Tax Edge

By Robert Steere, Toolkit Staff Writer

Have you ever been told that you must provide federal tax return information while in the midst of a financial transaction? When trying to obtain a new home mortgage or refinance your current mortgage, or obtain a loan for your small business, have you been told that, in order to obtain approval, you must provide federal tax return information? It happens all the time, and the information is not always right at hand.

To aid taxpayers who are faced with such demands, the Internal Revenue Service has issued a new form with which you can request your own tax return information. It is intended to simplify and expedite the process. Taxpayers can now use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order any Form 1040 series tax return transcript free of charge.

One reason for the new form is to aid the processing of mortgage applications under the Home Affordable Modification Program as part of the Making Home Affordable Program. The new form will make it simpler for homeowners who are trying to modify or refinance their mortgages to order copies of their tax return transcripts.

A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.

Form 4506T-EZ is a streamlined version of the Form 4506T, Request for Transcript of Tax Return. The Form 4506T-EZ is only for individuals who filed a Form 1040 series return. Businesses, partnerships and individuals who need transcript information from other forms must still use the Form 4506T.

Transcripts ordered using Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields, especially the requested years, before signing and dating the form.

Taxpayers can obtain Form 4506T-EZ at the IRS website. It is a fillable form so people can complete the form online and print a copy. They can mail it or fax it to the addresses and numbers listed in the instructions. It generally takes 10 days to process the request.

Taxpayers are always wise to retain copies of their original tax returns in a safe, secure place. If your originals have been lost or destroyed, or if you want confirmation that the information on your originals is consistent with the information in the IRS electronic records, you can use either Form 4506T or 4506T-EZ to obtain transcripts to use as replacement records or to compare with your originals. If you need to order an exact copy of a tax return from the IRS, you can do it by filing Form 4506, Request for Copy of Tax Return, but each copy costs $57 and can take 60 days to process.

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Posted October 23, 2009.