The primary way to find out what’s going on with a business and its taxes is for a tax practitioner to investigate its IRS transcripts. The first step is always analysis and investigation. Transcripts provide a comprehensive report of what has been filed, paid, not paid, penalties, interest and more.
If you want to obtain copies of your business transcripts and do some investigation on your own, it’s possible. IRS transcripts are easy to order and most of the time completely free or available for a nominal fee. The three most common ways of obtaining transcript records for your business are online
#1. Online Ordering
Let’s start with online ordering. If you go through a firm, they will have a special license and can order IRS transcripts online in a few short days after sending in a fully executed Power of Attorney. But, if you, as a business owner, or your accountant want to view the transcripts, you have to jump through a few more hoops. Go online to www.irs.gov and familiarize yourself with their site. They have a great search feature that all business owners should take full advantage of and refer back to for questions that may arise.
The IRS took it one step further with easy to understand videos right at your fingertips. If you have trouble understanding the complex tax language, use these videos to master complex tax concepts. If you are unable to find exactly what you are looking for, a helpful page to visit is the Small Business Area. There is a wealth of information available to you there.
Please be aware that the IRS website has become a frequent target of hacking and cyber attacks. To protect themselves and taxpayers, IRS will occasionally disable the transcript delivery system and remove the ability to order transcripts.
#2. Call the IRS Transcript Line
If you find that the IRS transcripts system is not available online for any reason, your next option to obtain your business transcripts is to call the IRS transcript line at 1-800-908-9946 and follow the prompts. You can also call their main line at 1-800-829-1040. The downside to calling the main IRS number is they have longer than normal hold times. It is not uncommon to hold for an hour or two before speaking with a representative. If you find this to be the case, call early in the morning or later in the evening. Sometimes these off-peak hours can decrease your wait time in the hold queue.
#3. Use Form 4506-T
Finally the last way to order previous tax returns and a few other transcript reports is by using the form 4506-T (Request for a transcript of a tax return) or 4506 (Request for a copy of a tax return). A completed form in the 4506 series can be sent by mail to the Kansas City IRS office or via fax to 855-821-0094. However, not all forms go to the main IRS campus and will require some more digging to find the corresponding campus for your particular request. You will need to navigate through the IRS website and find the appropriate office to send those forms based on the type of business, transcript type, as well as the state in which the business operates.
What else can IRS transcripts be used for?
Transcripts are your secret file at the IRS. These documents have all the income reported on your account, copies of your tax returns and your business’ complete tax history for the last ten years. If you require older tax information or information not provided on your regular transcripts, you can submit your request to FOIA. There is a wide variety of information available to the public via FOIA and the transcript delivery systems.
The records can help you:
- – in filing your previous returns,
- – amending old returns,
- – as well as preparing current year tax returns.
IRS transcripts can help provide an accountant, enrolled agent, or bookkeeper a detailed look inside your business. This financial data can help them evaluate how your business performs as a whole. These facts are very valuable in creating a profitable business that runs smoothly and stays in compliance with the tax laws.
Tax practitioners can pass on their findings from this review and present you with key data that might not be visible to the untrained eye. For instance, if you use the financial data to determine certain ebbs and flows of your business cycles. This can help you make educated decisions in many aspects of your business dealings. For example, you could learn that year over year your retail business in a certain store increases by 20 percent. This can help you in moving funds and experienced workers to that storefront, rather than in a less productive area of your company.
On the flip-side, you can also use this information to protect your business. You must be aware what information is public knowledge and how it pertains to your business. Do your due diligence and investigate your reports to make sure your tax returns have the correct information. Make sure no one has filed erroneous 1099s under your business name. Don’t be the victim of identity theft. Use these reports to educate and protect your company. If you ever need to see what has been reported on your behalf, verify previous employment, or are just curious to your records, transcripts can be extremely helpful.
How does IRS protect against Identity Theft?
In order to obtain your business transcript information, the IRS may ask you a series of questions to prove your identity. Be prepared when calling the IRS. Have your EIN, last year’s tax return, physical address, articles of incorporation and other important business documents to help prove who you are and your relationship to the business.
What types of reports should I order?
If you are operating a business you should ask for reports and form types that pertain to your particular entity. If you require transcripts be sent in Spanish, please specify this option in your request.
- Tax Return Transcript – This will show most line items from your original tax return. It may include additional forms and schedules. This can be used when applying for credit, grant access to federal programs, or presented to potential business partners. Please be aware this is not a copy of your actual return, this is a transcript. If you need a copy of your tax return you should use form 4506-T.
- Account Transcript – This will show income, tax payments, letters sent, changes made to tax returns after the original filing, and account history. This is a great report to have available for your tax practitioner.
- Civil Penalty Report – If you are a business and have failed to pay payroll or employment taxes on behalf of your employees, you and your business may both be assessed a civil penalty. If you have a tax resolution case for your business it is important to investigate these findings.
- Wage and Income Transcript – This will show 1099s and income documents reported on your business’ behalf. This transcript is most often used to help complete tax returns.
- Form 4506 – This can be used to obtain 940, 941, 1040, 1041, 1065, 1120, and 1120S.
- Audit Work Papers – These notes from your audit can be obtained by using FOIA.
How long does it take?
Time can vary greatly on receiving transcripts. It’s influenced by several factors: type of report ordered, manner of the request, and the workload of CAF and FOIA, to name a few. You may be able to download certain reports in minutes, while others can take months.
My suggestion for this and most other IRS matters is: Keep a record of all your actions, dates, times and people you spoke with. A detailed record is your leverage when dealing with the IRS and FOIA. Don’t forget to follow up on your requests at an appropriate time. If the IRS sends you a letter that states it will take them an additional 30 days to process your request, don’t call in a week and demand answers. If you send mail, get a tracking number and call to make sure it was received.
If you feel that your rights to receiving the information in the time allotted are being violated, there is something you can do. Please know that most IRS decisions can be taken to a manager or appealed to the next level. If you are having a very difficult time getting through the red tape, your next step may be taxpayer advocates. If after all your hard work you find that you have made no progress, you can always pay a fee to a certified tax practitioner who works in tax resolution to retrieve your records on your behalf by filing form 2848 Power of Attorney.
The bottom line
Tax transcripts can be a good investment and take a relatively small amount of time and usually very little money. They can give you an inside look at your business. The reports can provide valuable information about your income, expenses, and other business matters. If you feel overwhelmed by obtaining this information on your own, speak to a tax resolution practitioner. At the very least they can expound on the topics I have covered here and help you through the process.
Best of luck in exploring the world of IRS transcripts!
Image: Federal income tax – internal revenue service, IRS
