Want to improve the IRS? SPEAK UP
By Andrea Price, TAP member representing Ohio
The Truth Contributor
The Taxpayer Advocacy Panel comprises civic-minded citizen volunteers from all walks of life representing each state, D.C., Puerto Rico, and an international member (citizens living, working, or doing business abroad). TAP is a Federal Advisory Committee whose mission is to listen to taxpayers, identify taxpayers’ issues, and make suggestions for improving the IRS service and customer satisfaction.
Everyone has something to say about taxes and the IRS. Please take a moment to give us your suggestions for TAP to consider by contacting one of the following:
TAP Ohio member: firstname.lastname@example.org
Call toll-free at:1-888-912-1227
National Taxpayer Advocate Erin M. Collins Blog-Decoding IRS Transcripts and the New Transcripts Format, October 5-6, 2021
Many individuals may not know they can request, receive, and review their tax records via a tax transcript from the IRS at no charge. Transcripts are often used to validate income and tax filing status for mortgage applications, student loans, social services, and small business loan applications and for responding to an IRS notice, filing an amended return, or obtaining a lien release. Transcripts can also be useful to taxpayers when preparing and filing tax returns by verifying estimated tax payments, Advance Child Tax Credits, Economic Income Payments/stimulus payments, and/or an overpayment from a prior year’s return.
The IRS maintains records for all taxpayers – individuals, businesses, and other entities – and provides five types of transcripts. A requested transcript may provide information regarding the date the IRS received a return; payment history including refunds, transfers between tax years and overpayment credits; due balance amounts; interest assessed; refundable credits allowed; basic examination information; and Forms W-2 or 1099 information.
Taxpayers may be able to get answers to their questions quickly and efficiently by requesting and reviewing their transcript – that is if they can decipher them. Taxpayers (and tax professionals with a properly executed Form 2848, Power of Attorney, or Form 8821, Tax Information Authorization) can request a transcript online through the IRS’s Get Transcript Online portal or their online account; by mail; or by calling the IRS’s automated phone transcript service at 800-908-9946. With difficulty reaching the IRS by phone or correspondence during the last two filing seasons, using the portal or online account may be more efficient than calling the IRS due to long wait times, the potential inability to speak with an available customer service representative or the length of time for the IRS to respond to a mailed transcript request. The IRS’s Get Transcript page is available in five languages, and the online application is also available in Spanish.
What Transcript Should Taxpayers Ask For?
There are several types of transcripts that can meet a taxpayer’s needs.
- Tax Return Transcript: This shows most items reflected on a taxpayer’s original tax return, including adjusted gross income and accompanying forms and schedules for the current year and three prior years. Lending institutions will often accept this transcript for student loan or mortgage purposes. Note:the secondary spouse on a joint return must use Get Transcript Online or Form 4506-T to request this transcript type. When using Get Transcript by Mail or phone, the primary taxpayer on the return must make the request.
- Wage and Income Transcript: This provides data from the third-party information statements the IRS has received for a specific taxpayer, such as Forms W-2, 1099, 1098, or 5498, and can be useful if the taxpayer did not receive or retain a copy of these documents. Wage and Income Transcripts are available for up to ten years. While the Wage and Income transcript provides federal withholding amounts, it does not reflect state tax withholdings, which may limit its use when preparing state income tax returns.
- Tax Account Transcript: This provides basic tax return data (marital status, adjusted gross income, taxable income) along with listing the activity on a tax account, such as tax adjustments, payments, etc., for the current year and up to ten prior years using Get Transcript Online. When using Get Transcript by Mail or phone, taxpayers are limited to the current tax year and returns processed during the prior three years.
- Record of Account Transcript: This is the most comprehensive transcript. It combines the Tax Return Transcript and the Tax Account Transcript to provide a more complete picture of a taxpayer’s tax return and subsequent account activity for the current year and for returns processed in the three prior years.
- Verification of Non-Filing Letter: This provides proof that the IRS has no record of a filed Form 1040-series tax return for the year requested. However, it doesn’t indicate whether a taxpayer was required to file a return for that year. This letter is available after June 15 for the current tax year or any time for the prior three tax years using Get Transcript Online.
New Tax Transcript Format
In July 2021, IRS updated a webpage on IRS.gov to educate taxpayers regarding the new transcript format and use of the “customer file number,” which was designed to better protect taxpayer data. This new format partially masks personally identifiable information. However, financial data will remain visible to allow for tax return preparation, tax representation, or income verification. These changes apply to transcripts for both individual and business taxpayers.
Here’s what is visible on the new tax transcript format:
- Last four digits of any Social Security number on the transcript: XXX-XX-1234;
- Last four digits of any Employer Identification Number on the transcript: XX-XXX1234;
- Last four digits of any account or telephone number;
- First four characters of the first name and first four characters of the last name for any individual (first three characters if the name has only four letters);
- First four characters of any name on the business name line (first three characters if the name has only four letters);
- First six characters of the street address, including spaces; and
- All money amounts, including wage and income, balance due, interest, and penalties.
For security reasons, the IRS no longer offers fax service for most transcript types to both taxpayers and third parties and has stopped its third-party mailing service via Forms 4506, 4506-T, and 4506T-EZ.