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IRS to Revamp Tax Transcript

When it comes to getting our information from the IRS now, security is king. So it only makes sense that the Internal Revenue Service is changing how it delivers the individual tax transcript to those taxpayers and tax pros who request it.

In short, the agency says it will redact, or block out, personally identifiable information from the Form 1040-series transcripts.

The New Normal

The new version of the transcript replaces the old format and will now be the default format when requests are made through Get Transcript Online or Get Transcript by Mail. Beginning September 23, it will also be the default format from the Transcript Delivery System for tax professionals.

Financial entries will be visible to give taxpayers and practitioners the data needed for tax prep or income verification.

Acting on feedback from a number of stakeholders, the IRS has also created a new Customer File Number that lenders, colleges and other third parties can use as an identifying number instead of the taxpayer’s SSN.

“Since the IRS joined in partnership with the states and tax industry in 2015, we’ve made great progress in our effort to combat stolen identity refund fraud. Our numbers are going in the right direction,” said Acting IRS Commissioner David Kautter. “To maintain our progress, we continue to evaluate our policies and procedures on an ongoing basis. One area that we identified as in need of change was the individual tax transcript area. We believe the change we are announcing today will better protect taxpayer data from unauthorized disclosure and theft.”

The following information will be provided on the new transcript:

  • Last 4 digits of any SSN listed on the transcript: XXX-XX-1234
  • Last 4 digits of any EIN listed on the transcript:  XX-XXX-1234
  • Last 4 digits of any account or telephone number
  • First 4 characters of the last name for any individual
  • First 4 characters of a business name
  • First 6 characters of the street address, including spaces
  • All money amounts, including balance due, interest and penalties

On September 23, the IRS also will post an updated Form 4506-T and Form 4506T-EZ, Request for Transcript of Tax Return, that will have a new Line 5b for a 10-digit Customer File Number. Legitimate third parties with a need for income verification or tax data often request taxpayers complete a Form 4506-T.

Third parties or taxpayers can create any 10-digit number (except for the taxpayer’s SSN) for use as an identifier. The Customer File Number listed on the 4506-T will automatically be posted and visible on the requested transcript, allowing the third party to match the document to the taxpayer.

There is, however, no change in the process for students who seek income verification using the Free Application for Federal Student Aid (FAFSA), or disaster victims who apply for FEMA assistance. Business tax transcripts will also remain unchanged.

For more details and to see a sample of the new transcript format, check out  “About the New Tax Transcript: FAQs”.

 

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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