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IRS Required Client Signature

January 27, 2017

Written by Casey Bullard

Paid Preparers Are Required to get Client Signature

If you are paid to prepare and e-file Form 2290, then you must have your client sign the proper forms.

There is no power of attorney that would allow a preparer to sign a 2290 on their clients’ behalf. The Taxpayer must sign it themselves; every form, every time. [1]

Each 2290 requires its own signature. Good News! A copy is acceptable; the original signature is not required. Often the idea of getting this signature can seem daunting, but so far most preparers report it’s not that big of a deal.They prepare their clients’ 2290s on the website and print out the tax documents, including the correct signature authorization form, from Step 5. Then they send the whole packet to their client along with their invoice. When the clients return everything the preparer finishes submitting the 2290 and a couple of minutes later can print out the Stamped Schedule 1.

What Does the Customer Sign?

There are two signature methods to choose from for the electronically filed Form 2290. The Form 8453-EX, Excise Tax Declaration, and the Form 8879-EX, IRS e-file Signature Authorization for Forms 720, 2290 and 8849. Both forms identify all parties involved in the transaction and provide space for the required signatures. Both the preparer and the client must sign the proper form.  Which of the two signature authorization forms is used, depends on how the e-filing software is set up with the IRS. And YES, all preparers must be set up with the IRS, even if they only do 2290s.[2]

This is important because an electronically transmitted return will not be considered complete without one of the following two forms:

  • Form 8453-EX is signed by the taxpayer, scanned into a PDF file, and transmitted with the return to the IRS.
  • Form 8879-EX is used to select a PIN that is used to electronically sign the return when it is filed through an ERO. (more on EROs below)

Wondering which form to use?

8453-EX

The first and simplest option is Form 8453-EX. This form can be used by any preparer with a Preparer’s Tax Identification Number (PTIN). PTINs are issued by the IRS to anyone who accepts a fee to prepare federal tax returns. If the Form 8453-EX signature method is used when the Form 2290 is e-filed, a copy of the signed Form 8453-EX is required to be attached to the 2290 you submit.

8879-EX

The second option is Form 8879-EX. This form can be used by a preparer who has a PTIN and an EFIN. An EFIN is an Electronic Filers ID Number. The Form 8879-EX must be signed by the preparer and the taxpayer. The form is not sent to the IRS unless it is requested.  The completed form is retained by the preparer for 3 years from the due date or the IRS received date, whichever is later. This form is used when both the taxpayer and the Electronic Return Originator (ERO) agree to use a PIN for the taxpayer’s signature on an electronically filed return. A preparer becomes an ERO by taking extra steps with the IRS to set up their company to e-file.

Penalties

Penalties for not getting the tax payers signature can be extremely steep. Often more than a preparer charged to file the form in the first place. Here’s a simple list of possible penalties from U.S. Code § 6695:[3]

  • $50 per return if you fail to give a copy to the taxpayer (section a)
  • $50 per return if the preparer doesn’t sign (section b)
  • $50 per return if you fail to list your identifying tax number (PTIN) on a return. (section c)

There are more penalties listed in U.S. Code § 6695 and penalties are also scheduled to increase with inflation so they could be going up in the coming years. There are also more penalties listed in other IRC Sections but hopefully just what’s listed is enough incentive to take the extra step to get the right signature authorization form. Most preparers wait for payment before they file the 2290 anyway, so if a preparer gives the client the proper signature authorization at the same time they provide the invoice, it doesn’t take any extra time to be compliant.

Please feel free to call us here at 2290Tax with your questions about signature authorization. We can direct you to the online applications for your PTIN and EFIN, to the legal code that backs up what we’re saying, and are happy to help in any other way that we can.

 


[1] IRC 6061 and the related regulations require a signature on returns.