Modernizing Fax Filings with the IRS by CW Associates CPA's Hawaii

Federal and state agencies, including the court systems, are modernizing by allowing the electronic filing of petitions and other court documents. For example, Alabama, Texas, Illinois and Missouri have e-filing systems for court petitions. In 2014, two federal courts (2nd and 9th Circuit Courts of Appeals) piloted an e-filing program for all courts in which the user is authorized to file electronically. The program is expected to become national in the next few years.

The IRS is also modernizing, although not as fast as many practitioners (or the AICPA) would like. Calls to the IRS and cases can be routed to any IRS employee or office all over the country. We are seeing more appeals conferences conducted by telephone with the various service centers instead of in person and expect Skype-type conferences to become more common. For many years, the IRS has electronically processed bank account and wage levies on delinquent accounts. Now, the IRS is also able to issue electronic summonses to eBay and PayPal.

Since November, the IRS has expanded the acceptance of signed forms by fax, including consents to assess additional tax of any amount, taxpayer closing agreements involving any amount and consents to extend the time to assess tax.

This small step may eventually lead to virtual audits and virtual hearings. The expanded consent will be most useful and necessary to preparers who need to perfect (correct small ministerial errors in) the original but rejected e-filed returns during the filing process, resolve post-filing issues and perhaps file delinquent client returns. Original tax returns are not accepted by fax, except as part of return perfection, presumably to encourage e-filing. As such, an unsigned original return can now be perfected with a faxed signature. Generally, faxed signatures will be considered legally sufficient where the IRS has been in contact with a taxpayer, and that contact has been documented in the IRS files.

Note that the IRS will not independently send an acknowledgment of received faxes, but the taxpayer or representative with a power of attorney (POA) may call and request a verbal confirmation of receipt if they feel that the fax report that is generally generated by the sender is insufficient.