In many things, New York is a recognized leader, standing at the forefront of finance, culture, and innovation. Yet it remains behind in terms of accepting e-signatures on e-file authorization forms, being one of only two states that do not allow preparers to use them on behalf of their individual or business entity clients.
Under current New York law, all filers are able to use an electronic signature to file their own state tax returns. Federal law goes a step beyond and allows tax preparers to utilize an electronic signature on e-file authorization forms in order to file a federal tax return to the IRS on behalf of clients. Tax preparers filing a New York tax return on behalf of clients, however, may not use an electronic signature on an e-file authorization form. New York and Hawaii are the only states that prohibit this practice.
It is rather odd that, when all our lives are becoming more entwined with advancing technology, New York still requires the use of a physical signature when utilizing e-file authorization forms. We are well into the 21st century at this point, yet our state tax code still holds to 20th century practice.
This is why the Society has been working in Albany over the past year to give electronic signatures the same legal status as a physical “wet” signature, which will reduce burdens on preparers and align the process with federal filings. This has been a priority for current NYSSCPA President Ita M. Rahilly. Having met several times with senior officials in the New York Department of Taxation and Finance (DTF) and leading members of the state legislature, we believe that relief might come during the current legislative session.
Already, there is a bill in the legislature cosponsored by Senator John C. Liu and Assemblyman William B. Magnarelli (S.5661/A.7765) that would authorize the DTF to accept e-signatures from individuals utilizing e-file authorization forms. During the 2019 legislative session, the bill passed the Senate with an overwhelming majority vote, but has stalled in the Assembly committee process. With our work during the off-session and early conversations with the legislature this session, we believe that we have made progress and will continue to see even more during this session.
We are also working on new legislation that would extend this same relief to business tax filers. Right now, in order for tax preparers for a New York business to successfully file the business’s tax returns, they must get the wet signature of the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other officer of the business duly authorized on an e-file authorization form. In a bill that we are planning to advance in the legislature, electronic signatures on e-file authorization forms would satisfy the same legal requirements and have the same force and effect as a wet signature.
It is our hope that these efforts, fueled by the Society’s advocacy work, will result in one less tax season hassle, as CPAs will no longer need to chase down clients for their physical signatures. Instead, just like nearly all of the other states, as well as the federal government, New York will accept an e-signature on an e-file authorization form, freeing up preparers’ time to attend to the myriad other tasks that need to get done.
This is just one more way that, through your support, we are working to make your professional life a little easier. When you contribute to the NYSSCPA’s PAC, your dollars go a long way in supporting our New York–based advocacy campaigns across the entire state. Go to http://www.nysscpa.org/pacdonatetoday.