CCA 1125022: IRS fax policy set signature requirements for tax documents

Plain-English summary

Chief Counsel Advice addressed whether the IRS could accept faxed signatures on agreements and consents, including TEFRA agreements that would generate refunds. It explained that the IRS policy generally allowed faxed consents and closing agreements involving tax amounts of $25,000 or less when taxpayer contact and the taxpayer's desire to fax were documented. Amounts above $25,000 generally required original signatures delivered in person or by mail. The advice said there was no legal prohibition on accepting faxed signatures regardless of the amount, but the $25,000 limit was a business-policy decision that Counsel could not change. It also said the existing policy should be followed until changed.

Ruling snapshot

• Question: When may the IRS accept faxed signatures on consents, closing agreements, and related tax documents?
• Outcome: Advice given.
• Key authorities: IRS Servicewide fax and signature policy; 2003 memorandum on fax and signature stamps.

Full text (IRS public release)

ID: CCA_2011051810563141 Number: 201125022
Release Date: 6/24/2011
Office: -------------
UILC: 7121.06-00

From: -------------------
Sent: Wednesday, May 18, 2011 10:56:36 AM
To: --------------------
Cc: -----------------------------------------------------------------------
Subject: RE: Faxed signature for agreements that will generate refunds

In 2003, as a result of recommendations from an IRS cross-divisional task force that
assembled to develop a Servicewide fax policy, the Service issued a policy statement
that permitted the Service to receive by fax, consents to assess additional tax of
$25,000 or less, and closing agreements involving tax amounts of $25,000 or less. The
policy statement provides that Taxpayer closing agreements involving tax amounts of
$25,000 or less can be accepted by fax if taxpayer contact has been made and the case
history documents the date of contact and the desire of the taxpayer to submit the
consent by fax. Consents to assess additional tax (Forms 4549, 870, and others) of
$25,000 or less can be accepted by fax if taxpayer contact has been made and the case
history documents the date of contact and the desire of the taxpayer to submit the
consent by fax. Closing agreements involving tax amounts over $25,000 and consents
assessing tax amounts in excess of $25,000 should be secured with original signatures
that are delivered in person or by mail.
There no specific guidance regarding TEFRA agreements memorialized on a Form 870-
PT, Agreement for Partnership Items & Partnership Level Determinations as to Penalties,
Additions to Tax, and Additional Amounts or 870-LT, Agreement for Partnership Items &
Partnership Level Determinations as to Penalties, Additions to Tax, and Additional
Amounts and Agreement for Affected Items. Arguably, if the refund amount is less than
$25,000, these Forms can be accepted by fax if taxpayer contact has been made and the
case history documents the date of contact and the desire of the taxpayer to submit the
consent by fax. We understand, however, that your policy is
not to accept faxed signatures on TEFRA agreements that will generate refunds.
There is no legal prohibition to the Service accepting faxed signatures from
taxpayers regardless of the amount of tax at issue; rather, the policy statement reflects
a business decision to accept faxed signatures where less than $25,000 is at issue
because in 2003, the taskforce determined that $25,000 was an appropriate amount
considering the risk of disavowal. The policy statement reflects a business decision,
and Counsel cannot change the policy. Until the fax policy regarding closing agreements
documenting refunds in excess of $25,000 is changed, it should be
followed. -------------------------------------------------------------------------------------------------------

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Please let us know if you have any questions.

ATTACHMENT

                                June 24, 2003

MEMORANDUM FOR DIVISION COMMISSIONERS
CHIEF, CRIMINAL INVESTIGATION
CHIEF, APPEALS
NATIONAL TAXPAYER ADVOCATE

FROM Bob Wenzel
Deputy Commissioner for Services and Enforcement

SUBJECT: New Policy for Use of Fax and Signatures Stamps in Taxpayer
Submissions

On Monday, May 12, 2003, the Tax Administration Council (TAC) approved the
expanded use of faxes for receiving information and documents from taxpayers and
practitioners. These procedural changes were developed by a cross-divisional group
led by my staff in response to a request from practitioners. The changes are aimed at
reducing taxpayer/practitioner burden as well as reducing the time it takes to resolve
taxpayer cases and inquiries. The receipt of faxes should not require any significant
changes to how the IRS handles open cases with taxpayers. It was intended as
another means to receive case information.

The new fax guidelines (copy attached) can be implemented immediately, where
possible, but all divisions should take the necessary steps so that they can accept faxes
as described in the policy no later than October 1, 2003.

The TAC also approved the use of signature stamps by practitioners for return
submissions. However, the policy for using signature stamps will require a change to
published guidance and Chief Counsel estimates this will be completed within the
next few months. I will advise you when you can begin accepting practitioner signatures
stamps as outlined in the policy.

To ensure effective implementation, I would like each of you to identify the Internal
Revenue Manuals assigned to your respective divisions that will need to be revised to
incorporate these new procedures, as well as the dates you expect these revisions to
be completed. Please forward this information to the Office of Tax Administration
Coordination (Room 7214 Main IRS) no later than July 14, 2003.

If you have any questions, please call me; staff can contact Gary Doniger, Acting
Deputy Director Tax Administration Coordination at (202) 927-4800.

Attachments

cc: Deputy Commissioner for Operations Support
Chief Counsel

Attachment 1

  Use of Fax and Signature Stamps for Taxpayer Submissions

Background

The IRS is involved in a significant number of taxpayer contacts to perfect returns
during the filing process, to resolve issues identified in post-filing, and to secure
delinquent returns. While the primary communication methods for these contacts have
traditionally been mail, phone or personal interviews, the IRS is always seeking new
ways of communicating with taxpayers that will reduce taxpayer burden and improve
organizational efficiency. Based on requests from the National Society of Accountants
and other outside stakeholders, as well as an increased use of facsimile equipment in
many operations by IRS, a cross-divisional group was assembled to develop a
Servicewide policy for the acceptance of faxes and signature stamps in routine tax
administration operations.

