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FRESNO DISTRICT STUDY COMPARES INFORMATION SUPPLIED TO LENDERS WITH TAX RETURN INFORMATION
The Fresno IRS District is conducting a study comparing income information supplied by lenders with information reported on potential borrowers' income tax returns. The lender submits a test form WR 95-01, signed by the taxpayer, that contains income information claimed by the taxpayer on loan applications. The IRS then confirms the information against tax returns. This process is used instead of filing a Form 4506, Request for Copy of Tax Form or Individual Tax Account Information, which can take a significant amount of time and delay the loan closing.
IRS personnel indicated the study has resulted in a large number of audits, though there are supposedly no plans to extend the study to other districts.
By the way, the IRS is launching a program also in the Fresno district to automate requests for tax returns. Fifteen financial institutions have been invited to participate in the project, coincidentally the same banks participating in the study. *
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