2014 Innovation Award Nominee:
Since 1990, taxpayers have e-filed more than one billion Form 1040 series tax returns. Many accountants and taxpayers who initially resisted e-filing now embrace its efficiency. However the e-filing process was not completely paperless – taxpayers were still required to physically sign Form 8879. That last hurdle to a fully paperless process was removed with the recent IRS approval for electronic signatures on Form 8879 – Publication 1345, March 11, 2014.
Through its ongoing work with tax preparers, CCH, part of Wolters Kluwer, recognized that obtaining physical signatures for Form 8879 created a bottleneck in the tax preparation and filing process. Since Form 8879 must be signed after a tax return is complete but before it is e-filed, getting the form signed by the taxpayer and spouse and returned to the accountant frequently involved tricky choreography especially if one of the parties was traveling. In addition to the time spent obtaining signatures, the CCH workflow study showed that accounting firms spent an average of $18 per return on direct costs to get Form 8879 delivered, signed and returned to them.
The CCH eSign solution was developed to streamline the process for both the taxpayer and tax preparer as well as reduce the overall cost by nearly 75%. Given the sensitivity of tax return information as well as the need to ensure the identity of the involved parties, there were obvious concerns about data security from the IRS as well as tax professionals. CCH worked with the IRS to address concerns about securing confidential tax return information and verifying the identity of the taxpayer.
CCH eSign uses encryption and knowledge based authentication to provide the required security and identity verification and it documents the transaction. CCH’s goal was to deliver a secure solution that fit easily into customers’ workflows. This was accomplished by creating a Form 8879 e-signature solution that was completely integrated with the tax return and our e-file status system:
- Integration into CCH tax-prep software: When a tax return is complete, e-sign can be selected within the CCH tax-prep software to securely send an email to the taxpayer and spouse with a link to initiate e-sign in a secure portal.
- Knowledge-Based Authentication: After the taxpayer and spouse verify their identity by answering a few security questions, they can review their tax return and apply their e-signatures to Form 8879.
- Email Confirmation: After Form 8879 is electronically signed, the taxpayer(s) and accountant receive email confirmations.
- Status Updates: CCH’s e-file status system is automatically updated with the date of signature and the tax return becomes eligible for e-filing.
- Reminders: Automated email reminders are available if Form 8879 is not signed within a prescribed number of days.
- Customization: Firms have the option to customize the notification language and format, including their logo, to personalize the interaction.
CCH eSign is the first e-signature solution to meet IRS requirements for Form 8879 and currently is the only Form 8879 e-signature solution integrated with e-filing. In addition, CCH eSign can be used to electronically sign other documents including Form 8878, Section 7216 Consent, engagement letters and much more. Taxpayers can e-sign Form 8879 and other documents using any smartphone, tablet or computer anywhere, anytime. The days of hunting for a scanner, fax machine or mailbox to return signed documents are over.
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