The move to a paperless environment and electronic signature solutions in accounting firms has been steady, like the drip of a leaky faucet. Enter the COVID-19 pandemic. Literally overnight that drip became more like Niagara Falls with the majority of society forced out of their offices and into their homes, working remotely.
No one likes to scramble to get things done. This is especially true for accounting and tax preparation. The effect of essentially shutting down the country, and the world, a month from the tax deadline last year did not invoke feelings of peace and tranquility. And while the path to everyday use of electronic signatures in the tax and accounting profession has been slow but steady over the last 20 years, the thundering rush of firms searching for the best solutions was felt with the onset of the pandemic.
So, how has e-signing and electronic signature solutions affected the tax and accounting profession? In a word, positively! Even though e-signatures have been legal and accepted by the IRS in some instances for a long time, the path to acceptance and becoming the norm in the tax preparation process made it feel like e-signatures were a new concept. When in truth, nearly every other facet of our lives – from retail credit card payments to real estate transactions – demonstrates that electronic signatures are so commonplace that no one bats an eye.
The History of E-Signatures and Electronic Signature Solutions
Looking back at the evolution of electronic signature solutions, it is evident that the need for these tools grew out of a shift in the profession to paperless processing, beginning with the Electronic Signatures in Global and National Commerce Act, or ESIGN Act, enacted by Congress on October, 1, 2000. This act made the legal validity of electronic signatures the same as ink-on-paper (wet) signatures and gave rise to the development of electronic signature solutions. However, it wasn’t until the introduction of SafeSend Returns and other SafeSend products that there was an e-sign solution built specifically for the tax and accounting profession.
A few years later, Notice 2004-54 allowed income tax return preparers to submit a select few documents to the IRS such as original or amended returns that were signed with a computer software program, rubber stamp or mechanical device. Requests for filing extensions were also allowed to be submitted in this manner. Unfortunately, this notice did not apply to actual taxpayers who were still not permitted to sign documents electronically.
Three years later, Notice 2007-79 expanded the list of forms allowed to be submitted to the IRS by electronic return originators to include Form 8453, Form 8878, and Form 8879. While moving in the right direction, taxpayers themselves were still excluded from electronically signing IRS documents. This amounted to a faster drip; nonetheless, still a leaky faucet in the move toward e-signed tax packages and paperless returns.
Continuing forward with the digital trend, the following year, TicTie Calculate was introduced by SafeSend. This Adobe® Acrobat® plug-in helped accountants prepare and organize digital workpapers from scanned PDF files; thus moving further and faster toward paperless, or at least less paper!
Over the next few years, SafeSend Exchange was introduced (then known as CPA SafeMail), giving the accounting profession a secure way to transfer large files, and SignatureFlow was released in anticipation of electronic signatures would soon be accepted by the IRS. Then in March of 2014, the IRS provided guidance in IRS Publication 1345 allowing individual taxpayers to e-sign income tax return packages. Third-party knowledge-based authentication, or KBA, was approved by the IRS as a means of preventing fraud for the many vendors who provided electronic signature solutions to tax professionals. In response, SafeSend Returns was introduced in 2016, allowing firms to automate the “last mile” of tax preparation, including taxpayer and spouse e-signatures on 8879s. The product has gone on to win multiple Innovation Technology Awards.
A Focus on the Way Firms Work and Firm Clients
SafeSend is the market leader in automating client touchpoints throughout the entire tax engagement process and continues to improve and innovate while complying with new IRS laws as they are established. SafeSend works with an extensive list of associations, alliances, and membership groups in the tax and accounting profession to stay apprised of the needs of practitioners.
The Taxpayers First Act of 2019, as implied in the name, puts taxpayers first and states that the IRS must establish standards for accepting a taxpayer’s e-signature on requests to authorize the IRS to disclose the taxpayer’s return or other information to a practitioner, or on powers of attorney granted by a taxpayer to a practitioner. In response, the IRS published guidelines, effective December 3, 2019, which provided baseline requirements for e-signature programs.
The IRS memoranda of August 28, 2020, announced an expansion of the use of electronic and digital signatures on 17 different forms through December 31, 2020. However, prior to that date in December, the authorization to use e-signatures on these forms was extended through June 30, 2021.
Building Tools Specific for the Tax and Accounting Profession
SafeSend Returns and SafeSend Signatures are not just electronic signature solutions, they are the only accounting-specific solutions. All of SafeSend’s solutions offer a safe, secure and speedy way to automate the back-and-forth communication with clients that has traditionally been handled manually. From engagement letters to tax return assembly & delivery, the SafeSend Suite helps tax and accounting firms complete in minutes processes that have historically taken days or weeks to accomplish.
There are many generic electronic signature solutions that work well for mass markets, but not so much for the specific requirements of the tax and accounting profession. The challenges that firms face with preparing and delivering individual and business returns requires an electronic signature solution specific to the tax and accounting profession!
The move toward paperless returns has certainly sped up in the last 20 years and SafeSend has been at the forefront of building electronic signature solutions specific to the tax and accounting profession. With more than one million tax returns delivered, SafeSend Returns is the ultimate tool to streamline the “last mile” of the tax return process, including the collection e-signatures that is relevant to the tax and accounting profession. As the profession looks at how they will operate in a post-COVID-19 world, SafeSend continues to offer innovative solutions to keep tax and accounting work flowing like the Niagara River.
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SafeSend Returns is a multi-year winner of the CPA Practice Advisor Technology Innovation Award. SafeSend Returns eliminates the manual, labor-intensive elements many tax departments experience producing client-ready tax returns.