paperless office vs. the Internal Revenue code, The

CPA Journal, The, Aug 1998

IRC section 6695 requires paid tax return preparers to sign client's tax returns for filing with the IRS. One tax preparation firm, in attempting to move to a paperless office, proposed the following procedure to the IRS. The return would be prepared electronically. The signature page would be printed out, manually signed, and then electronically "imaged." Thereafter, the paper with the manual signature would be destroyed though storage of the return would meet IRS guidelines for electronic storage (Rev. Proc. 97-22). The copy of the return to be delivered to the client for his or her signature would be printed out of the imaging system including the preparer's imaged signature.

The IRS found that this approach violates the section 6695 requirements. The preparer must either manually sign the copy presented to the client or keep a manually signed paper copy of the client's copy.

This ruling is at odds with the move to increase efficiency through electronic filing; but until Congress addresses the legality of digital signatures, the IRS is powerless to remedy the situation. Bills are now pending in the House and Senate regarding digital signatures in banking transactions so hopefully the issue will receive more attention in the near future.

Source: LTR 9821038.