UPDATE 5/21/14: I was wrong. Don’t hold the phone on being outraged. We all should be outraged. See my updated blog post here.

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Earlier this week, the tax pro community — myself included — were outraged at apparent new IRS requirements for tax pros who e-file. Read Russ Fox’s posts here and here for further background.

This all stems from revisions the IRS made to the e-file handbook (Publication 1345). A quick glance at the revisions appeared to show the IRS saying:

  1. All tax pros who e-file must take copies of government-issued ID, and furthermore …
  2. Pull credit reports on their clients in order to verify the client’s identity

I was outraged when Russ broke this news on Monday. Here’s what Russ, Robert Flach and I had to say on Twitter that morning:

On Wednesday, I killed a tree and printed Publication 1345 so I could read through it with a highlighter in hand.

Here’s what I discovered: we may have jumped the gun on the outrage machine.

I don’t think Publication 1345 is saying ALL tax pros get photo ID and pull credit reports. The publication says we must do those things if the e-file authorization is signed electronically (meaning, not signed with paper and pen).

Electronic signatures are now allowed on e-file authorizations. This means, a client signs via their computer, or a saved signature dropped into a document (see Page 22 of Publication 1345 for a list of what constitutes an electronic signature). This is the situation where the pro would need to get a photo ID and maybe pull a credit report.

For those of us who have our clients sign with a regular old pen and then mail, scan or fax the authorization form back, I don’t think anything changes and these new requirements don’t apply to us.

This isn’t to say I think the IRS’s new requirements are good (I agree with the photo ID part but the credit report part seems over the top), but these new requirements make much more sense when one realizes that it applies only to limited situations involving electronic signatures only.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”