Recommendations:

The following policies on the acceptance of faxes and signature stamps are
recommended for Servicewide adoption.

Faxes - General Guidelines

These general guidelines are applicable to all divisions and cover operations related to
income tax, employment tax, excise tax, estate tax, gift tax, and generation skipping tax,
as well as tax exempt and employee plans determinations.

 Filing of original tax returns via fax will only be allowed as part of a return perfection
process (e.g. securing missing schedule or missing signature) initiated by the IRS or
in the post-filing/non-filing activities described in next bullet. Tax returns can be
received via fax as part of return perfection even if a taxpayer signature is required
since Chief Counsel has advised that in circumstances where contact with the
taxpayer has been made and documented, faxed signatures are legally sufficient.

 Submission of documentation, forms, letters, and returns related to post-filing/non-
filing inquiries and interactions can be allowed via fax based on taxpayer or IRS
request unless there is a specific prohibition. This allowance applies to inquiries and
interactions conducted by Field Assistance, Accounts Management, Compliance
Services, Field Examination, Field Collection, Determinations Units, Appeals, and
the Taxpayer Advocate Service, or related to post-submission inquiries and
interactions conducted by Employee Plans or Exempt Organizations in connection
with an application for a determination or a request for a ruling, Documentation,
forms, letters, and returns can be received via fax in these circumstances even if a
taxpayer signature is required since Chief Counsel has advised that in
circumstances where contact with the taxpayer has been made and documented,
faxed signatures are legally sufficient. In the short term, acceptance of faxes by
some locations may be limited by equipment availability. However, all operating
divisions should take steps to make whatever changes are needed to provide this
option for taxpayers as quickly as possible (e.g. procure equipment, update IRM’s).

 The IRS will not acknowledge faxes received from taxpayers in the course of tax
administration activities by a return fax. Exceptions can be made in unusual
circumstances as determined by IRS management.

 Guidance for some specific forms, documents, and letters can be found in
Attachment 1. These items are listed individually based on a request by either
outside stakeholders or internal groups. This list does not necessarily include all
items that could be received by fax based on the general guidelines.

Signature Stamps – General Guidelines

Return Preparers may sign original returns, amended returns, or requests for filing
extensions using a signature stamp to facilitate signing large numbers of returns.
Taxpayers, however, must continue to sign their returns with an original signature or
other authorized alternative (e.g. PIN).

Preparer/taxpayer signature stamps will not be permitted when signing other documents
such as elections, applications for change in accounting method, powers-of-
attorney, consent forms, revenue agent reports, and other case inquiry/resolution
related documents requiring signature.

Attachment 2

   Specific Guidance on Use of Faxes in Tax Administration Processes

Lists not all inclusive

1. The following specific documents/forms/letters will continue to be accepted by fax in
   routine operations:

   • EIN Requests (Form SS-4)
   • Power-of-Attorney (Form 2848)
   • Taxpayer Authorization (Form 8821)
   • 1120S Election (Form 2553)
   • Transcript Requests (Form 4506)
   • Request for Public Inspection or Copy of Exempt or Political Organization IRS
     Form (Form 4506-A)
   • Foreign Certification Requests
   • Appeals Conference Requests
   • Responses/documentation needed to resolve filing or post-filing questions or
     correspondence.

2. The following specific documents/forms/letters can be accepted by fax if contact
   has been made with the taxpayer by phone or in-person and the taxpayer history file
   is documented with the date of contact and notation is made that the taxpayer wishes
   to send the document/form/letter by fax.

   • Requests for Innocent Spouse Relief (Form 8857)
   • Taxpayer Statement About a Refund (Form 3911)
   • Injured Spouse Claim (Form 8379)
   • Installment Agreements (Form 433-D)
   • Offers in Compromise (Form 656)
   • Collection Information Statement – Wage Earner (Form 433-A)
   • Collection Information Statement – Business (Form 433-B)
   • Early Referral Requests
   • Fast Track Mediation Requests
   • Request for Collection Due Process Hearing (Form 12153)
   • Letter to designate a payment
   • Letter to request non-filing of lien
   • Letter to request lien release
   • Letter to request lien withdrawal
   • Letter to request non-assertion of penalty
   • Letter to provide reasonable cause statement
   • Supporting Statement to Correct Information (Form 941C)
   • Election by a Small Business Corporation (Form 2553)

3. Consents to assess additional tax (Forms 4549, 870, and others) of $25,000 or less
   can be accepted by fax if taxpayer contact has been made and the case history
   documents the date of contact and the desire of the taxpayer to submit the consent
   by fax. Consents to assess tax in excess of $25,000 should be secured with original
   signatures that are delivered in person or by mail.

4. Taxpayer closing agreements involving tax amounts of $25,000 or less can be
   accepted by fax if taxpayer contact has been made and the case history documents
   the date of contact and the desire of the taxpayer to submit the consent by fax.
   Closing agreements for tax amounts in excess of $25,000 should be secured with
   original signatures that are delivered in person or by mail.

5. Employee Plan and Exempt Organization determination letter applications will not
   be accepted via fax.

6. Determination Letter Requests related to income tax, gift tax, estate tax, generation-
   skipping transfer tax, employment tax and excise tax matters
   will not be accepted via fax.

7. Consents to extend the statute of limitations for assessing tax (Form 872, SS-10,
   and other consent forms) will not be accepted via fax in normal operations.