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It’s finally here! The Internal Revenue Service (IRS) has rolled out a new online option that will help tax professionals submit certain authorization forms electronically.
To date, the new option applies to two forms: Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization. These forms allow taxpayers to authorize the IRS to disclose their tax information to third parties, such as, tax professionals.
Form 2848
You’re probably used to Form 2848: it allows taxpayers to authorize an eligible individual (often, a tax professional) to contact and speak to the IRS on the taxpayer’s behalf. It also authorizes the representative to receive related confidential tax information – like transcripts – from the IRS. The taxpayer and the tax professional must sign Form 2848.
Form 8821
Form 8821 is considered less useful: it only allows taxpayers to authorize any individual, corporation, firm, organization, or partnership to inspect and/or receive confidential tax information verbally or in writing for the type of tax and the years or periods you list on the form. Form 8821 doesn’t allow anyone to speak on your behalf or represent you in any other manner before the IRS: you’ll need Form 2848 for that. Only the taxpayer must sign Form 8821.
Online Tool For Tax Professionals
Tax professionals can find the new “Submit Forms 2848 and 8821 Online” on the IRS.gov/taxpro page:
KPE/IRS
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To use the new online option, tax professionals must have a Secure Access account, including a current username and password. If you don’t have Secure Access, you can create an account in advance of submitting an online authorization form. If you can verify your identity with a U.S.-based mobile phone, it takes about 15 minutes to get set up. Individuals who do not have an U.S.-based mobile phone can receive the code via mail, which can take up to 10 business days.
“This online tool will allow tax professionals to safely obtain signatures from individual and business clients and upload authorization forms,” said Chuck Rettig, IRS commissioner. “This is a first step in our ongoing efforts to expand digital options for tax professionals using electronic signatures and online uploads.”
Electronic Signatures
The signatures on Forms 2848 and 8821 submitted using this process can be handwritten or electronic.
You do not need specific technology to create electronic signatures. Electronic signatures can be:
- A name that is typed on a signature block;
- A scanned or digitized image of a handwritten signature attached to an electronic record;
- A handwritten signature input onto an electronic signature pad;
- A handwritten signature, mark, or command input on a display screen with a stylus device; or
- A signature from third-party software.
But if the tax professional uses the electronic signature option for a new client, the tax professional must first authenticate the client’s identity. The same is true if a tax professional does not have personal knowledge of the taxpayer’s identity and they’re signing the authorization form in a remote transaction. You can find out more information about authentication in the FAQs here.
If you’re not interested in the electronic option, don’t worry: you can still mail or fax authorization forms to the IRS. That’s reassuring since my early attempt to upload a Form 2848 using the option resulted in this:
IRS/KPE
Clearly, there are some kinks to work out. But it’s still encouraging.
Future Plans
This summer, the IRS plans to launch the Tax Pro Account, an all digital option. Initially, it will allow tax professionals to initiate third-party authorization on IRS.gov and send it to a client’s IRS online account. Clients will be able to access their online account, digitally sign the authorization, and send it directly to the CAF database to be recorded. This should make authorization a cinch and a lot faster.
More information about the Tax Pro Account will be announced in the future.