What Is an IRS Tax Verification Number?

An IRS tax verification number is not a permanent identifier. The term refers to the process where a taxpayer grants a third party, such as a mortgage lender, permission to get their tax records directly from the Internal Revenue Service. This is a common step in loan applications where lenders must confirm an applicant’s income history. By authorizing the IRS to release tax information, the applicant provides a reliable confirmation of their financial standing. This direct verification is preferred by financial institutions over copies of tax returns, as it eliminates the possibility of altered documents.

The Function of Form 4506-C

The official document that enables this income verification process is Form 4506-C, IVES Request for Transcript of Tax Return. This form serves as a taxpayer’s written consent, authorizing the IRS to send their confidential tax information to a designated third party. The form is submitted by the third-party requester, not the taxpayer, through a specific IRS system.

Using Form 4506-C, a variety of tax transcripts can be requested depending on the level of detail the third party requires.

• A Tax Return Transcript shows most line items from an original tax return, such as adjusted gross income (AGI).
• A Tax Account Transcript provides basic data, including marital status, type of return filed, and payment history.
• A Record of Account combines the information from both the tax return and tax account transcripts.
• A Wage and Income Transcript details data from information returns submitted by employers, such as Forms W-2, 1099, and 1098.

Completing the Authorization Form

To begin the process, the taxpayer must use the correct version of Form 4506-C, which can be downloaded from the official IRS website, as outdated versions will be rejected. The form requires identifying information, including the taxpayer’s full name, Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), and current address. If a joint return was filed, the spouse’s name and SSN or ITIN are also required. If the address was different on the requested tax return, the previous address must be entered as well.

Line 5 is designated for the third-party requester’s information and is typically filled out by the institution, such as a lender. The subsequent lines specify which transcripts are being requested. For example, line 6 is used for tax return transcripts, while line 7 is used for Wage and Income transcripts. The taxpayer must also enter the ending date for each tax period in a mm/dd/yyyy format.

Finally, the taxpayer must sign and date the form and check a box attesting under penalty of perjury that they are the individual named on the form. This signature is the legal authorization that permits the IRS to release the information. An unsigned form is invalid and will be rejected, halting the verification process.

The Third Party Verification Procedure

After the taxpayer has accurately completed and signed Form 4506-C, they provide it to the third-party requester, such as their mortgage lender. The third party is then responsible for submitting the form to the IRS. This is almost always done electronically through the Income Verification Express Service (IVES), a system created by the IRS for registered participants to request tax transcripts.

IVES is a secure, web-based system that allows authorized financial institutions to submit Form 4506-C requests and receive taxpayer transcripts in an electronic format. Only vetted and approved companies are permitted to participate in the IVES program.

Once the form is submitted through IVES, the IRS systems process the request. The service verifies the information on the form against its records and, if everything matches, generates the requested transcript. The transcript is then made available electronically to the third party, typically within two to three business days. Once the lender receives the tax transcript from the IRS, they will review it to verify the applicant’s income. After this step is complete, they can proceed with the loan underwriting process.