It’s that time of the year again to be aware of the how the IRS and lenders work together to assure that borrowers have given their lender the SAME tax information that the borrowers filed with the IRS for a given year – via the use of the 4506 Transcript request. If a borrower has filed his/her 2012 tax return ASAP, and provided that 2012 tax return to a lender, chances are that the lender is going to request the 4506 transcript for 2012. The problem is that the IRS says that they (the IRS) are “running behind”. The IRS is even saying that 2012 tax returns may not be ACCEPTED by the IRS until after Jan 31, 2013, and that, most likely, more complicated tax returns for tax year 2012 may not be accepted until after Feb 28th.
Advise your buyer-borrowers to provide only their 2012 W-2’s for the time being, and not provide the fully-completed 2012 tax return. Even after the IRS accepts the current 2012 tax return, if a 4506 verification needs to be completed, it may take 6 weeks or more to receive the 2012 4506 verification from the IRS. What to do if the buyer was planning to use the tax refund for part of the down payment? WORK VERY CLOSELY with the lender – each lender is going to have specific guidelines as to documentation.