IRS Tax Transcript Retrieval Methods

Report
I Need IRS Tax Transcripts NOW:
Tips and Tricks of IRS Tax Transcript Retrieval
December 2012
Presented by Maria Kirgan
Senior Director of Customer Happiness &
Product Management
Content
I.
Verification Requirements
II. IRS Data Retrieval Tool
III. IRS Tax Transcript Retrieval Methods
IV. IRS Tax Transcripts
V. Veri-Tax: Your Tax Transcript Retrieval Partner
2
Department of Education 2012-2013 Financial Aid Changes
Publication Date: February 23, 2011
Subject: Enhancements to the FAFSA-IRS Data Retrieval Process
Dear Colleague Letter GEN-11-03
Since most applicants can quickly and easily access IRS data through the FAFSA-IRS Data
Retrieval process, we no longer consider it reasonable for an institution to accept anything less
reliable than direct IRS-supplied evidence for verification of income data. Therefore, if an
applicant selected for verification has not successfully transferred information from the IRS, or
one who did transfer the information but changed it, the ED expects the institution to require
the applicant, and if necessary the applicant's parents, to provide an official IRS transcript of
their federal income tax information.
The Department of Education requires students to submit IRS income data in
order to be qualified for Title IV financial aid.
Students and educational institutions have multiple options on how to
retrieve the required tax transcripts.
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IRS Data Retrieval Tool
4
IRS Data Retrieval Tool
•
The IRS Data Retrieval Tool allows students and parents to access the IRS tax return
information needed to complete the Free Application for Federal Student Aid (FAFSA).
Students and parents may transfer the data directly into their FAFSA.
•
If you do not use the IRS Data Retrieval Tool to provide tax information, you may be
required to obtain an official tax transcript from the IRS.
•
Who can use the IRS Data Retrieval tool?
o Applicants who are completing an initial FAFSA, completing a renewal FAFSA, or
making corrections to their initial FAFSA
o Student applicants or parents who:
• Have a valid Social Security Number
• Have a valid Federal Student Aid Personal Identification Number (PIN)
• Have completed and filed a 2011 Federal Tax Return
This is the easiest way to retrieve tax data and should be attempted to use by
all students and parents.
5
Using the IRS Data Retrieval Tool
FAFSA will direct a student to retrieve tax information directly from the IRS using the DRT.
DRT screening questions:
• Tax filing status Married filed separately
• Tax filing status is Head of Household
• Amended taxes filed
• Foreign tax returns
• Recently filed taxes
If a box is checked, other than “None of
the above”, the student/parent is not
eligible to transfer information from the
IRS DRT.
A tax transcript will be required for
“Financial Information” verification.
Update: Amended Tax Returns require a
signed copy of the relevant tax return
AND a signed copy of the 1040X that
was filed with the IRS.
6
2013-14 Enhancements to IRS Data Retrieval Tool
Preview!! Enhanced IRS DRT Questions for 2013-14!
FSA Fall Conference Session 26. (November 2012). FAFSA & Application Processing Update.
Presented by Misty Parkinson and Jody Sears, U.S. Department of Education
7
IRS DRT
Cannot retrieve data if
address is entered incorrectly.
• Must be the same
address on 2011 1040.
• Incorrect address
abbreviations (st., apt.,
unit, ave., etc.) will not
successfully retrieve tax
data.
Ineligible to use DRT if:
• Marital status changed
after 12/31/2011
• Student did not apply
using FAFSA On The Web
• Did not file 2011 taxes
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Transfer data from DRT to FAFSA
9
2012-13 IRS DRT Request Flags
Any ISIR Request Flag Value other than ’02’ requires additional documentation
• ISIR code ‘02’ means the tax data was successfully retrieved by the DRT, transferred to
FAFSA, and was not changed by the user
• All other codes may require verification
10
Acceptable Documentation Update for 2012-13
Update November 2, 2012
For the remainder of the 2012-2013 award year, the alternative documentation is
acceptable in instances where the tax filer had attempted to request an IRS Tax Return
Transcript but was unsuccessful.
Alternative Documentation:
• A signed copy of the 2011 IRS tax return
And
• A signed copy of the IRS response stating the requests was unsuccessful
o Mailed letter from IRS
o Printed screenshot
And
• A signed IRS Form 4506T-EZ or IRS Form 4506-T
• If the institution has reason to believe that the information provided on the signed
copy of the paper tax return may not be accurate, it must, send the IRS Form 4506-T
to the IRS and wait for the IRS of the Tax Return Transcript or the IRS notification
that a transcript is not available for that tax filer.
