Times are a changing, and so is the IRS Tax Transcript

Heather Borries -

Times are always changing and so is the IRS Tax Transcript. Below is the who, what, when, and why of it all.

Photo by Thought Catalog / Unsplash

Why is the IRS making the change?
The IRS announced upcoming changes to the Tax Transcript that will go into effect for individuals on September, 23rd 2018. Thankfully you have some time to familiarize yourself with the changes.

So what is changing?
The IRS realizes that criminals need information to impersonate their victims. So the IRS masking Personal Identifying Information (PII) on the transcript to make it harder for the bad guys to commit fraud. They are also adding an optional Customer Filer Number so fewer social security numbers are bouncing around in cyber space.

So what is changing?
The following data elements will be displayed on the transcript:

  1. Last 4 digits of any SSN listed on the transcript: XXX-XX-1234
  2. Last 4 digits of any EIN listed on the transcript: XX-XXX-1234
  3. Last 4 digits of any account or telephone number
  4. First 4 characters of a business name
  5. First 6 characters of the street address, including spaces

Also, the 4506T and 4506T-EZ will change on 9/23/18 to add an optional Customer File Number. The purpose of that number is to allow third parties to make a request with that number instead of a social. The IRS in turn, adds the Customer File Number to the transcript in response. It’s similar to how institutions create student ID numbers and use it in lieu of a social.

How do I know who’s transcript this is?
According to the IRS the people who need to know will know. Ok, Mr. XXXX are you Mr. Hall or Mr. Cook? So yes, it may take a moment to figure out who’s information you are looking at….but that IS the point after all. It’s harder for the bad guy now too.

What is not changing?
The new transcript will still display all income and tax information, such as the wage amounts, taxes, credits etc. There are no changes to business transcripts, only individuals. The new transcripts will be used in verification the same way they are used now.

Also, there are no changes to the IRS Data Retrieval Tool. As always, you should direct your students and their parents to use the DRT whenever possible.

References
https://www.irs.gov/newsroom/irs-to-introduce-new-tax-transcript-to-better-protect-taxpayer-data
https://www.irs.gov/individuals/about-the-new-tax-transcript-faqs