Form 8879: The Electronic Handshake

Why This Matters for the Exam

Form 8879 is one of the most tested topics on Part 3 because it involves strict timing rules (before transmission), retention requirements (3 years), and material change thresholds ($50/$14). The IRS treats Form 8879 as the legal equivalent of the taxpayer's signature on a paper 1040, so violations carry serious consequences.

Expect scenario-based questions that test your understanding of when a new form is required and what happens if the ERO transmits without a signed form.

What Is Form 8879?

Form 8879 (IRS e-file Signature Authorization) - The form taxpayers sign to authorize the ERO to electronically sign and transmit their tax return. This form replaces the physical signature that would appear on a paper Form 1040.

Key Concept: When you e-file, the taxpayer doesn't actually sign the 1040 itself. Instead, they sign Form 8879, which gives the ERO permission to apply an electronic signature on their behalf.

The Three Critical Rules for Form 8879

Rule #1: Signature BEFORE Transmission

The ERO cannot transmit a return to the IRS until they have a signed Form 8879 in hand (physical or digital).

Acceptable Signature Methods:

• Wet Signature: Taxpayer signs a physical copy of Form 8879 in ink.
• Electronic Signature: Taxpayer signs using an IRS-approved e-signature platform (must meet security standards).
• Faxed Signature: A faxed copy of a signed Form 8879 is acceptable (as long as the original is retained).

Unacceptable Signature Methods:

• Verbal Authorization: "Yes, you can file my return" over the phone is NOT sufficient.
• Email Without Signature: An email saying "go ahead and file" without a signed 8879 attached is NOT sufficient.
• Pre-Signed Blank Forms: Having clients sign blank forms "for future use" is prohibited.

Exam Trap: Students often think verbal approval is enough. It's not. The form must be signed.

Rule #2: No Alterations Without a New Signature

If the return changes materially after the taxpayer signs Form 8879, a new form must be signed.

Material Changes (Require New Form):

• Tax Due/Refund Changes > $50: If the refund increases from $1,000 to $1,100, a new form is required.
• Withholding Changes > $14: If you discover an additional W-2 that adds $20 of withholding, a new form is required.
• Changes to Personal Information: If you correct the taxpayer's SSN or address after signing, a new form is required.

Immaterial Changes (No New Form Required):

• Tax Due/Refund Changes ≤ $50: Correcting a $30 error doesn't trigger a new form.
• Withholding Changes ≤ $14: Adding $10 of withholding doesn't trigger a new form.
• Math or calculation errors that don't change the refund/tax due by more than $50.

Rule #3: Retention for 3 Years

The ERO must retain the signed Form 8879 for 3 years from the later of:

• The return due date (e.g., April 15, 2025 for a 2024 return).
• The actual filing date (if filed late).

Example:

• 2024 return filed on April 15, 2025 → Retain until April 15, 2028.
• 2024 return filed on October 15, 2025 (on extension) → Retain until October 15, 2028.

Form 8879 Rules Summary

On the Exam

Expect 2-3 questions on Form 8879, typically:

1. Timing Questions: "Can an ERO transmit a return before receiving Form 8879?"
2. Material Change Questions: "The refund increases by $60 after the client signs 8879. What must the ERO do?"
3. Retention Questions: "How long must an ERO keep Form 8879?"

The key is to remember: Sign BEFORE transmission, new form if >$50 or >$14, retain for 3 years.