IRS to delay closure of tax transcript fax service

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The Internal Revenue Service has agreed to postpone the closure of its tax transcript fax service after a bipartisan request from the leaders of the Senate Finance Committee.

"IRS will extend its transcript faxing service beyond the planned Feb. 4 end date and is reviewing options for a new timeframe," said a statement Wednesday from the IRS Wage & Investment Division. "We are committed to providing you with advance notice of the new date. As a reminder, you can now have unmasked Wage and Income Transcripts sent to your e-Services secure mailbox if you follow certain procedures. This should help bring clients into compliance and allow for electronic filing. For details, please see Fact Sheet 2018-20, 'Steps for tax professionals to obtain wage and income transcripts needed for tax preparation.'"

The statement added that, due to the government shutdown, the division was still catching up on third-party authorization forms, and warned that wait times on its telephone line would be longer than usual.

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking Democrat Ron Wyden, D-Ore., sent a letter Wednesday to IRS Commissioner Chuck Rettig asking him to postpone the discontinuation of the Internal Revenue Service’s tax transcript faxing service.

“We write to express our interest in seeing that the temporary shutdown of certain government agencies, including the IRS, does not impede efforts the agency has made with the tax practitioner community to ensure a smooth transition in particular methods of communicating taxpayer information to taxpayers and their agents,” they wrote. “We appreciate that certain complexities exist with regard to the IRS’s work at this time, and for that reason we encourage the IRS to extend any approaching deadlines for converting from one method of communicating such information to another.”

The IRS is still in the process of recovering from the 35-day partial government shutdown, as well as dealing with the tax-filing season that began on Monday. The agency, tax professionals and taxpayers alike are also adjusting to the extensive changes in the Tax code and in the Form 1040 itself as a result of the Tax Cuts and Jobs Act.

The IRS also posted an update on its website Tuesday on its activities after the shutdown, including frequently asked questions about the impact from the shutdown on ongoing tax audits and examinations, tax collections and Tax Court cases.

The planned closure of the tax transcript fax service had been an issue for many tax professionals even before the shutdown. "We understand the IRS has been working with the tax-practitioner community to alleviate its concerns that, absent alternative methods of providing tax practitioners with taxpayer information in a timely manner, the proposed changes would hamper its ability to effectively assist taxpayers," Grassley and Wyden wrote to Rettig. "We also understand this work may have been suspended during the shutdown. Therefore, we encourage the IRS to delay its planned discontinuation of faxing taxpayer information until such time that the agency can reasonably resolve the legitimate concerns of the tax-practitioner community about alternatives to the IRS faxing taxpayer information. Of course, such a delay should not compromise the security or privacy of taxpayer information."

The IRS suffered a high-profile data breach several years ago when identity thieves managed to use the online Get Transcript app to steal confidential information from more than 350,000 taxpayers in 2014 and 2015. The IRS had to temporarily close down the Get Transcript app until it could improve the authentication procedures for accessing taxpayer information. Until the online app resumed operation in 2016, the IRS had to rely on alternatives such as surface mail and fax.

(This article has been updated to reflect the IRS's announcement that it is delaying the closure of the fax service.)

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Tax season Government shutdown Chuck Grassley Ron Wyden IRS