The U.S. Internal Revenue Service (IRS) has recently made a significant amendment to its Internal Revenue Manual (IRM). As of October 17, 2023, the IRS has fully incorporated certain e-signature policies and procedures into the IRM, effectively permitting the use of electronic signatures on selected forms. This includes those related to elections under section 83(b) of the Internal Revenue Code of 1986 (referred to as “Section 83(b) Elections”).
This action puts an indefinite extension on the prior temporary relief granted by the IRS, which was on course to cease in October, as identified by Shearman & Sterling LPP. This move can be considered a stride forward in providing more convenience and flexibility to all parties involved, especially considering the recent push for digitization across various domains.
Section 83(b) Elections allow taxpayers to choose to be taxed at the time of receiving the property instead of waiting for their rights in the property to become vested. The Electronic Signatures in Global and National Commerce Act (E-SIGN Act) was enacted in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce. The Act provides that a signature, contract, or other record relating to such a transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.
To a significant extent, the indefinite use of electronic signatures for Section 83(b) Elections underlines the digital transformation, which has been a trend for a while now, particularly in the legal and regulatory industries.
For more details on this development, you can review the official publication at JDSupra.