What is a 4506t?
Form 4506t is a Federal tax form commonly referred to as the Tax Transcript form. This common form is used to:
- Request a personal tax return copy
- Designate a third party to receive a personal tax return copy
Form 4506t researches (2) years of past Federal tax returns on file. There are many occasions that require Form 4506t use. Mortgage loan borrowers are required to submit a completed and signed Form during the mortgage loan application process. Why? Lenders need to verify past tax returns to discover financial eligibility. In this case, the lender is the 3rd party receiving copies of personal tax returns. Buyer beware in the case of any false tax returns. In this case, the mortgage lender would alert the IRS of any tax return discrepancies.
Form Receipt Time
IRS’s return processing takes from 2-4 weeks before a tax transcript becomes available. If the citizen filed through electronic means. IRS processing takes approximately 6 weeks if the tax return was filed through the mail system.
The IRS charges $2.25 for each Form 4506 process, and lenders usually include this cost within their processing fees.
Pitfalls to Avoid
Taxpayers can avoid Form 4506 pitfalls, particularly the chance that the IRS may reject the form, with valuable information. The IRS will not process (or reject) the Form if the address on the Form doesn’t match the address listed for the tax year requested. Pay close attention to Line 4 of the 4506 Form, and make sure the addresses are exact. If the IRS cannot read a clear signature or other handwriting on the form, the form will be rejected as well.
Obviously, legal and true federal tax returns avoid IRS penalty. A false tax return will trigger an inaccurate Form 4506 transcript, and discrepancies will be visible. The taxpayer certainly does not want to generate IRS trouble. So, file true tax returns as a rule of thumb.