I Was Wrong: We SHOULD Be Outraged About the New IRS E-File Requirements

A few weeks ago, I wrote that my colleagues in the tax world were being overly dramatic about the new IRS e-file requirements. I said I thought the requirement to take a photo ID and pull a credit report on clients applied only in limited circumstances that didn’t apply to many of us.

I was wrong.

At a continuing education event on Tuesday, it was clarified that practitioners are supposed to take a photo ID from all clients, and pull a credit report if the client signs the e-file authorization “remotely,” meaning: anywhere other than right in front of the practitioner. (My interpretation had been that “remote” signature meant that the client signed the authorization digitally rather than with an old-fashioned pen. Again, I was wrong.)

Read Joe Kristan’s blog post for more details.

If these new requirements stand, it will force me to totally change the way I conduct business. I’ll have to increase fees and will undoubtedly lose clients — maybe a lot of clients.

Here’s what I wrote to the IRS liason who’s collecting comments from practitioners:

Kristy,

Joe Kristan asked me to e-mail you my comments on the new IRS e-file requirements. I’m an accountant in Indianola and will be adversely affected by these requirements.

I meet all of my clients face-to-face at the beginning, but the actual preparation and completion of the return is done away from the client. In fact, in my practice, literally 98% of my clients sign the Form 8879 “remotely.”

I send them their completed tax return and the e-file authorization either by mail or through my secure website, and they sign the authorization on their own time and either mail or scan it back to me so I can e-file the return. It seems this meets the definition of being a “remote” signature (since the signature doesn’t take place in front of my eyes) and I will need to start pulling credit reports on 98% of my clients.

If this is the case, it will increase my cost of doing business and I will likely lose many of my clients who don’t want to mess with the bureaucracy, the intrusion on my part into things that aren’t my business (via their credit report) and the additional fees that I would need to charge them due to the increased compliance burden on my end.

And if I’m supposed to implement this NOW, on the 2013 extensions I’m working on … well, I don’t even know where to begin on how to get credit reports. I truly feel paralyzed because I don’t even know where to start on complying with these ridiculous new rules.

In addition, I talked to my attorney and he’s not sure it’s even legal in Iowa to pull credit reports on people except for purposes of verifying their creditworthiness.

I would also like to tell you what my attorney said regarding these new requirements. He said, quote, “That’s just dumb.” I agree. One could insert many different adjectives and expletives in place of “dumb” to describe these requirements.

Please pass this on to the proper decision makers at the IRS.

Sincerely,
Jason T. Dinesen, LPA, EA

“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.”