WASHINGTON – Moving to protect business taxpayers from identity theft, the Internal Revenue Service announced that starting Dec. 13 it will begin masking sensitive data on business tax transcripts.
The announcement provides 30 days for stakeholders to make any adjustments. The IRS began informing tax professionals of this change during the summer Nationwide Tax Forums. The agency previously masked sensitive data on individual tax transcripts two years ago.
A tax transcript is a summary of a tax return. Transcripts are often used by tax professionals to prepare prior year tax returns or represent the client before the IRS. Lenders and others use tax transcripts for income verification purposes.
Here’s what is visible on the new tax transcript:
- Last four digits of any Employer Identification Number listed on the transcript: XX-XXX1234
- Last four digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
- Last four digits of any account or telephone number
- First four characters of the first, and 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 six characters of the street address, including spaces
- All money amounts, including wage and income, balance due, interest and penalties
Customer File Number and Form 4506-T
Because the full Social Security number no longer is visible, the IRS has created an entry for a Customer File Number. This is an optional 10-digit number that can be created usually by third-parties that allow them to match a transcript to a taxpayer. The Customer File Number field will appear on the transcript when that number is entered on Line 5 of Form 4506-T, Request for Transcript of Tax Return and Form 4506T-EZ.
Here’s how it would work for a taxpayer seeking to verify income for a lender: The lender will assign a 10-digit number, for example, a loan number, to the Form 4506-T. The Form 4506-T may be signed and submitted by the taxpayer or signed by the taxpayer and submitted by the lender. The Customer File Number assigned by the requestor on the Form 4506-T will populate on the transcript. The requestor may assign any number except the taxpayer’s Social Security number. Once received by the requester, the transcript’s Customer File Number serves as the tracking number to match it to the taxpayer.
Get Transcript (Taxpayers) and the Customer File Number
Only individual taxpayers may use Get Transcript Online or Get Transcript by Mail. Many taxpayers use this service to satisfy requests for income verification. The Customer File Number is available for Get Transcript users. Taxpayers can manually enter a Customer File Number assigned to them, for example, by a lender or college financial office. That Customer File Number will display on the transcript either when it is downloaded or when it is mailed to the taxpayer.
More information about the masking of transcripts can be found at IRS.gov’s e-Services page after Dec. 13.