IRS will mask business tax transcript identifying information

By Sally P. Schreiber, J.D.

The IRS announced on Friday that it is taking a step to fight identity theft for business taxpayers by masking sensitive identifying data on business tax transcripts (IR-2020-254). The rules will apply beginning Dec. 13, and the IRS is asking for suggestions on changes to the rules before that date.

Tax preparation professionals often use tax transcripts to prepare current-year returns or represent taxpayers before the IRS. Lenders also use transcripts to verify income.

The IRS explained that this is what would be visible on the new business tax transcripts:

  • Last four digits of any employer identification number listed on the transcript: XX-XXX1234;
  • Last four digits of any Social Security number or individual taxpayer identification number listed on the transcript: XXX-XX-1234;
  • Last four digits of any account or telephone number;
  • First four characters of the first and the last name for any individual (or the first three characters if the name has only four letters);
  • First four characters of any name on the business name line;
  • First six characters of the street address, including spaces; and
  • All money amounts, including wage and income, balance due, interest, and penalties.

Business tax transcripts also have space for a customer file number, an optional 10-digit number that can be created by third parties (e.g., lenders) to allow them to match a transcript to a taxpayer. The customer file number field will appear on the transcript when that number is entered on Line 5 of Form 4506-T, Request for Transcript of Tax Return, and Form 4506T-EZ, Short Form Request for Individual Tax Return Transcripts. The customer file number may be any number except the taxpayer’s Social Security number or employer identification number.

Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.

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