The Tax Times: IRS to Introduce New Tax Transcript as of 9/23/18!

Thursday, August 23, 2018

IRS to Introduce New Tax Transcript as of 9/23/18!

On August 22, 2018, the IRS announced in IR-2018-171 that it is moving to better protect taxpayer data, in a new format for individual tax transcripts that will redact personally identifiable information from the Form 1040 series.

This new transcript replaces the previous format and will be the default format available via Get Transcript Online, Get Transcript by Mail or the Transcript Delivery System for tax professionals as of September 23. Financial entries will remain visible, which will give taxpayers and third-parties the data they need for tax preparation or income verification.

Additionally, based on stakeholder feedback, the IRS also has created a new Customer File Number that lenders, colleges and other third parties that order transcripts for non-tax purposes can use as an identifying number instead of the taxpayer’s SSN.

“We believe the change we are announcing today will better protect taxpayer data from unauthorized disclosure and theft.” said Acting IRS Commissioner David Kautter.

As the IRS has made inroads, criminals need more taxpayer details to better impersonate their victims, making the tax transcript a sought-after document. Criminals attempt to pose as taxpayers accessing their own account or as tax preparers or third parties requesting client information.

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.

As of September 23, 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 automatically will be posted and visible on the requested tax transcript, allowing the third party to match the document to the taxpayer. A Customer File Number can be, for example, a loan account number Line 5b is an optional line, intended for those third parties that request high volumes of transcripts.

There is no change in the process for students seeking income verification through Free Application for Federal Student Aid (FAFSA) or disaster victims seeking FEMA assistance. Nor will business tax transcripts change.

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