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IRS transcripts masked for identity protection

Identity theft has long been a serious issue for taxpayers in the United States, with thousands of taxpayers each year having their personal information fall into the wrong hands. Fortunately the IRS has taken yet another step to combat this growing trend – since December 13, sensitive information has been masked on taxpayer transcripts.

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Because identity thieves oftentimes need a combination of the taxpayer’s name, address, and social security number in order to commit fraud or identity theft, all three of these items are impacted by the new masking procedures. Following are the details of what continues to be visible on the new transcript format:

  • The last four digits of the taxpayer’s SSN, or in the case of an entity, the last four digits of the EIN
  • The last four digits of any of the taxpayer’s account numbers or telephone number
  • The first four characters of the taxpayer’s first and last name, or three characters if the name only has four letters
  • The first four characters of any business entity name
  • The first six characters of the taxpayer’s street address
  • All monetary figures; no dollar amounts will be masked as this would defeat the purpose of the transcript

While this may create minor complications for tax professionals using transcripts to recreate prior year tax returns, for the most part we are after the dollar figures, not personal identification data. The same should go for lenders who are seeking to verify income for a loan applicant – they want to see the dollar amounts. For this reason, people using transcripts for legitimate reasons should be relatively unaffected by these changes, and hopefully will prevent the bad guys from obtaining this sensitive data.

For more detailed information about the various types of taxpayer transcripts as well as their many potential uses (not including identity theft), check out my earlier blog here. And as always, feel free to reach out to your Henry+Horne tax professional for all of your tax planning and compliance needs.

Austin M. Bradley, CPA