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Although the end of summer is not generally a time when people give much thought to IRS and income taxes, much has been happening on the income tax identity theft front during recent days. Income tax identity theft continues to be a major problem with the General Accountability Office (GAO) estimating annual losses due to income tax identity theft at close to 6 billion dollars annually.
PHOENIX — IRS says hold on to tax returns. People may need copies of filed tax returns for many reasons. For example, they can help people prepare future tax returns.
Fannie Maeās policy regarding use of the IRS Form 4506-T to validate borrower income documentation for underwriting and QC purposes requires the lender to:
- have each borrower (regardless of income source) complete and sign a separate IRS Form 4506-TĀ for each type of transcript required at or before closing (for example, one IRS Form 4506-T to beĀ completed and signed for personal returns and another for business returns), and
- add the execution of IRS Form 4506-T with the IRS (directly or through an authorized vendor, like 4ustax.com) to itsĀ written QC plan. Refer to the Selling Guide, Subpart D1, Lender QC Process, for details aboutĀ lender QC requirements.
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