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Taxpayers can find answers to questions about private collection agencies on IRS.gov

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Taxpayers who are contacted by a private collection agency on behalf of the IRS might have questions about the program. These taxpayers can visit IRS.gov to find answers to questions they might have.

In fact, to better help these taxpayers, the IRS recently updated the private debt collection pages on IRS.gov. These updates added more information for taxpayers whose case is being handled by a collection agency.

The web pages include info such as:

  • The names and addresses of the collection agencies.
  • How the process works.
  • What a taxpayer should do after being contacted.

Here are some things taxpayers should know about the private debt collection program:

  • The law requires the IRS to use these agencies to collect certain inactive tax debts.
  • Before being contacted by a private collection agency, the taxpayer will receive two letters.
    • Notice CP40 comes from the IRS to individual taxpayers. Business taxpayers receive a Notice CP140 from the IRS. These letters tell the taxpayer their overdue account was assigned to a private collection agency.
    • An initial contact letter comes from the private collection agency. This letter has info on how the taxpayer can resolve their overdue taxes.
  • Both letters contain a taxpayer authentication number. It’s used by the collection agency to confirm the taxpayer’s identity. It’s also used by the taxpayer to verify the caller is from a legitimate collection agency.
  • Taxpayers whose debt was transferred to a private collection agency will be contacted by one of four agencies. When contacted, the taxpayer should make sure the caller is from one of the private collection agencies listed on IRS.gov.
  • The private collection agency will ask the taxpayer a series of questions to make sure they’re talking to the correct person.
  • The taxpayer will be asked to exchange portions of the taxpayer authentication number with the private collection agency. This allows the caller and the taxpayer to validate each other’s identity.

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IRS takes additional steps to protect taxpayer data; plans to end faxing and third-party mailings of certain tax transcripts

WASHINGTON — As part of its ongoing efforts to protect taxpayers from identity thieves, the Internal Revenue Service today announced it will stop its tax transcript faxing service in June and will amend the Form 4506 series to end third-party mailing of tax returns and transcripts in July.

Tax transcripts are summaries of tax return information. Transcripts have become increasingly vulnerable as criminals impersonate taxpayers or authorized third parties. Identity thieves use tax transcripts to file fraudulent returns for refunds that are difficult to detect because they mirror a legitimate tax return.

The halt to the faxing and third-party service this summer are two more steps the IRS is taking to protect taxpayer data. In September 2018, the IRS began to mask personally identifible information for every individual and entity listed on the transcript. See New Tax Transcript and Customer File Number. At that time, the IRS announced it intended to stop its faxing and third-party mailing service, and has since worked with tax professionals to assure they have what they need for tax preparation and representation.

Faxing service ends June 28

Starting June 28, 2019, the IRS will stop faxing tax transcripts to both taxpayers and third parties, including tax professionals. This action affects individual and business transcripts.

Individual taxpayers have several options to obtain a tax transcript. They may:

  • Use IRS.gov or the IRS2Go app to access Get Transcript Online; after verifying their identities, taxpayers may immediately download or print their transcript, or
  • Use IRS.gov or the IRS2Go app to access Get Transcript by Mail; transcript will be delivered within 10 days to the address of record, or
  • Call 800-908-9946 for an automated Get Transcript by Mail feature, or
  • Submit Form 4506-T or 4506T-EZ to have a transcript mailed to the address of record.Tax professionals also have several options to obtain tax transcripts necessary for tax preparation or representation as follows: 
  • Request that the IRS mail a transcript to the taxpayer’s address of record, or
  • Use e-Services’ Transcript Delivery System online to obtain masked individual transcripts and business transcripts, or
  • Obtain a masked individual transcript or a business transcript by calling the IRS, faxing authorization to the IRS assistor and the IRS assistor will place the document in the tax practitioner’s e-Services secure mailbox.
  • When needed for tax preparation purposes, tax practitioners may:
    • Obtain an unmasked wage and income transcript by calling the IRS, faxing authorization to the IRS assistor and the IRS assistor will place the document in the tax practitioner’s e-Services secure mailbox, or
    • Obtain an unmasked wage and income transcript if authorization is already on file by using e-Service’s Transcript Delivery System.

Certain third-party mailings stop July 1

Effective July 1, 2019, the IRS will no longer provide transcripts requested on Form 4506, Form 4506-T and Form 4506T-EZ to third parties, and the forms will be amended to remove the option for mailing to a third-party. These forms are often used by lenders and others to verify income for non-tax purposes. Among the largest users are colleges and universities verifying income for financial aid purposes. Tax professionals also are large volume users.

Taxpayers may continue to use these forms to obtain a copy of their tax return or obtain a copy of their tax transcripts. This change will NOT affect use of the IRS Data Retrieval Tool through the Free Application for Federal Student Aid (FAFSA) process.

Third parties who use these forms for income verification have other alternatives. The IRS offers an Income Verification Express Service (IVES) which has several hundred participants, who, with proper authorization, order transcripts. Lenders or higher education institutions can either contract with existing IVES participants or become IVES participants themselves. The tax transcript is an official IRS record. Taxpayers may choose to provide transcripts to requestors instead of authorizing the third party to request these transcrpts from the IRS on their behalf.

Tax professionals who are attorneys, Certified Public Accountants or Enrolled Agents (i.e., Circular 230 practitioners) and do not have an e-Services account may create one and, with proper authorization from clients, can access the e-Services’ Transcript Delivery System. Unenrolled tax practitioners must have an e-File application on file and be listed as delegated users to access TDS.

