Most people’s day-to-day activities are increasingly centered on convenience. From banking on smartphones, to trading equities online, to buying clothing, most of us can check off our to-do list with one click. When it comes to interactions with accountants, however, many clients may cringe at the thought of big packets of paper, snail mail and faxes. And not only are these methods of communicating unappealing for clients, the inefficient processes associated with them are a time drain for accountants. We should be cognizant that any business or professional service that is serving customers or clients using methods that conform to a world that no longer exists is on a death march. And paper is not consistent with today’s world.
A perfect example of this mutual inefficiency and past world is evident for practitioners who are still struggling to obtain manual signatures from clients on Form 8879, engagement letters or consent forms. Not only is tracking down a signed document a time-consuming process, but so is converting it from a fax, PDF or signed piece of paper into a format that works within the firm’s document management system and then alerting the appropriate staff member so that the next steps can be taken.
For firms pushing ahead with e-signatures, however, this process is smoother, more efficient and very secure, both for the firm and for the client. And it is consistent with the world of today. A client whose signature is required simply receives an email with a link to view the relevant forms and access the identity verification process. After a few quick clicks on their desktop, laptop, tablet or smartphone, the client’s identity is securely verified and their e-signature is applied to all necessary locations in the document.
From the firm’s perspective, e-signatures save time and simplify internal processes as well. E-signed documents – if integrated properly with the firm’s other technology – are automatically filed in the firm’s electronic document management system and into an overall practice management system, relevant staff are alerted so that the returns can be processed and/or next steps can be taken, significantly increasing efficiency in workflow.
While obtaining e-signatures on Form 8879 has gained in popularity in the last year, due in part to steps the IRS has taken to allow e-signatures and clarify requirements, there are also many other uses for e-signatures that can save your firm time and expense. Using e-signatures for engagement letters and consent forms can save costs by eliminating the need to mail hard copies to clients—and these documents can be signed electronically in a matter of minutes.
When it comes to exploring the full spectrum of ways e-signatures can benefit your practice, start with your current tax technology provider. The most valuable e-signature functionality is one that is integrated into your current tax preparation software. It’s also important to utilize a solution that is specific to the tax and accounting profession, as e-signatures on Form 8879 must meet stringent IRS requirements verifying the taxpayer’s identity, known as Dynamic Knowledge-Based Authentication (KBA). There are many mass market e-signature offerings out there that do not adequately meet the needs of tax professionals nor meet IRS requirements, so it’s important to be aware. And again, integration is also critically important.
It’s also imperative that you check your state’s rules to verify whether your state accepts federal e-signatures or their own version. Typically, e-signature fees are only assessed upon successful completion of e-signatures for all parties and there is no extra charge for states with their own e-signature form, if processed with Form 8879. Normally, the spouse’s e-signature form is also included in the 8879 transmission fee.
By taking full advantage of e-signatures, your firm and clients will no doubt benefit from increased convenience, security and efficiency. And in today’s tax and accounting world, any change that results in reduced time and simplified processes is invaluable.