On August 22, 2018, IRS announced a new format for individual tax transcripts that will redact personally identifiable information from the Form 1040 series but retain visible financial information. Beginning September 23, 2018, the new form would become the default format available via Get Transcript Online, Get Transcript by Mail, or the Transcript Delivery System (TDS) for tax professionals. IRS also created a new Customer File Number that can substitute a taxpayer’s Social Security number. This alternative number can be used when lenders, colleges and other third parties order transcripts for non-tax purposes.

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

Also on September 23, the IRS 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. On that date, third parties or taxpayers may 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 be automatically posted and visible on the requested tax transcript, allowing the third party to match the document to the taxpayer.

The Service further proposed:

  • Halting as soon as December 2018 fax delivery of client transcripts to representatives who request transcripts over the phone; and
  • Eliminating after April 15, 2019 mailed transcript delivery to any third party.

According to IRS, once these changes go into effect, the TDS will be the only means available to enrolled agents seeking client transcripts.

In light of these new updates, NAEA President Jean Nelsen, EA expressed to IRS NAEA’s deep concerns with these proposals and skepticism of making TDS the only means for obtaining transcripts. President Nelsen has asked the IRS to reconsider its decision to redact most of the data contained in transcripts and has asked that the change in policy for providing transcripts to third parties be delayed until after the agency has provided modernized online practitioner accounts with a secure mailbox option.

In general, NAEA remains concerned about the IRS’s singular focus on providing exceptional service to the loan industry, while treating tax professionals as second-class stakeholders.  Without the existence of a strong partnership with enrolled agents and other Circular 230 professionals, we believe the agency and the federal government would be hard pressed to meet even minimum levels of customer service and enforcement.

Read NAEA’s comment letter to IRS Acting Commissioner David Kautter below:

August 23, 2018

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