Tax season is a busy period for many accounting experts and tax preparers. It is the time between January 1 and April 15 of each year, when the taxpayers prepare their financial statements and reports for the past year and submit their tax returns.
Although few people do their tax filing work themselves, others depend on tax preparers and accounting professionals for filing the paperwork correctly and enhancing the financial result of the tax return.
Electronic signatures are beneficial for both accountants and tax professionals. It is because it offers them much more convenience and surpasses the client’s expectations successfully. Online signatures also help them save time and money while creating minimal waste. This post explores the perks of electronically signing the tax return documents.
e-Signing of 8879 and 8878 Tax Forms
8878 and 8879 are IRS electronic file signature authorization forms. Form 8879 authorizes an ERO to enter the PIN of the taxpayers on their income tax returns.
However, form 8878 is used for extending time to file returns. It also allows an ERO to enter the recipient PINs on electronic forms 4868 and 2350.
As per the new IRM electronic signature rules, individual taxpayers need to physically sign the authorization form and mail or sign it in the office of ERO.
Also, if you have an incorrect Taxpayer Identification Number, you can fill out the Blank w9 form.
Benefits of Using e-signatures During Tax Season
The advancements in digital technology have made the tax filing and submitting the returns process over the web much easier. For e-filing income tax returns, the taxpayers simply need to affix their digital signature onto the document.
Under the Information Technology Act, 2000, a digital signature software verifies that the recipient has authenticated the tax return documents and has not changed in transit.
Tax preparers can remove the hassle of printing, emailing, or faxing the legal forms with e-signatures. Below are the benefits that tax preparers and accountants can expect from the e-signature technology.
1. Speed-up the Entire Workflow
Sending the physical tax documents using the conventional method typically takes a few weeks or even months to receive the tax returns. But, the traditional process of printing, signing, and sending all your tax documents via the mail is not important when you are signing your tax returns electronically.
It means online signatures are a quick solution to the cumbersome tax-filing process. You can digitally send all of the important documents to your clients faster than distribute it manually. It let you manage all the work in a few weeks or less rather than days. Also, the use of paper is significantly reduced.
2. Increased Convenience
With the advancement of communication in communities, the legally binding signatures have also come a long way. Although the Internal Revenue Service introduced electronic filing in 1986, it wasn’t until the addition of e-signatures in 2014 that the number of e-filed returns hiked to nearly 100 million in 2017.
This made both consumers and tax preparers think about how e-signatures made the whole process glitch-free.
With the use of e-signatures, the clients can complete their returns quickly, and tax preparers can effectively serve more customers. This saves their money and time and money and prevents any hassle.
3. Make Customer Experience Pleasant
As you know, most of the clients are using their mobiles and expect their accounting experts to be tech-savvy. 83% of accountants say that their clients expect more from them today. The paper-free tax-filing process allows accountants to fill out complicated forms of their clients ASAP.
Electronic signatures help customers to electronically see, sign, and submit their tax returns and other necessary forms regardless of their location. It helps you improve the overall satisfaction of the customers.
4. Boost Data Security
Due to the rising cybersecurity threats online, the IRS has gone the extra mile to ensure the security of e-signed tax returns. Taxpayers also need to adhere to certain requirements.
Certain types of online signatures are more secure. For example, digital signatures offer a high-level of security, unlike a basic e-signature.
Thus, be aware of the e-signature type you use to fill out your tax return documents. Digital signatures are 100% protected from cyber threats. It allows taxpayers to confidently send and receive tax documents that contain sensitive details like Social Security numbers and financial records.
As per the IRS’s initial e-filing legal requirement, the unique signer identity must be verified. This verification is completed by connecting the e-signature to the associated electronic record. For this, the following authentication methods are used:
a) Knowledge-Based Authentication
KBA is an authentication used to prove that the person providing identity is real. The IRS basically used this type of authentication when the individual is remotely e-signing forms 8878 and 8879.
It requests the signer to fill correct information, such as D.O.B or other before accessing any document. If all the correct information is correct, he or she is then prompted to answer basic questions based on a database of public records.
b) Email-Based Authentication
In this authentication type, the signer needs to prove his or her identity by clicking on a link sent via email. After that, the signer is asked to consent to receive and sign tax filing documents electronically.
The IRS also requires that the signed tax documents be tamper-proof to protect the integrity of the data contained within the documents. The tamper-proof feature is available in digital signatures.
This ensures that intruders do not have access and have not changed to the document. The IRS also tells signed documents to go along with a full audit trail that logs detailed data like the date and time of document creation, execution, signer’s IP address, who viewed it, and more.
The IRS requires the audit trail and associated tax filing documents to be stored on file for a minimum of two years. They can also be saved online to lower paper usage and save storage space.
Everyone wants the tax filing process to be quick and efficient as possible. However, chasing down signatures on paper copies consumes more time and can be hectic. The best way to save time and increase productivity during tax season is to switch to e-signatures.
Relying on the electronic signature process also lowers the potential for error. Clients can quickly sign with confidence knowing their sensitive information is safe, thereby driving effective client engagement and less administration. You can even opt for the best electronic signature solution – eSign Genie to make the process of signing tax returns hassle-free.