When a person is asked to verify the income of his or her business, transcripts of tax returns may be requested from the Internal Revenue Service by completing Form 4506-T. After the IRS receives the form, the agency is required by law to fulfill the request within 48 hours. Up to four years of transcripts can be requested with a single form. For five to eight transcripts, a second form must be submitted.
Overview of Form 4506-T
Official documentation from the IRS is a common requirement when income verification for a business is needed. Copies of tax returns may actually be preferred because they contain detailed data from Schedule B through Schedule F or corporate filing information. However, when copies of returns are not acceptable, transcripts of Form 1040, 1040-A, 1040-EZ, W-2, 1098 or 1099 may be requested by completing and submitting Form 4506-T Request for Transcript of Tax Return.
Completing a Request for Transcript of Tax Return
IRS Form 4506-T can be used to request transcripts of tax returns for the previous four years. If an individual is a sole proprietor, then a single transcript for self-employment, or business, income and personal income may be requested. However, if the business is an LLC or corporation or is required to file taxes separately, then one Form 4506-T is needed for each type of income.
Form 4506-T requires only a few lines of general information beginning with name, address and Social Security number. The taxpayer then must choose which type of transcript is needed from the following options:
• Return transcript – This is the transcript for individual and business tax returns.
• Account transcript – The account transcript includes information on the financial status of the entity’s account with the IRS, including payments, penalties and adjustments.
• Record of account – This is a combination of the two reports above, and it is the most detailed transcript available.
• Verification of non-filing – This certifies that the business did not file a tax return for the year.
• Form W-2, 1099, 1098 or 5498 – These transcripts are generally not applicable to businesses, but they are available if needed.
Once the transcripts are chosen, Form 4506-T is completed with a signature, date and phone number. The signer must also verify that he or she possesses the legal authority to act as such. For partnerships, any member may sign in most circumstances. For corporations, the signer is usually an officer with binding authority, but exceptions are available.
Alternatives to Form 4506-T
While Form 4506-T is considered the most efficient way to request tax return transcripts,it is not always necessary. Alternately, taxpayers may request transcripts by filing Form 4506 Request for Copy of Tax Return, Form 4506-EZ Short Form Request for Tax Return Transcript or Form 8821 Tax Information Authorization. Transcripts may also be requested by phone.