Update Posted Date: November 2, 2012
Author: David A. Bergeron, Acting Assistant Secretary for Postsecondary Education
Subject: Acceptable Documentation Update for 2012-2013 Award Year Verification
11
Identify Theft Verification Documentation
To complete verification for victims of identity theft submit:
•
Signed copy of IRS income tax return
AND One of the following:
• IRS Form 14039, “Identity Theft Affidavit”
• Signed, dated statement indicating victim of identity theft and IRS is investigating
• Copy of the police report filed by the tax filer
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IRS Tax Transcript Retrieval Methods
13
Tax Transcripts Retrieval Methods
Tax Transcript Delivery
Transcript
Ordering Methods
Deliverable
Delivered
Turnaround
Time
Delivered Directly
to Third Party
Online
www.irs.gov
Paper
Mailed
5-10 days*
No
Telephone
Paper
Mailed
5-10 days*
No
IRS Form
4506T-EZ
Paper
Mailed
5-10 days*
Yes
Electronic
Online Portal
1-2 days
Yes
Veri-Tax through
IRS Form 4506T/EZ
*A paper copy of the IRS tax transcript should arrive in the mail within five to ten days from the date
the IRS receives the request
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Method 1: Online www.IRS.gov
15
Method 1: Online www.IRS.gov
• IRS mails transcripts back to the address on file
• If the IRS cannot process the transcript request,
a notification is not usually sent to the student
• Account Transcript and Return Transcript are
the only transcripts that can be ordered though
this method
16
Method 2: Phone Requests
• Students can call the IRS and request a
transcript be mailed back to them
• IRS offices have stopped faxing transcripts
through phone requests
• The IRS has become inundated with phone
requests and has asked that students do not
order by phone
• Students and Financial Aid offices have spent
hours on hold trying to get transcripts
17
Method 3: Form 4506T-EZ vs. Form 4506-T
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Form 4506-T
Name and
SSN
Address on
file with the
IRS
Address of
third party
recipient
999 Broadway Blvd. Los Angeles, CA 90001
Common reasons for rejection:
• Address is not the one on file with the IRS
• Unreadable/illegible text
Tips:
• Enter multiple addresses on line 4
• Use 2011 tax return address
474 Central Ave. Portland, OR 90098
19
4506-T
Enter 1040
Check
transcript
type
Common reasons for rejection:
• Line 6 is not completed
• A box is not checked
Tips:
• Check Record of Account (Box C) which includes both Return Transcript (Box A) and
Account Transcript (Box B) information, as well as amended tax data
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4506-T
Enter tax
year(s)
requested*
Taxpayer’s
signature
Date
*2011 transcript not available for 3-5 weeks after e-filing and 6-8 weeks after filing by
mail. If requested prematurely, “No Record of Return Found” will be returned.
Common reasons for rejection:
• Missing year, signature, or date
• Signature date expires after 120 days
• Signature is unreadable
Tip:
• Very important that the signature is legible. The name must be identifiable.
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IRS Tax Transcripts
22
2012-13 Required Verification Items
Tax Filer
Non-Tax Filer
• Household size
• Number in college
• Child support paid
• Food Stamps
• Household size
• Number in college
• Child support paid
• Food Stamps
• Additional FAFSA required
verification items:
• Adjusted gross income
• Federal income taxes paid
• Untaxed IRA distributions
• Untaxed pensions
• Education credits
• IRA deductions
• Tax exempt interest
income
• Additional FAFSA required
verification items:
• Income earned from work
23
2013-14 Verification Tracking Flag Groups
UPDATE for 2013-14
•
Income Verification required for flags V1 and V5
Verification
Tracking Flag
Verification Trackinig Group
Verification Description
V1
Standard Verification
Record selected because conditions based on
statistical analysis error-prone risk model were met
V2
SNAP Verification
Record selected for a receipt of SNAP criteria only
V3
Child Support Paid Verification
Record selected for Child Support Paid criteria
V4
Custom Verification Group
Record selected for Identity criteria only
V5
Aggregate Verification Group
Record selected for Identity criteria and "Standard
Verification" criteria
FSA Fall Conference Session 26. (November 2012). FAFSA & Application Processing Update.
