What is IRS p1345?
The IRS publishes guidance documents in relation to taxes. This handbook is for Authorized IRS e-file Providers of Individual Income Tax Returns, and provides rules and requirements for participation in IRS e-file of individual income tax returns and related forms and schedules.
The IRS has always generally requested regular written signatures for tax returns, election statements, and other IRS documents. In view of technological improvements and the necessity to modernize interactions with the IRS, tax professionals have long wished for IRS standards and procedures to provide e-signatures for all IRS documents.
In 2008, the IRS for the first time allowed taxpayers to sign an IRS document using e-signatures. Since then, rules have evolved with the latest version of p1345 the clearest yet.
What are the requirements for IRS p1345?
To reduce the likelihood of identity theft and fraud, Publication 1345 requires that in a remote transaction, the software provider and the ERO must verify the taxpayer’s identity through third-party knowledge-based authentication (KBA). The KBA process identifies each taxpayer who is e-signing the document by asking multiple-choice personal questions about the taxpayer. The information used to formulate the questions is from various sources such as public records, phone listings, home and automotive titles, and credit reporting agencies. Many e-signature vendors offering services to tax professionals provide a KBA process approved by the IRS.
Identity verification must be done each time a taxpayer remotely signs Form 8878 or Form 8879. The current FAQs for Form 8878 and Form 8879, Frequently Asked Questions for IRS e-file Signature Authorization, confirm this. When e-filing an individual tax return, tax professionals must send the individual taxpayer a copy of the tax return to review in advance of the taxpayer’s signing Form 8879. Also, if the amounts on Form 8879 change by more than the amounts prescribed in IRS Publication 1345, a new Form 8879 must be signed. Note that an e-signature in a remote transaction does not include handwritten signatures on Forms 8878 or 8879 sent to the ERO by hand delivery, U.S. mail, private delivery service, fax, email, or an internet website.
Not counting the temporary procedures adopted due to COVID-19, the current individual forms eligible to be e-signed include only Forms 8453, 8878, and 8879.
Chapters include: General Information, Electronic Return Origination, Transmission, Other Authorized IRS e-File Providers Activities, and IRS e-file Rules and Requirements.
Why should you be IRS p1345 compliant?
Taxes are an area that demand exacting standards due to potential penalties and pitfalls. E-signatures are a complex and important part of filing tax returns and should be done with utmost care. Compliance with p1345 will ensure you are following the IRS rules regarding Authorized IRS e-file Providers of Individual Income Tax Returns.
How to achieve IRS p1345 compliance?
Centraleyes has incorporated a built-in, pre-loaded questionnaire into the platform to allow you to keep track of your compliance with IRS p1345, automate tracking of remediation tasks and take advantage of clear data visualization to ensure you are fulfilling all of the relevant and important IRS requirements. Assign collaborative data collection tasks with ease, automate remediation prioritization and utilize clear step by step detailed instructions to comply with IRS p1345.
Read more: https://www.irs.gov/pub/irs-pdf/p1345.pdf
Tax practitioners may find the IRS Electronic Signature (e-Signature) Program Manual Transmittal (Dec. 3, 2019) a useful reference guide to confirm compliance with IRS e-signature policies (see Internal Revenue Manual §10.10.1).
