When applying for significant loans like mortgages or business financing, lenders require thorough income verification beyond documents you provide, like pay stubs or bank statements. Form 4506-C acts as your official permission slip, allowing lenders to securely request your tax return transcripts from the IRS through their authorized program, the Income Verification Express Service (IVES). This direct verification helps prevent fraud and confirms your financial information accuracy.
Form 4506-C replaced Form 4506-T in 2022 for third-party transcript requests via IVES, streamlining lender access to tax data.
How Form 4506-C Works
- You Complete and Sign: You fill out the form with details such as your name, Social Security Number (SSN), and specify which tax years the lender may access.
- Lender Submits Request: The lender, registered in the IRS IVES program, submits your signed form electronically.
- IRS Sends Transcript: The IRS sends a transcript showing key tax data—not your full tax return—directly to the lender.
This direct-from-source confirmation gives lenders reliable evidence of your income, aiding compliance with lending standards such as the Ability-to-Repay rule, which requires lenders to verify a borrower’s ability to repay loans (CFPB).
Important Parts of Form 4506-C
- Taxpayer Identification: Name, SSN or EIN, and current or previous addresses must exactly match IRS records.
- Requestor Information: Details of the authorized lender requesting the transcript.
- Transcript Type and Tax Years: Specifies which tax document summaries (e.g., Form 1040) and years are requested.
- Signature and Date: Your authorization signature is required; valid for 120 days.
Avoid These Mistakes When Signing
- Ensure all personal info matches your tax filings for the relevant year to prevent delays.
- Print clearly to avoid illegibility.
- Request transcripts only for filed tax years.
- Sign and date the form properly to make it valid.
Why Lenders Use Form 4506-C
Lenders rely on Form 4506-C to verify your stated income thoroughly, reducing risk and meeting legal obligations. For example, when buying a home, mortgage lenders use it to confirm that reported income on your application matches IRS records before approving your loan.
Related Topics
Explore more about income verification and mortgage processes in our articles on Verification of Mortgage (VOM) and Tax Return Transcript.
Additional Resources
Refer to the official IRS page for Form 4506-C to understand its detailed instructions and updates (IRS.gov Form 4506-C).
