E-signature is one of the best way to secure your electronic documents. Aside from the fact that it’s paper free, you don’t have to fax it and not only that, it can also save you time and money. But along with those benefits comes risks like fraud and identity theft. The IRS is no stranger to these issues, especially on tax returns.
Flickr (Stan Paregien)
A Movement for Legality
The U.S government wanted to find a way for e-signatures to have adamant effects on documents, the same as how penned signatures took effect on paper.
After years of planning, the U.S government came up with the E-SIGN act (Electronic Signatures in Global and National Commerce) launched in 2000, which identified most e-signatures in the U.S as legal authorizations for electronic documents.
An Enemy to Fraud?
So, what actually makes e-signature a cure to fraud?
One of the best advantage of e-signatures aside from having your documents signed fast and easy, is it’s security feature. An electronic signature is made up of high end complex encryption that hackers can’t walk through.
Digital signature software has 2 keys: the private key, which is only assigned by the software to you, and you’re the only one who could access it, especially when you sign a document. While the public key can be used by anyone. It can read the signature made by the private key.
IRS Making the Move
During those times when the ESIGN Act of 2000 was being planned and executed, the IRS was one of those government sectors who wanted to have some conditions on authorizing e-signatures. Remember that as per returns and other tax related documents, fraud and identity theft are the worst crimes that could be committed with the use of signatures.
The IRS might be seeing risks on e-signatures, since they are aware that as more digital signature softwares are being sold in the market, the more of a possibility that hackers might also improve their way of stealing information and tampering tax documents.
An example of it is when hackers tries to tamper the rules and terms of a contract between accounting firms and their clients. Aside from the fact that it may result to breach of contract, the offended party might not be able to defend it in court since the document is cleanly changed, and the end result: great liabilities to the losing party.
March 11, 2014 — when the IRS released advisories regarding the new guidance to e-signatures on forms 8879 and 8878. These are two of the most common forms in IRS when it comes to authorization of e-signatures. Form 8879is an authorization form for e-filed return if filed using ERO (Electronic Return Originator), while form 8878 are authorization forms for extension requests.
One of those considerations of the IRS is to undergo KBA or Knowledge Based Authentication, where taxpayers will answer questions (it is in multiple choice format) about his/her own information based on public records, family members, home, phone and other relevant data.
For taxpayers like you, one of the best practices that I would suggest is to thoroughly monitor your documents before and after you put e-signatures on it. So that once you think that something is wrong with your documents (especially tax returns), you can fix it as soon as possible.
Another thing is that technology is given to man for things to be done the easy way and keep mankind in control of everything, but it doesn’t mean that responsibility isn’t attached with that control. You should always be responsible on taking care of your private keys to avoid encounter with fraud offenders.