No matter how much we despise it, tax season is among us once more: a time of year when the only thing more painful than paying your taxes is having to fill out reams of paperwork.
Individual tax returns are expected to total more than 150 million this year, according to the Internal Revenue Service (IRS). Taxpayers are in the millions, but the good news is that you may employ electronic signatures to reduce the amount of back and forth required by tax return paperwork. In reality, the Internal Revenue Service (IRS) aggressively encourages people to file their tax forms electronically in order to receive their refunds more quickly.
Electronic signatures make the process so easy and convenient that the number of returns submitted electronically has surged from 25,000 in 2014 to roughly 100 million in 2017, an increase of more than 500 percent.
Nonetheless, before you jump on the internet and sign up for an e-signature service, there is one important consideration to keep in mind: you should be looking for a solution that will keep your confidential data secure, especially given the fact that one in every 15 people was a victim of tax-related identity theft in 2017.
The most effective method of ensuring your security is to use an e-signature solution that complies with the IRS guidelines for electronic signatures.
1.The World’s Most Comprehensive Guide to Electronic Signature Laws is available online.
Here are three rules that the Internal Revenue Service has established as a guideline for eSignature security:
1) Determine the identity of the taxpayer who signed the form.
It is necessary for the e-signature system to save personal information about each signer, such as their date of birth, name, social security number, and home or work address. Aside from that, it confirms the taxpayer’s identity by determining whether or not the information they submit corresponds to the information obtained from record checks with credit bureaus or similar databases.
When a taxpayer signs electronically from a distance, the e-signature solution must apply knowledge-based authentication (KBA) to validate his or her identity. This procedure normally consists in asking the signer a series of comprehensive questions that have been prepared based on information obtained from publicly available databases. This information is normally only known by the signer and no one else is permitted to know it.
In accordance with the requirements set forth by the National Institute of Standards and Technology, the e-signature solution must maintain a record of the signer’s successful completion of this authentication test in order to be considered valid. However, if a signer does not successfully answer the questions after three attempts, he or she must authorise the documents with a handwritten signature.
2) Ensure the legitimacy of the eSignature while maintaining the document tamper-proof.
If the integrity of these electronic records is to be maintained, the e-signature solution must verify that the e-signature provided by the taxpayer is legitimate. This verification is performed by attaching the e-signature to the electronic record that it is connected with.
In addition, it should be hard to erase, copy, or transfer the e-signature in order to falsify a digital record in the future. To put it another way, the e-signature solution must incorporate measures that prohibit the document from being altered in any way.
3) Create a digital paper trail for your records.
It is necessary for the e-signature solution to store a digital image of the signed form in order to comply with IRS standards. Additionally, it must include other information, such as the date and time at which the document was signed, the taxpayer’s IP address, his or her username (login details), and the KBA results obtained after the identity verification process has been successfully completed.
Also important is that the e-signature system you choose provides a digital audit trail, which verifies that the signer has completed the full procedure. The Electronic Return Originator (ERO) will be able to submit verification to the Internal Revenue Service (IRS) if necessary in this manner.
However, while the use of electronic signatures for tax documents is still in its early stages, this technology has the potential to make the filing process easier than it has ever been.