Customer File Number helps match transcripts

Because the taxpayer’s name and Social Security number are now partially masked, the IRS also created a Customer File Number space that can be used to help third parties match transcripts to taxpayers. Third parties can assign a Customer File Number, such as a loan application number or a student identification number. The number will populate on the transcript and help match it to the client/student. Learn more about the Customer File Number at About the New Tax Transcript and the Customer File Number

Avoid the rush: Get a tax transcript online

Avoid the rush: Get a tax transcript online

WASHINGTON — The Internal Revenue Service today reminded taxpayers who need their prior-year tax records to either complete their 2018 tax return or to validate their income can use Get Transcript Online or Get Transcript by Mail.

Taxpayers often call or visit the IRS seeking their prior-year tax transcript, which is a record of their tax return. But the days around Presidents Day mark the busiest time of the year for the IRS. Taxpayers can avoid the rush by using online options that are faster and more convenient.

It’s always a good idea to keep copies of previously-filed tax returns. That recommendation is more important this year because, for some taxpayers, certain data from the 2017 tax return – the adjusted gross income — will be required to validate their electronic signature on their 2018 tax return due April 15 for most filers. This is especially true for taxpayers who have switched tax software products this year.

Generally, for returning users, the commercial tax software product will carry over the prior-year information and make for an easy, seamless validation process. However, taxpayers using a new tax software product for the first time may be required to enter the information manually.

Here’s the way the electronic signature and signature validation work:

  • Taxpayers sign their returns electronically by creating a four-digit Personal Identification Number (PIN), also known as a Self-Select PIN. To validate that e-signature PIN, taxpayers must enter their birthdates and either their adjusted gross income from the prior-year return or the prior-year Self-Select PIN.
  • If taxpayers have kept a copy of their prior-year tax return, completing this task is easy. On the 2017 tax return, the Adjusted Gross Income (AGI) is on line 37 of Form 1040; line 21 on Form 1040-A; or line 4 on Form 1040-EZ.
  • If a copy of their 2017 tax return is not available, taxpayers may be able to obtain a copy from their previous year’s tax preparation software or previous tax preparer.
  • Taxpayers may also obtain a tax transcript online from the IRS.
    • Use Get Transcript Online to immediately view the AGI. Taxpayers must pass the Secure Access identity verification process. Select the “Tax Return Transcript” and use only the “Adjusted Gross Income” line entry.
    • Use Get Transcript by Mail or call 800-908-9946. Taxpayers who fail Secure Access and need to request a Tax Return Transcript can use the mail option.  Allow five to 10 days for delivery. Use only the “Adjusted Gross Income” line entry.

The electronic signature is the way the taxpayer acknowledges that information on the tax return is true and accurate. Validating the electronic signature by using prior-year adjusted gross income is one way the IRS, state tax agencies and the tax industry work to protect taxpayers from identity thieves.

Taxpayers who have been issued an Identity Protection (IP) PIN should enter it when prompted for an IP PIN by the software. The IP PIN will serve to verify the taxpayer’s identity. If the taxpayer has never filed a tax return before and is age 16, enter zero as the AGI.

The IRS has redesigned tax transcripts to partially mask all personally identifiable information for any person or entity on the 1040-series return. All financial entries remain fully visible. Taxpayers who need a tax transcript for income validation purposes can still use Get Transcript Online or by Mail. Review About the New Tax Transcript and the Customer File Number for more information.

As the IRS, state tax agencies and the tax industry have made progress against tax-related identity theft as part of the Security Summit effort, cybercriminals try to steal more personal information to file fraudulent tax returns. Masking personal data on tax transcripts is one way the IRS is helping to protect taxpayers from identity thieves.

Tips for taxpayers who need to reconstruct records after disaster strikes

Tips for taxpayers who need to reconstruct records after disaster strikes

After a disaster, taxpayers might need to reconstruct records. This could help them prove their losses, which may be essential for tax purposes, getting federal assistance or insurance reimbursement.

Here are several things taxpayers can do to help reconstruct or get copies of specific types of records after a disaster:

Tax Return Transcripts

  • Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov. They can also call 800-908-9946 to order them by phone.

Proof of loss

  • To establish the extent of the damage, taxpayers should take photographs or videos of affected property as soon as possible after the disaster.
  • Taxpayers can look on their mobile phone for pictures that show the property before the disaster damaged it.
  • If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was affected.
  • Taxpayers can support the valuation of property with photographs, videos, canceled checks, receipts, or other evidence.
  • If they bought items using a credit card or debit card, they should gather past statements from their credit card company or bank. If the taxpayer didn’t keep these records or they were destroyed, statements may be available online or they can contact their financial institution.

Records about property

  • Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.
  • Taxpayers who made improvements to their home should contact the contractors who did the work to see if records are available. If possible, the home owner should get statements from the contractors to verify the work and cost. They can also get written accounts from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.
  • When no other records are available, taxpayers can check the county assessor’s office for old records that might address the value of the property.
  • There are several resources that can help someone determine the current fair-market value of most cars on the road. These resources are all available online and at most libraries. They include Kelley’s Blue Book, the National Automobile Dealers Association, and Edmunds.

IRS to introduce new tax transcript to better protect taxpayer data

IRS to introduce new tax transcript to better protect taxpayer data

WASHINGTON – Moving to better protect taxpayer data, the Internal Revenue Service today announced 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.

“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.”

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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