IRS Extends Temporary Use of Electronic and Digital Signatures for Certain IRS Forms Until December 31, 2021

The US Internal Revenue Service (IRS) extended its temporary approval of accepting digital signatures on certain IRS forms until December 31, 2021 (see Memorandum NHQ-10-1220-000, the Memorandum). This Memorandum has also extended the policy to include “electronic signatures,” and the list of IRS forms has been expanded to include Code Section 83(b) election statements.

As highlighted in a prior September 10, 2020 LawFlash on this same topic, the IRS had announced on August 28, 2020 the temporary approval of the use of digital signatures in a news release (IR-2020-194, the News Release). This News Release allowed a limited number of IRS forms to be digitally signed. The Memorandum is broader in scope and provides some clarity on what type of signatures are acceptable. In addition to digital signatures, the Memorandum specifically includes electronic signatures, and the IRS acknowledges that both electronic and digital signatures can appear in “many forms” and “may be created by many different technologies.” The Memorandum further states that the IRS is not requiring any specific technology for purposes of producing an electronic or digital signature during this temporary acceptance period. Thus, it appears the IRS is accepting images of signatures (scanned or photographed) and digital signatures (those using encryption techniques). Although the IRS does not specify which electronic or digital signature product to use, tax professionals may want to store a copy of the electronic transmission of the signed form should further authentication be required at a later date.

The Memorandum also expands the number of IRS forms that may be electronically or digitally signed (full list included below). In addition to Form 8832, Entity Classification Election, which allows an eligible entity to elect how it will be classified for US federal tax purposes, the IRS is now accepting digital or electronic signatures on Internal Revenue Code Section 83(b) election statements, which allows a taxpayer to elect to report income from the transfer of property for the performance of services in the year of such property transfer. All IRS forms submitted under this temporary IRS policy must be signed and postmarked on August 28, 2020 or later.

The Memorandum explains that the IRS is extending this temporary policy as a continued response to COVID-19 in order to minimize the need for in-person contact. Thus, although the IRS has now extended this temporary policy a couple of times since it was first introduced in August 2020, this policy may not be continued, at least not in this current form, after December 31, 2021.

The following are the forms listed in the Memorandum:

• Form 11-C, Occupational Tax and Registration Return for Wagering
• Form 1066, US Income Tax Return for Real Estate Mortgage Investment Conduit
• Form 637, Application for Registration (for Certain Excise Tax Activities)
• Form 706, US Estate (and Generation-Skipping Transfer) Tax Return
• Form 706-A, US 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, US Estate Tax Return for Qualified Domestic Trusts
• Form 706 Schedule R-1, Generation Skipping Transfer Tax
• Form 706-NA, US Estate (and Generation-Skipping Transfer) Tax Return
• Form 709, US Gift (and Generation-Skipping Transfer) Tax Return
• Form 730, Monthly Tax Return for Wagers
• Form 1120-C, US Income Tax Return for Cooperative Associations
• Form 1120-FSC, US Income Tax Return of a Foreign Sales Corporation
• Form 1120-H, US Income Tax Return for Homeowners Associations
• Form 1120-IC DISC, Interest Charge Domestic International Sales – Corporation Return
• Form 1120-L, US Life Insurance Company Income Tax Return
• Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons
• Form 1120-PC, US Property and Casualty Insurance Company Income Tax Return
• Form 1120-REIT, US Income Tax Return for Real Estate Investment Trusts
• Form 1120-RIC, US Income Tax Return for Regulated Investment Companies
• Form 1120-SF, US 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 US 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 US 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 US 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
• Elections made pursuant to Internal Revenue Code Section 83(b)

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

San Francisco
Sarah-Jane Morin

Washington, DC
Eric Albers-Fiedler