January 04, 2017 | Posted in:

How Can I Sign my Return Electronically?

In 2014, the IRS published guidance which allowed the electronic signing of Form 8879, the IRS e-file Signature Authorization form. By signing this form, a taxpayer indicates that he has examined his tax return and grants permission for its electronic filing. Some states have their own versions of this form, and some states accept the federal Form 8879.

Great! Electronic signatures are easy and save time, right? Well, yes, but the IRS also needs a way to make sure it is actually the taxpayer who is signing the emailed form. This is where knowledge based authentication (KBA) comes in. In order to prove his identity, a taxpayer must answer several “out of wallet” questions. The answers would be difficult to obtain from the information inside a person’s wallet or tax return, so they should only be known to the taxpayer. The questions are generated from various sources of public and private records, including credit reports, real estate records, and marketing data. These questions are automatically generated by a third party, and your tax preparer will never see the questions or the answers. For a joint tax return, both spouses will need to answer their own set of questions.

So what kind of questions will be asked? Although these can vary, here are some samples. “With which of the following addresses are you associated?” The multiple choice answers may include a prior address or the address of a property on which you have or had a mortgage, along with some addresses you are not associated with. “At which of the following banks do you have a loan?” “In which state was your social security number issued?”

What happens if you fail? It is quite possible that a taxpayer may not know the correct answer to one or some of the questions, or that he might accidentally click the wrong response. So what happens then? The IRS allows two more attempts to pass validation. If the taxpayer fails all three attempts, since the KBA process failed to verify the taxpayer’s identity, the tax return cannot be opened from the email and the Form 8879 may not be signed electronically. The taxpayer would need to sign the form by hand and deliver the signed paper copy to his tax preparer, just as before electronic signatures were allowed.

In this increasingly paperless age, signing your tax return electronically is a logical step in the process that has required electronic filing of the tax returns for several years. Receiving a copy of your tax return by email for your review and signature is an efficient and time-saving tool now available. The added security of the KBA process ensures that no unauthorized person has access to your tax data. Ask your tax preparer about electronic signatures when he prepares your tax return.

Julie Strohlein CPA

Associate Partner
Julie has over 20 years of experience in public and private accounting, representing varied clientele including the medical, legal, and real estate industries and trusts.
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