The US Internal Revenue Service has extended its temporary approval of accepting electronic or digital signatures on certain IRS forms until October 31, 2023, and has expanded the list of forms that may be signed electronically or digitally to include Form 1042, Annual Withholding Tax Return for US Source Income of Foreign Persons.
Memorandum NHQ-10-1121-0005 (the Memorandum) extends the temporary policy previously announced in an Internal Revenue Service (IRS) news release on August 28, 2020, which was later updated through Memorandum NHQ-10-1220-0006 on December 28, 2020 (the December Memo), and Memorandum NHQ-10-0421-0002 on April 15, 2021 (the April Memo). In this prior guidance, the temporary acceptance of digital and electronic signatures on certain IRS Forms was set to expire on December 31, 2021.
Reiterating the December Memo and April Memo, the Memorandum confirms that both digital and electronic signatures may be used, and that both electronic and digital signatures can appear in “many forms” and “may be created by many different technologies.” The IRS still does not require any specific technology for purposes of producing a digital or electronic signature during this temporary acceptance period. Thus, it appears the IRS will accept images of signatures (scanned or photographed) and digital signatures (those using encryption techniques).
The Memorandum expands the list of IRS forms that may be electronically or digitally signed (full list included below) to include Form 1042, Annual Withholding Tax Return for US Source Income of Foreign Persons (for withholding agents or intermediaries to report certain payments subject to withholding). Form 8832, Entity Classification Election (which allows an eligible entity to elect how it will be classified for US federal tax purposes), and Internal Revenue Code Section 83(b) election statements (which allows a taxpayer to elect to report income from the transfer of property for the performance of services in the year of such property transfer) remain on the list of IRS forms that may be electronically or digitally signed. All IRS forms submitted under this temporary IRS policy must be signed and postmarked on August 28, 2020 or later.
The Memorandum explains that the IRS is extending this temporary policy as a continued response to the COVID-19 situation by minimizing the need for in-person contact. However, although the IRS has now extended this temporary policy several times since it was first introduced in August 2020, this policy may not be continued, at least not in this current form, after October 31, 2023.
The following are the forms listed in the Memorandum:
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