Digital Signature: Understanding Digital Tax Agreements

Imagine finding an agreement you signed several years ago.

You open it. You see your name.

But it doesn't look like the handwritten signature you're used to seeing.

"Did I actually sign this?"

It's a question tax professionals hear more often than you might expect.

Because the way people sign documents has changed dramatically.

Signing doesn't always mean picking up a pen

Today, many agreements are completed electronically. Instead of printing a contract, signing it with a pen, scanning it, and emailing it back, a person can review a document online and sign electronically.

For tax and accounting services, this makes the process faster and easier to track.

But an electronic agreement isn't necessarily just a name typed into a box. A properly configured digital signing process can create an audit trail showing information associated with the signing event.

What can a digital signing record show?

Depending on the platform and signing process used, records can contain information such as:

• The email address associated with the signing process.

• The date and time of signing

• The IP address associated with the signing event

• A digital certificate or signing certificate

• The document that was signed

• Information showing the signing sequence or audit trail

That additional information is important because, more than a digital signature on a screen, the surrounding signing record can provide context.

Why this matters with older tax agreements

Imagine someone signed an agreement several years ago. Today, they may remember receiving an email but not remember exactly what they clicked.

That's understandable. People sign dozens of documents every year.

But when a question arises later, the relevant information isn't simply what the signature looks like. The agreement itself and the associated signing records are important.

That's why clients should keep copies of documents they sign.

Electronic signatures and tax documents

The CRA has processes that allow electronic signatures on certain documents, subject to the applicable requirements.

However, not every electronic signature on a document is automatically valid. Details like the signing method, the document, the applicable requirements, and the circumstances surrounding the agreement all matter.

For that reason, we at Canada Tax Review maintain appropriate records of the digital agreements our clients sign electronically.

Your best protection is understanding what you signed

Whether you are signing a tax-review agreement, an accounting engagement letter, or another professional-services contract, take a moment to read it.

Look at:

What service am I agreeing to?

How is the service paid for?

What happens if I cancel?

What happens after an application is submitted?

What authorization am I providing?

These questions can prevent confusion later. And if you don't understand something before signing, ask.

The takeaway

A digital signature may look different from the handwritten signature you're familiar with.

That doesn't mean the signing process has no records behind it.

When an agreement is signed electronically, the document and its associated signing information should be considered together.

Most importantly, read the agreement before signing and keep a copy afterward.

The next question is often the one people care about most:

"How much is this service actually going to cost me?"

That's the subject of the next story.

Continue reading: How Tax Review Fees Work: Understanding Flat Fees vs. Refund-Based Fees