IRS Ends Tax Transcript Fax and Third-Party Services

Jul 1, 2019 | Newsletter

IRS Ends Tax Transcript Fax and Third-Party Services

Due to ongoing efforts to protect taxpayers from identity thieves, the Internal Revenue Service no longer offers tax transcript faxing service and third-party mailing of tax returns and certain transcripts. These measures are effective June 28 and July 1, 2019 respectively, and affect individual and business transcripts.

Background

Tax transcripts are summaries of tax return information and have increasingly become a target of criminal activity. Identity thieves impersonate taxpayers or authorized third parties and use tax transcripts to file fraudulent returns for refunds. These fraudulent returns are difficult to detect because they mirror a legitimate tax return.

In September 2018, the IRS began to mask personally identifiable information for every individual and entity listed on the transcript and works with tax professionals like me to make sure that we have what we need for tax preparation and representation for our clients.

Here is what is visible on the new tax transcript:

  • Last four digits of any SSN listed on the transcript: XXX-XX-1234
  • Last four digits of any EIN listed on the transcript: XX-XXX1234
  • Last four digits of any account or telephone number.
  • First four characters of the last name for any individual (first three characters if the last name has only four letters).
  • First four characters of a business name.
  • First six characters of the street address, including spaces.
  • All money amounts, including wage and income, balance due, interest and penalties.

Faxing Service Ends June 28

Starting June 28, 2019, the IRS will stop faxing tax transcripts to both taxpayers and third parties, including tax professionals. This action affects individual and business transcripts. Several options remain, however, for obtaining a tax transcript, including using the IRS2Go app to get transcripts online or by mail. Taxpayers can also call 800-908-9946 to access an automated Get Transcript by Mail feature, or submit Form 4506-T or 4506T-EZ, Request for Transcript of Tax Return, to have a transcript mailed to the address of record.

Certain Third-party Mailings Stop July 1

Effective July 1, 2019, the IRS will no longer provide transcripts requested on Form 4506, Form 4506-T and Form 4506T-EZ to third parties. These forms are often used by lenders and others to verify income for non-tax purposes and have been amended to remove the option for mailing to a third-party. Taxpayers may continue to use these forms to obtain a copy of their tax return or a copy of their tax transcripts.

Among the largest users are colleges and universities verifying income for financial aid purposes. This change will NOT affect use of the IRS Data Retrieval Tool through the Free Application for Federal Student Aid (FAFSA) process.

Third parties who use these forms for income verification have other alternatives such as Income Verification Express Service (IVES). Taxpayers may choose to provide transcripts to requestors instead of authorizing the third party to request these transcripts from the IRS on their behalf.

Because the taxpayer’s name and Social Security number are now partially masked, the IRS also created a Customer File Number space that can be used to help third parties match transcripts to taxpayers. Third parties can assign a Customer File Number, such as a loan application number or a student identification number. The number will populate on the transcript and help match it to the client/student.

If you have any questions about tax transcripts, don’t hesitate to call.

Tax Season Cleanup: Which Records Can You Toss?

Tax Season Cleanup: Which Records Can You Toss?

If you’ve filed your 2024 tax return, you may be eager to do some spring cleaning, starting with tax-related paper and digital clutter. The documentation needed to support a tax return may include receipts, bank and investment account statements, K-1s, W-2s, and...

Payroll Fraud Threats Inside and Outside Your Company

Payroll Fraud Threats Inside and Outside Your Company

Payroll fraud schemes can be costly. According to a 2024 Association of Certified Fraud Examiners (ACFE) study, the median loss generated by payroll fraud incidents is $50,000. It’s essential to know the payroll schemes making the rounds and how to prevent them or at...

The Tax Side of Gambling

The Tax Side of Gambling

Whether you’re a casual or professional gambler, your winnings are taxable. However, the Treasury Inspector General for Tax Administration reports that gambling income is vastly underreported. Failing to report winnings accurately can lead to back taxes, interest and...

Stuck in the Middle: The Sandwich Generation

Stuck in the Middle: The Sandwich Generation

The term “sandwich generation” was coined to describe baby boomers caught between caring for their aging parents and their children. Today, it most commonly applies to Generation Xers and older Millennials. If you’re caught in the middle, it might be time for honest...