Presented by Misty Parkinson and Jody Sears, U.S. Department of Education
24
Transcripts
Return Transcript (Box A)
Record of Account (Box C)
25
Line Items
2012–2013 FAFSA
Information Requiring
Verification
2012–2013 FAFSA Verification-IRS Tax Return Transcript Matrix (Revised March 16, 2012)
2012–2013
2012–2013 ISIR
FAFSA Q#
Field#
(Student and
(Student and
2011 IRS 1040 2011 IRS 1040A 2011 IRS 1040EZ
Parent)
Parent)
2011 IRS Tax Return Transcript Item
Line #
Line #
Line #
Adjusted Gross Income
35 and 83
42 and 106
37
21
4
43 and 107
Adjusted Gross Income Per Computer
For IRS Form 1040 Transcripts:
—Income Tax After Credits Per Computer
For IRS Form 1040A Transcripts:
—Total Tax Liability TP Figures Per
Computer
For IRS Form 1040EZ Transcripts:
—Total Tax Liability TP Figures Per
Computer
Income Tax Paid
36 and 84
55
35
10
Education Credits
43a and 91a
50 and 114
Education Credit Per Computer
49
31
N/A
IRA Deductions and
Payments
44b and 92b
57 and 121
KEOGH/SEP Contribution Deduction +
IRA Deduction Per Computer
28 + 32
17
N/A
Tax Exempt Interest
Income
44d and 92d
59 and 123
Tax-Exempt Interest
8b
8b
N/A
Untaxed Portions of IRA
Distributions
44e and 92e
60 and 124
Total IRA Distributions – Taxable IRA
Distributions
15a – 15b
11a – 11b
N/A
Untaxed Portions of
Pensions
44f and 92f
61 and 125
Total Pensions and Annuities – Taxable
Pension/Annuity Amount
16a – 16b
12a – 12b
N/A
Posted Date: March 16, 2012
Subject: Revised 2012-2013 FAFSA Verification - IRS Tax Return Transcript Matrix
Author: Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid
26
Method 4
Veri-Tax:
Your Tax Transcript Retrieval Partner
27
Who is Veri-Tax?
• In 1999, Veri-Tax pioneered the electronic delivery of IRS tax transcripts for the
mortgage, lending, and credit card industries.
• Veri-Tax currently processes more than 350,000 tax transcripts per month.
• Veri-Tax is certified with the highest security standards available (SAS70/SSAE 16
Type II).
Veri-Tax offers a full suite of products including:
• Form 4506-T Processing/ Tax Transcript Retrieval
• SSN Verifications
• Mortgage Fraud Reports
• Employment Verifications
• Flood Zone Determinations
• Bankruptcy Reports
28
Veri-Tax’s IRS Tax Transcript Retrieval
• Veri-Tax is a disinterested third party acting as the middle entity between the
financial aid office and the IRS
• Veri-Tax submits 4506-Ts and retrieves transcripts quickly through a customized
electronic delivery and retrieval method with the IRS
• Veri-Tax has over 13 years of experience working with the IRS, and interfaces
regularly with them to stay informed of the ever-changing tax transcript request
process. The IRS keeps Veri-Tax informed of their scheduled downtime and system
maintenance disruptions before they occur.
• Veri-Tax typically completes the entire tax transcript retrieval process within
24 - 48 hours
Taxpayer
signs
4506-T
Submits
form to
VT
Creates
summary
& returns
transcripts
QC form
& sends
to IRS
Returns
transcripts
29
Online Ordering Portal
• No software needed
• Form 4506-T generation
• Multiple user authorization
levels
• Multiple locations can be set
up under one account
• Online tracking and reporting
• 24-48 hour turnaround time
30
Online Ordering Portal
• Generate a pre-populated 4506-T
for the student/parent to sign
• Or upload a signed 4506-T
• Track the status of
each order by order number,
reference number (student ID),
or SSN
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Generated 4506-T
32
Veri-Tax’s Quality Control Process
• Veri-Tax notifies you within 30 minutes when an order is incomplete, completed
incorrectly, or has other issues before the 4506-T is sent to the IRS.
• Users can make the necessary changes, and resubmit the Form 4506-T at no cost!
• Some reasons for rejection include:
ILLEGIBLE FORM
ADDRESS MISSING
SIGNATURE DATE
MISSING
SIGNATURE DATE
EXPIRED
MISSING SIGNATURE
INCOMPLETE
MISSING SSN
INVALID TAX PERIOD
INVALID DATE
REQUESTED
Information on the 4506-T - name, address, SSN - is not readable and your request cannot be
sent to the IRS.
