Posted Date: October 4, 2018

Subject: IRS Announced Updated Tax Transcripts Redacting Sensitive Information

The Internal Revenue Service (IRS) recently announced changes to tax transcripts and third-party services. 

• Effective September 23, 2018, the current format of the individual tax return
  transcript(s) was replaced with an updated version that redacts sensitive personal identifying information of the tax filer.
• At the end of the current calendar year, when taxpayers or third parties call the IRS with a transcript request, the transcript will be mailed to the taxpayer’s address of record. The transcript will not be faxed on request to either the taxpayer or a third party.

These changes are part of an effort to continue to combat stolen identity refund fraud, and to protect taxpayer information.

Changes to IRS Tax Transcripts

As part of the verification process, students (and if applicable their spouses or parents) may be required to submit to institutions a copy of their income and tax information via a tax transcript. The IRS has announced that with the launch of the new tax transcripts the following information will now display:

• Last 4 digits of any SSN listed on the transcript (e.g. XXX-XX-1234)
• Last 4 digits of any EIN listed on the transcript (e.g. XXX-XX1234)
• Last 4 digits of any account or telephone number
• First 4 characters of the last name of 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

Based on our review of the changes to the IRS tax transcripts, we do not believe that the redaction of sensitive personal information will pose a significant burden for institutions in using the new tax transcripts for verification purposes. Institutions should still be able to identify and match the tax payer information on the tax transcript with the FAFSA information on file either by use of the limited redacted information provided on the tax transcript or by use of the new “Customer File Number” available on the new transcript. As a result the IRS tax transcript is still acceptable documentation for verification purposes.

Changes to IRS Forms 4506-T and 4506T-EZ

Forms 4506-T  and 4506T-EZ now provide an opportunity for the tax filer to provide a Customer File Number which is optional and available for the filer to use when using the form to request a transcript. Starting early next calendar year tax payers may also assign a Customer File Number to their tax transcript that they obtain through Get Transcript On-line and Get Transcript On-Line By Mail. Up to 10 numeric characters, such as a student identification number, can be included to better assist institutions in matching the tax transcript to the appropriate student.

In the spring of 2019 the IRS plans to remove the option for requesting third-party receipt of tax information from Form 4506-T and 4506T-EZ.  Instead, transcripts will be mailed only to the taxpayer’s address of record. Institutions still interested in receiving tax transcripts directly from the IRS may request to become participants in the IRS’ Income Verification Express Services [IVES] program by registering for e-Services on IRS.gov. 

Publication Date: 10/4/2018