In the past two years, many traditional processes in the world of taxes and the law have been transformed by necessity, using digital signatures, or e-signatures, for many financial and legal documents. With many offices and courts re-opening and returning to pre-COVID processes, the IRS has recently reported that it will continue to allow taxpayers and representatives to use e-signatures on certain paper forms not eligible for electronic filing electronically.
These forms where an e-signature is allowed must be signed and postmarked from August 28, 2020, to October 31, 2023.
E-signatures gained acceptance to minimize the in-person contact between taxpayers and their representatives. The IRS will continue to accept a wide range of e-signatures, including:
- A typed name on a signature block;
- A scanned image of a handwritten signature with an attachment to an electronic record;
- A handwritten signature from an electronic signature pad;
- A handwritten signature, mark, or command input on a display screen using a digital stylus;
- A signature created by a third party software.
Images of signatures will also be accepted formats, including tif, jpg, pdf, jpeg, Microsoft Office Suite, or Zip files.
It is still considered a temporary situation (however, many states have made e-signing permanent) and applies only to specific forms that require paper filing. Among the common returns that allow for e-signing are:
- 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 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-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, and
- Tax Elections per Internal Revenue Code Section 83(b).
There are other esoteric forms eligible for electronic signature. Most income tax returns (personal (Form 1040), businesses (Forms 1120 and 1065), and trusts and estates (Form 1041)) cannot use electronic signatures. Documents not eligible must still have handwritten signatures unless the form is electronically signed.
Reference: Wolters Kluwer (March 8, 2020) “Taxpayers May Use E-Signatures on Certain Paper-Filed Forms”