On February 28, 2022, the Internal Revenue Service (“IRS”) announced a further extension of the deadline to submit a form 4506-C that conforms with the requirements for new Optical Character Recognition (“OCR”) software. To provide IVES partners more time to make updates, the mandatory date has been moved from March 1, 2022 to October 1, 2022.
The IRS is in the process of updating the Income Verification Express Service (“IVES”) to a more modern automated process by implementing OCR software. For submissions to be accepted by the optical reader, the form must be submitted as a “clean copy,” free of any notations or editing marks, or multiple document type requests. If a submission does not conform, it will be manually processed, until the mandatory change date of October 1, 2022. Previously, it was common practice for form 4506-C to be completed with multiple products and tax years but have the order request only include certain marked transcripts or years.
The IRS states the extension of the mandatory date is based on concerns raised by IVES participants regarding readiness. Effective October 1, 2022, all 4506-C requests must include only the information needed for the order and be clear of editing marks. Only one transcript type should be included per form, and only the taxpayers and tax years needed should be included on the appropriate lines. Non-conforming orders will either be rejected by the IRS or the order will be charged for all marked items, resulting in additional fees.
One of the more significant changes comes in handling of persons filing joint tax returns. To conform with new requirements, a 4506-C for joint tax returns should only include the name of one of the taxpayers in order to avoid duplicate fees for the second taxpayer.
Note, DocMagic will include all tax years being requested. Only the years needed should be included in the request, as the IRS will return all years on the request, which may result in additional fees.
DocMagic previously announced system changes that went into effect on February 1, 2022 and are currently available for review. Updates will also be provided for any additional changes that may be needed for implementation.
Please direct any questions or comment to compliance@docmagic.com.
