SERVICE EXTENDS PROCEDURE FOR TRUST RETURN PREPARERS TO AVOID MANUALLY SIGNING RETURNS WHILE ESCAPING PENALTY.

Notice 89-48

The Service is in the process of amending the regulations under section 6695(b) of the Internal Revenue Code to permit the use of facsimile signatures by preparers of Forms 1041, U.S. Fiduciary Income Tax Return. Section 6695(b) of the Code provides that income tax return preparers who are required by regulations to sign returns or claims for refund prepared by them and fail to do so, shall pay a penalty of $25.00 for each such failure unless the failure is due to reasonable cause. Currently, section 1.6695-1(b)(1) of the Income Tax Regulations generally provides that income tax return preparers must manually sign returns or claims for refund prepared by them.

The Service is aware that the manual signature requirement can create hardships for income tax return preparers responsible for the preparation of large numbers of 1041 returns that, by virtue of section 645 of the Code, must be filed on a calendar year basis. Accordingly, in Notice 88-48, 1988-1 C.B. 531, the Service announced that, under certain conditions, a facsimile signature for signing Forms 1041 would be accepted. By its terms, Notice 88-48 applied only to 1987 Forms 1041.

Pending the revision of the regulations under section 6695(b) of the Code, the Service will continue the procedures outlined in Notice 88-48. Accordingly, with respect to Forms 1041 filed for taxable years ending after December 31, 1987, and on or before the date on which further guidance is published, the Service will not assert the penalty contained in section 6695(b) against a preparer of Forms 1041 for failure to sign a return provided the preparer uses a facsimile signature in signing the returns and meets the following conditions:

(1) the preparer submits to the Service with the Forms 1041 bearing the preparer's facsimile signature, a letter manually signed by the preparer (a) listing the taxpayer's name and identification number shown on each Form 1041 bearing the facsimile signature, and (b) containing a declaration, under penalties of perjury, that the facsimile signature appearing on each return is the signature used by the preparer to sign the return;

(2) after the facsimile signature is affixed, no person other than the preparer may alter any entries on the Form 1041 other than to correct arithmetic errors discernible on the return; and

(3) (a) the employer of the preparer, or (b) the partnership in which the preparer is a member, or (c) the preparer (if neither (a) nor (b) applies), retains and makes available, upon request by the Service, a manually signed copy of the letter submitted to the Service with the returns and a record of any arithmetic errors corrected.

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

DRAFTING INFORMATION

The principal author of this notice is Gerald A. Consalvi of the office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Mr. Consalvi on (202) 566-3886 (not a toll-free call).