In October 2021, the Internal Revenue Service (“IRS”) began the process of updating the Income Verification Express Service (“IVES”) to a more modern system. To move from a manual process to a more efficient automated process, the IRS began using optical character recognition (“OCR”) software.
For form 4506-C (IVES Request for Transcript of Tax Return) submissions to be accepted by the optical reader, the form must be submitted as a “clean copy,” free of any notations or editing marks, or multiple document types. Previously, it was common practice for the 4506-C form to be completed with multiple products and tax years but have the order request only include certain marked transcripts or years.
Effective January 1, 2022, all 4506-C requests must include only the information needed for the order and be clear of editing marks. Only one transcript type will be accepted per form, and only the taxpayers and tax years needed should be included on the appropriate lines. Non-conforming orders will either be rejected by the IRS or the order will be charged for all marked items, resulting in additional fees.
One of the more significant changes comes in handling of persons filing joint tax returns. As of January 1, a 4506-C for joint tax returns should only include the name of one of the taxpayers in order to avoid duplicate fees for the second taxpayer.
Effective December 16, 2021, DocMagic will be making the following changes to the 4506-C to comply with IRS requirements:
- DocMagic will use party data to provide a separate form for each transcript type requested, with only one box checked in the corresponding line: 6A (Return Transcript), 6B (Account Transcript), 6C(Record of Account), or 7 (Form W-2, 1099, 1098 or 5498 series request).
- For data that does not separate out transcript and party information, DocMagic will be parsing out the information to complete the form.
- DocMagic will suppress more than one box being checked for 6A-6C or 7. If data for more boxes is provided, a separate copy of the 4506C form will be provide for each type of request.
- If requesting a 1040 for joint taxpayers, only one taxpayer’s form will be provided, as that is all that is required. Including both joint taxpayers will result in additional charges.
DocMagic is in communication with our LOS partners as they make updates to how data is passed for separate transcript requests, using the preferred party and transcript data.
Note, DocMagic will include all tax years being requested. Only the years needed should be included in the request, as the IRS will return all years on the request, which may result in additional fees.
For more information, click here to view the latest IRS bulletin regarding the changes. If you have any questions, please contact DocMagic's Compliance Department.
