This video from the National Taxpayer Advocate, intended for individuals purchasing or refinancing real estate, includes a consumer tax tip about protecting your personal tax information.
When you go to the formal closing to purchase a home or refinance a home loan, you’ll undoubtedly be asked to sign a lot of forms. There are some IRS forms you should be careful about signing.
You may be asked to consent to disclose certain tax information in order to verify your income. You may be asked to sign Form 4506-T, known as the Request for Transcript of Tax Return. This form gives the lender access to your tax information.
You may not be aware that signing an undated form that does not specifically identify the person or identity who will receive your tax information, your information may be obtained by any number of entities with access to that form at any time in the future.
The best way to prevent misuse of your tax information is to limit who has access to this information. Before signing any documents in connection with the loan, make sure the documents are complete and that you read them carefully. Do not sign a blank or incomplete Form 4506-T.
The IRS has been asked to update this form to allow an individual to specify who may have access to it, but until this revision has been made, exercise caution. Date the form when signing, since this starts the 60-day period during which third parties can access your tax information.
For more information on this topic, call 1-800-TAX-FORM (1-800-829-3676) and request Publication 4419, “What You Need to Know: The Mortgage Verification Process”.