I Need IRS Tax Transcripts NOW: Tips and Tricks of IRS Tax Transcript

RetrievalDecember 2012

Presented by Maria KirganSenior Director of Customer Happiness & Product Management

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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

Department of Education 2012-2013 Financial Aid Changes

Publication Date: February 23, 2011Subject: Enhancements to the FAFSA-IRS Data Retrieval ProcessDear 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.

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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

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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 FAFSAo 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.

Using the IRS Data Retrieval Tool

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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.

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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

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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

2012-13 IRS DRT Request Flags

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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

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Acceptable Documentation Update for 2012-13

Update November 2, 2012For 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 IRSo 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, 2012Author: David A. Bergeron, Acting Assistant Secretary for Postsecondary EducationSubject: Acceptable Documentation Update for 2012-2013 Award Year Verification

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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

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Tax Transcripts Retrieval Methods

Transcript Ordering Methods

Tax Transcript Delivery

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

Veri-Tax through IRS Form 4506T/EZ Electronic Online Portal 1-2 days Yes

*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

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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

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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

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Method 3: Form 4506T-EZ vs. Form 4506-T

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Form 4506-T

Name and SSN

Address on file with the

IRSAddress of third party recipient

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

999 Broadway Blvd. Los Angeles, CA 90001 474 Central Ave. Portland, OR 90098

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4506-T

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

Enter 1040

Check transcript

type

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4506-T

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.

Taxpayer’s signature

Enter tax year(s)

requested*

*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.

Date

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IRS Tax Transcripts

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2012-13 Required Verification Items

Tax Filer•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

Non-Tax Filer

•Household size•Number in college•Child support paid•Food Stamps•Additional FAFSA required verification items:•Income earned from work

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2013-14 Verification Tracking Flag Groups

UPDATE for 2013-14

• Income Verification required for flags V1 and V5

FSA Fall Conference Session 26. (November 2012). FAFSA & Application Processing Update. Presented by Misty Parkinson and Jody Sears, U.S. Department of Education

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

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Transcripts

Return Transcript (Box A) Record of Account (Box C)

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Line Items

Posted Date: March 16, 2012Subject: Revised 2012-2013 FAFSA Verification - IRS Tax Return Transcript MatrixAuthor: Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid

2012–2013 FAFSA Verification-IRS Tax Return Transcript Matrix (Revised March 16, 2012)

2012–2013 FAFSA Information Requiring

Verification

2012–2013 FAFSA Q#

(Student and Parent)

2012–2013 ISIR Field#

(Student and Parent) 2011 IRS Tax Return Transcript Item

2011 IRS 1040 Line #

2011 IRS 1040A Line #

2011 IRS 1040EZ Line #

Adjusted Gross Income 35 and 83 42 and 106 Adjusted Gross Income Per Computer 37 21 4

Income Tax Paid 36 and 84 43 and 107

For IRS Form 1040 Transcripts:—Income Tax After Credits Per ComputerFor IRS Form 1040A Transcripts:—Total Tax Liability TP Figures Per ComputerFor IRS Form 1040EZ Transcripts:—Total Tax Liability TP Figures Per Computer

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

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Veri-Tax:Your Tax Transcript Retrieval Partner

Method 4

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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

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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

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Taxpayer signs

4506-T

Submits form to

VT

Returns transcripts

QC form & sends

to IRS

Creates summary & returns transcripts

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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

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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

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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 Information on the 4506-T - name, address, SSN - is not readable and your request cannot be sent to the IRS.

ADDRESS MISSING Address information on the 4506-T is missing. Please ensure that the street address is complete, including city, state and zip code.

SIGNATURE DATE MISSING Signature date on the 4506-T is missing.

SIGNATURE DATE EXPIRED

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.

MISSING SIGNATURE 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.

INCOMPLETE Form 4506-T is incomplete. Please check lines 6-9 on the form for missing information.MISSING SSN SSN information is not included in box 1b of the 4506-T.

INVALID TAX PERIOD 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 DATE REQUESTED Invalid tax periods requested. Tax periods must be year end of 12/31.

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Online Ordering Portal

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Online Order Details

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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

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Veri-Tax’s Features and BenefitsFeatures 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 trackingFinancial 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!

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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 Step 2 (If ineligible to use DRT or flagged for verification)

IRS Data Retrieval Tool Option A: IRS Direct Option B: Third PartyStudent uses IRS Data Retrieval Tool through FAFSA on the Web to retrieve income data.

Student or school requests transcripts from IRS directly byPhone or online.

School requests IRS transcripts via Veri-Tax.

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

• 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

• 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 4506-T’s for no cost!

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Questions?

30 Executive Park, Suite 200Irvine, CA 92614

Customer Happiness Team: (800) 969-5100Website: www.veri-tax.com/verification

Email: CustomerHappiness@veri-tax.comMathew HastingsSenior Account Executive Specializing in Customer Happiness (949) 783-2123mathew.hastings@veri-tax.com

Maria KirganSenior Director of Customer Happiness & Product Management(949) 783-2160maria.kirgan@veri-tax.com