandemic that the IRS extended the capability to dozens of other tax forms and documents.

"We heard from tax professionals and taxpayers as well as our employees about how the flexibilities made it easier to comply with tax requirements and communicate with IRS compliance personnel," said Doug O'Donnell, IRS deputy commissioner for services and enforcement, in a statement Monday. "While these digital flexibilities were critical during the pandemic, it's equally important to continue to offer options as the IRS moves toward a fully digital environment. We will continue to review our processes to identify areas where we can leverage technology to reduce burden on the tax community while maintaining critical security and protections against identity theft and fraud."

Al Drago/Bloomberg

The IRS has now updated Internal Revenue Manual (IRM) 10.10.1 to reflect it will accept alternatives to handwritten signatures for a number of its tax forms and the ability to accept images of signatures and digital signatures for compliance. A listing of allowable signature options can be found in IRM Exhibit 10.10.1-2 on IRS.gov.

Another document, Interim Guidance Memorandum PGLD-10-1023-0002, provides for receipt and transmission of documents through Oct. 31, 2025, using email with encryption when working person-to-person with IRS personnel to address compliance or resolve issues in ongoing or follow-up authenticated interactions (mainly with field compliance, Independent Office of Appeals, Counsel and Taxpayer Advocate Service personnel). This guidance will remain in effect until the IRS fully implements long-term solutions for secure electronic communication channels with taxpayers as alternatives to encrypted email.

The IRS has been using some of the funds from last year's Inflation Reduction Act to modernize its aging technology systems with scanners, optical character recognition, a pilot test of a free direct e-file program and more.