On October 17, 2023, the Internal Revenue Service (IRS) updated the electronic signature guidance in its Internal Revenue Manual (IRM) to reflect the electronic signature relief that the IRS provided to taxpayers during the COVID-19 pandemic. This pandemic-related relief has allowed taxpayers to use electronic or digital signatures on specified paper forms and filings that would ordinarily have required an original “wet ink” signature. While the ability to “e-sign” the specified forms and filings was scheduled to expire on October 31, 2023, the IRS does not specify an expiration date for the policy in the IRM, indicating that it will remain in effect indefinitely.
The policy in the IRM allows the use of electronic signatures on the same tax forms that are covered by the temporary policy. Notably, this includes elections made under Section 83(b) of the Internal Revenue Code and entity classification (“check the box”) elections on IRS Form 8832. The policy does not apply to any forms that are not specifically listed. No particular technology is currently required for the electronic signature. Acceptable electronic signatures may include a name typed into a signature block, a scanned image of a handwritten signature on the applicable form or a signature created by third-party software (such as DocuSign).
Although the IRS will permit electronic signatures on the specified forms, there is still no ability to file the forms with the IRS electronically. Therefore, a taxpayer must print out a paper copy of the form with the electronic signature and timely file the paper copy with the IRS.
The IRM is not taxpayer guidance and is not binding on the IRS. Rather, it is a manual of internal guidelines for IRS employees that reflects current IRS practice and procedures. As of today, the IRS has not issued any guidance for taxpayers regarding an extension of the electronic signature policy, although it previously stated on its website that it is working to extend the temporary policy to allow electronic signatures for certain forms beyond October 2023 while it develops long-term solutions.
