More tax preparers are offering electronic signatures for Forms 8879 than ever. Is it time to jump on the bandwagon? Should you move to electronic signatures for Form 8879?
Let’s start with the facts. The IRS does allow Form 8879 to be signed electronically, but there’s a catch. The IRS requires that the electronic signature software you use must include identity verification. Software providers, based on compliance guidance from the NIST, use knowledge-based authentication (KBA) questions to meet the requirement. This adds friction and cost. Clients fail KBA questions between 10% and 15% of the time. And firms have to pay several dollars per Form 8879 for the KBA loop. So is moving to electronic signatures worth it?
Some clients will demand an all-electronic experience. Some clients will prefer electronic but won’t be able to accurately answer the KBA questions. And some clients will insist on wet signatures. Most firms will have a mix of all three. As long as you have some clients who’d rather sign on screen, adding eSignature is worth it — because not adding the option to eSign could send those clients elsewhere.
With an eSign option, you can tailor a signature method to satisfy every client’s preference. Just add a question on your annual tax questionnaire to find out how they want to handle it. Something as simple as this:
“How would you like to sign your personal tax return this year?”
- Print, sign, and take a photo using our app.
- Electronically sign (requires all signers to successfully answer identity verification questions).
- Drop off a signed copy at our office.
If electronic signature is right for you, here are a few additional compliance tips.
Make sure your electronic signature solution does the following:
- Provides a stored record for at least three years.
- Contains a record of the taxpayer’s IP address.
- Saves the results of the ID check.
In addition to stand-alone eSignature solutions, there are some professional suites that include it as well, with varying degrees of integration. Just be aware that most of them involve redirecting you to an outside login page to access signatures, which can be frustrating for clients who don’t appreciate hopping back and forth between apps. If you’re looking for a more streamlined client experience — with no redirects or hopping — go with an all-in-one digital front office platform like Liscio. Not only does Liscio keep you compliant, it’s fully integrated with signatures, communication, task tracking, and files together in one location.
Whichever route you choose, make your preparations early and you’ll be set for success during crunch time.
If you want to learn more about Liscio and their eSignautre processes for tax season, check out this webinar with Insightful Accountant on February 6 at 2:00 p.m. Eastern Time. Register here.
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