The IRS launched the Get Transcript feature on its website in 2014, but only a couple of years later, the agency detected that over 225,000 accounts were exposed to cyber-attacks.
The agency’s response to the mounting number of hacks that jeopardize the safety of taxpayers’ data was the introduction of the Customer File Number, a ten-digit tracking number, and the altering of the transcript format.
Only third parties, such as lenders or tax preparers, need this number when requesting a tax account transcript, which means that businesses or individuals don’t need their Customer File Numbers to access their transcripts.
In this article, we’ll explain what IRS Customer File Number is and reveal its functionality and significance.
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Tax Transcripts And Taxpayer Data Protection
Aside from knowing when to expect your refund, IRS tax transcripts can help you obtain a personal loan or validate your income when applying for a mortgage.
The fastest way to access your Record of Account transcript is to use the Get Transcript tool on the IRS website. However, you must first create an account and go through the ID.me identity verification process before accessing an IRS transcript.
You can request the following transcript types with the Get Transcript tool:
- Tax Account Transcript
- Tax Return Transcript
- Wage and Income Transcript
- Record of Accounts Transcript
The confidential data on each transcript type will be masked if third-party requests to see them. Hence, they’ll only be able to see the information below:
- The last four digits of your SSN, EIN, phone number, or any account.
- The first four letters of your name and surname or the first three letters if your name or surname have four letters.
- The first four letters or characters of your business’ name or the first three letters if its name has just four characters.
- The first six characters of your address with spaces.
- Balance due, wage, interest, penalties, and income amounts.
The wage and income transcripts the IRS issues to third parties with the purpose of preparing a tax return containing unmasked personal information such as SSN, EIN, taxpayer’s name and address, and employer’s name and address.
The Purpose of The IRS Customer File Number
Your TIN (Taxpayer Identification Number) won’t be included on transcripts you can access with the Get Transcript tool. That’s why the IRS introduced the Customer File Number, which third parties can use to match a taxpayer with a particular transcript.
It’s important to note that the IRS doesn’t issue these numbers. Hence, only third parties, such as tax preparers or lenders, can issue it. The number can have up to ten digits, but the issuer cannot use your TIN or SSN as a Customer File Number.
Moreover, you don’t have to provide your Customer File Number to access different transcripts with the Get Transcript tool. This field is optional, and you can fill it out if you want the number to appear on your tax transcripts.
Tax preparers with access to the IRS Transcript Delivery System can add the Customer File Numbers to their clients’ transcripts. In addition, you can call 800-908-9946 if you want to add a Customer File Number issued by a third party to your transcripts.
You don’t need this number to access your IRS account or use the Get Transcript tool because the number’s function is to help lenders, tax preparers, and all other authorized third parties ensure that the transcript contains your and not someone else’s financial information.
Requesting a Tax Account Transcript
A tax preparer must file Form 2848 Power of Attorney or Form 8821 Tax Information Authorization for each client whose transcripts they want to access through the Transcript Delivery System.
Circular 230 professionals, such as attorneys, CPAs, or enrolled agents, can also use this system to view their client’s financial data. The system allows them to assign a Customer File Number to each client and add it to their transcripts.
After providing the necessary documentation, authorized tax professionals receive the requested document in a secure mailbox. The file will be available in this mailbox for a month or three days after the tax preparer views or opens it.
You can download all transcript types available through the Get Transcript tool if you don’t want to authorize a tax professional you hired to access your transcripts with TDS. Individual taxpayers can also call 800-908-9946 if they want their tax transcripts delivered by mail.
Don’t forget that the IRS no longer offers the option to receive tax transcripts via fax due to safety concerns.
Understanding Forms 4506-T, 4506-C and 4506-T-EZ
Traditional or online lenders don’t have access to the TDS. Hence, they may ask a borrower to file Form 4506-T Request for Tax Return, 4506-C, or 4506-T-EZ so that they can review their financial records.
Some companies are members of the Income Verification Express Service (IVES), which enables them to confirm borrowers’ financial information quickly. You won’t have to deal with filing these forms if you apply for a loan with a lender that participates in this project.
The IRS suspended mailing tax transcripts to third parties since July 1, 2019, which means that only taxpayers can file these forms. The agency will only mail a transcript to a taxpayer’s address on record.
Filing these forms won’t be necessary if you have access to the Get Transcript tool. Please note that you’ll have to use Form 4506-T if you want to request a transcript because Form 4506-T-EZ only allows you to request tax return information.
The Instructions sections of these forms reveal that the Customer File Number is optional and that taxpayers can use it when requesting a transcript. The IRS will print the number on the transcript’s paper version and mail it to you.
So, when you apply for a loan, the lender will issue a ten-digit number. You’ll enter this number on Line Five of Form 4506-T or a similar form, along with other required information. The IRS will process your request and print the Customer File Number on the transcript it mails to you.
You should submit the document to the lender with other documents they need to approve your loan. Please note that you’ll have to wait approximately three weeks for the transcript to arrive at your home address.
Frequently Asked Questions
The IRS doesn’t issue customer file numbers. The lender or tax preparer you authorize to access your financial information can create this number to match you with a tax transcript.
Lenders can use Income Verification Express Service to obtain tax return, Form W-2, and Form 1099 transcripts and verify a borrower’s financial records. IVES enables lenders to request transcripts with the borrower’s consent, but it’s not an alternative to Customer File Numbers.
You don’t need this number to file taxes or access different transcripts with the Get Transcript tool. This number will be added to your tax return transcript if you or an authorized third party want to use it for tracking purposes.
The IRS doesn’t offer any information regarding the maximum number of Customer File Numbers an individual taxpayer can have. In most cases, you’ll only have one Customer File Number created by a lender or a tax preparer.
The Significance of IRS Customer File Numbers For Individual Taxpayers
Customer File Numbers make tracking tax transcripts easier. They aim to help third parties connect a tax transcript to an individual taxpayer faster because their SSNs, EINs, and other data are concealed on most transcripts.
You’ll only need this number if you don’t have an online IRS account. Even then, including the number on Form 4506-T is optional, and it’s up to you to decide if you want to use it to make it easier for a lender to identify your tax transcript.
Taxpayers with access to the Get Transcript tool can download the transcripts they need to apply for a loan which is why they don’t have to include this number on their tax transcripts.
However, assigning a Customer File Number to your tax transcripts will ensure that only authorized parties can view your financial information.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
