As more and more business and finance transactions are completed by electronic means, the matter of security and confidentiality has become a top priority. In a September 24th letter to the IRS, the American Institute of CPAs (AICPA) proposed that the current standards around electronic signatures for "remote transactions," in which the subject is not appearing in person, are not adequate in protecting taxpayers' confidential information.

The AICPA said in its Sept. 24 letter that it “strongly supports” the IRS’s effort to develop standards allowing for electronic signatures on Form 8879, IRS E-file Signature Authorization. However, stricter methods of achieving these means were urged, with factors such as the taxpayers' IP addresses, login information, and additional identity verification considered a must going forward to ensure more proper security.

"The IRS should work with stakeholders to develop some alternatives to dynamic knowledge-based authentication that would still provide the level of identity verification that is necessary for proper tax administration, while not unnecessarily exposing taxpayer data to new parties," the letter stated.

The IRS had updated its guidance for taxpayer electronic signatures on certain forms in March 2014.

For the full letter, head over to the AICPA website here.