Address information on the 4506-T is missing. Please ensure that the street address is
complete, including city, state and zip code.
Signature date on the 4506-T is missing.
Signature date on the 4506-T has expired. The IRS requires the form to be dated within the
last 120 days. The form may not be postdated.
Signature on the 4506-T is missing. The IRS requires that at least one of the parties listed on
lines 1 and/or 2 sign the form.
Form 4506-T is incomplete. Please check lines 6-9 on the form for missing information.
SSN information is not included in box 1b of the 4506-T.
2011 income data (Box 8: W-2, 1099, 1098, or 5498) is not expected to be available until July
2012. Any requests for 2011 income data will NOT be processed by the IRS.
Invalid tax periods requested. Tax periods must be year end of 12/31.
33
Online Ordering Portal
34
Online Order Details
35
Summary Sheet
• Summary sheet includes
taxpayer/student
information and custom
reference number
• Highlights FAFSA
required verification line
items
• Multiple years shown on
one table for crossover
student requests
• Can be customized for
each school’s
verification process
36
Veri-Tax’s Features and Benefits
Features
Benefits
Online ordering and IRS interface allows for
electronic delivery of official IRS tax
transcripts
Improves efficiency, no waiting on hold with
the IRS, and transcripts are retrieved within
24-48 hours
Easy online order tracking
Financial Aid offices can check transcript
statuses and easily associate retrieved
transcripts with a student’s file
Official IRS income tax data delivered
directly to Veri-Tax’s secure platform for the
financial aid office’s retrieval
Avoids the tampering of tax data by
fraudulent taxpayers for accurate income
verification
Custom tax transcript summary sheet
highlights verification line items
Saves time calculating income verification
worksheet, searching for the correct tax
transcript line items, and reduces error rates
Thorough Quality Control process detects
many issues before sending 4506-T to the
IRS
Reduces customers’ IRS rejection rate by 50%
Customer support team is reached at 800
number - No phone tree!
Veri-Tax’s customers’ needs are put first.
Direct access to customer support to answer
processing questions immediately
Customer Happiness is top priority!
37
E-Signatures Coming Soon!!
The IRS will begin allowing electronic signatures on the 4506-T beginning January 7, 2013!
• Two e-signature options:
• Option 1: Use e-signatures through Veri-Tax’s Veri-Sign solution
• Option 2: Use your existing e-sign vendor
• *Must be approved as an authorized vendor by Veri-Tax
• Both options Do NOT need the student to print out, sign, and fax/email the forms back
to the school.
• Once a financial aid officer creates the tax transcript request order in Veri-Tax’s online
portal, the student will be sent an email notification to e-sign the 4506-T. Once signed,
the IRS will complete the order in 24-48 hours.
• E-sign helps streamline the verification process
for both you and your students!
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Summary: Transcript Retrieval Options
Step 1
IRS Data Retrieval Tool
Student uses IRS Data Retrieval
Tool through FAFSA on the Web to
retrieve income data.
Ineligible to use tool if:
• Married filing separately
• Marital status changed after
12/31/2011
• Tax filing status is Head of
Household
• An amended tax return is filed
• IRS Data was not transferred to
FAFSA
• Student used paper FAFSA
• Address is entered incorrectly
Step 2
(If ineligible to use DRT or flagged for verification)
Option A: IRS Direct
Student or school requests
transcripts from IRS directly by
Phone or online.
• Ideally a 5-10 day turnaround
time
• No control of the process
• No tracking ability
• Paper transcript
• No customer service
• No reasons given for rejecting
order
Option B: Third Party
School requests IRS transcripts via
Veri-Tax.
• 24-48 hours turnaround time
• Online order submission and
tracking
• Quick and easy implementation
• Summary sheet
• No long term contracts
• Customer Happiness Team
assists in fixing rejected 4506T’s for no cost!
39
Questions?
Maria Kirgan
Senior Director of Customer Happiness
& Product Management
(949) 783-2160
[email protected]
Mathew Hastings
Senior Account Executive
Specializing in Customer Happiness
(949) 783-2123
[email protected]
30 Executive Park, Suite 200
Irvine, CA 92614
Customer Happiness Team: (800) 969-5100
Website: www.veri-tax.com/verification
Email: [email protected]
40

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