This new method allows tax professionals and taxpayers to securely sign and upload important documents electronically without having to meet in person.
Learn more about the IRS and its employees, as well as the issues that impact taxpayers.
It would have been impossible to experience the 2020 tax filing period during the COVID-19 pandemic without learning some lessons about how we can improve IRS processes and ensure safety and health.
The IRS has a critical lesson to learn: Tax administration is fundamentally digital. Digital options are essential for taxpayers, tax professionals, and employees.
One option that I would like to emphasize is the electronic signature. The Taxpayer First Act (TFA) of 2019 requires the IRS to provide digital signature options for Form 2848, Power of Attorney, and Form 8821, Tax Information Authorization.
These improvements will benefit individual taxpayers as well as business taxpayers and tax professionals who work with them. Tax professionals need these authorization forms to represent clients before the IRS and to prepare tax returns for prior years. Taxpayers sign these authorization forms granting tax professionals and other third parties access to their tax information.
These authorization forms are currently submitted and processed on paper. The forms are usually completed by tax professionals and signed by taxpayers using a pen. The IRS can send the forms by mail or fax. The faxed forms are printed or distributed electronically to the staff in the Centralized Authorization File (CAF) Unit. Before adding information to the CAF database, these teams verify the accuracy of the forms and check for fraud.
The top priority of the IRS is to keep taxpayers and tax professionals safe in these uncertain times.
The IRS worked on improving CAFs and making TFA requirements a reality even before COVID-19. Here is a look at the future.
We plan to launch an IRS.gov secure submission platform in January and a new page called "Submit Forms 2848 & 8821 Online." This will allow tax professionals to upload third-party authorization forms electronically.
To authenticate their identities, tax professionals must enter their Secure Access usernames and passwords or complete a Secure Access registration.
Both taxpayers and tax professionals may sign the forms electronically, or with ink. The form can then be uploaded to the IRS as an image.
I want to be clear that this online submission will not reduce the time taken by CAF staff to review and process the documents. It gives taxpayers and tax professionals the option to electronically sign these documents and upload them without having to meet in person. In these uncertain times, the IRS places safety first.
Tax professionals must verify taxpayer's identities for each electronically filed tax return. We plan to use a similar process to Publication 1345, Handbook of Authorized IRS E-File Providers. Tax professionals should be familiar with this verification process.
The new IRS.gov third-party authorization submission process won't be the only option for Forms 2848 or 8821.
We plan to launch the Tax Pro Account platform next summer. The Tax Pro Account will be the entry point for tax professionals to electronically sign and initiate third-party authorization forms online.
The third-party authorization form can be electronically transferred into the client’s IRS online account. Clients have the ability to access their IRS online account to electronically sign the document. The document is immediately sent to the CAF. There is no waiting time and no backlog. From beginning to end, the Tax Pro Account can be operated electronically.
Tax professionals will have four options for submitting these documents after we complete the projects. They can upload to IRS.gov, initiate electronically through Tax Pro Account, mail, or fax to IRS. We cannot accept electronic signatures on mailed authorization forms or faxed authorization forms due to fraud risk.
The IRS is committed to working with all stakeholders to improve the process for taxpayers as well as tax professionals. We have been in touch with professional associations and advisory committees. We are currently working with tax professionals in order to get their feedback. Additionally, we will conduct user focus groups.
We will soon provide more information about the secure submission platform, including a demonstration webinar to tax professionals in December. These electronic signature options will make tax professionals' and taxpayers' lives easier and safer in the coming months.
The IRS is continuing to expand its efforts following the Taxpayer First Act. This electronic signature process is just one part of a larger effort. We continue to look for innovative ways to assist taxpayers and to work with tax professionals.