This column highlights issues and questions submitted to the MACPA Professional Ethics Task Force. Responses may not consider all of the unique circumstances that are part of an ethical inquiry.

Q: What are the implications if I E-File an income tax return prior to obtaining a completed IRS Form 8879?

A: When E-Filing an income tax return on behalf of a client, the IRS guidelines state that both individuals listed on a joint return must review the return and complete the IRS Form 8879 when they are unable to personally enter their PIN upon transmission of the return. The PIN is instead written onto the Form 8879 and subsequently signed and dated by the couple. Do not transmit the completed return unless the Form 8879 has been signed and dated by both individuals. The IRS has indicated that the Form 8879 signature dates must be concurrent with or before the actual transmission date to validate the electronic signatures. Once complete, the Form 8879 is to be kept on file in the office of the electronic return originator (ERO) for a period of 3 years.

Failure to obtain the required approval of the return and signatures on the Form 8879 could result in loss of your e-filing privileges and is a clear violation of the MACPA’s Code of Professional Conduct. If the IRS were to become aware that an income tax return was e-filed prior to proper completion of the Form 8879 and thus indicating insufficient review of the return by the taxpayer, the IRS may revoke your e-filing privileges. E-filing the return without a completed Form 8879 is also a violation of Rule 201.01b, failure to exercise due professional care in the performance of professional services and Rule 202, failure to comply with standards promulgated by bodies designated by Council in performing professional services, of the Code of Professional Conduct.

While it is difficult to determine if the client has given sufficient attention to the work you’ve completed on the return, if you e-file the return without authorization via the Form 8879, you are furthering the taxpayer’s ability to contend later on down the road that they were never given the chance to review your work, whether or not that may have been the case.

Lastly, it is not necessary that you, as the CPA and ERO be present at the time the taxpayer reviews your work, nor is it necessary that you are present to witness the completion of the Form 8879. Many firms have procedures in place where administrative staff can both provide the final copy of the return to the taxpayer, as well as the blank Form 8879. The Form 8879, furthermore, does not need to be completed in your presence, nor the presence of the staffer. If one spouse is unavailable to sign the Form following joint review of the return, a copy of the completed Form 8879 may even be faxed to the office of the ERO prior to e-filing.

While it is understood that providing your clients with the expeditious attention they deserve, it is not worth risking your reputation and e-filing privileges to circumvent IRS guidelines in doing so. If your client cannot understand why it is important that they review their return and both taxpayers complete the Form 8879 prior to e-filing, perhaps their business isn’t worth the risk.

Additional information regarding e-file is available here: http://www.irs.gov/pub/irs-pdf/p1345.pdf

Members with questions regarding interpretation of the Code of Professional Conduct should contact the MACPA Regulatory Affairs Department.

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