It’s amazing how much can be taken for granted when the ecosystem of the government and business work well together. But now as the government remains shuttered, daily reports file in about new repercussions from the ecosystem being stunted. The latest victim of the shutdown? IRS tax transcripts. What does this have to do with you? A lot more than you might think.
The Function of Tax Transcripts
The IRS processes millions of tax transcripts each month. These transcripts can be requested by you, your prospective employer, or prospective lenders and are available as proof that your financial standing is what you say it is. However, this doesn’t happen automatically. You first submit a consent form so that the desired parties can receive your transcript. That’s one form that has to go out. Then the filing for the transcript itself has to happen.
What does this have to do with the government shutdown? Well, thanks to the deadlock in Congress, the IRS is currently closed. That means neither of these forms will receive any attention unless they were filed prior to October 1. And let’s not even think about the backlog that will happen once the government reopens its doors…
No Tax Transcripts Make it Harder to Obtain Credit
So what happens if you just put an offer on your dream home? Sadly, it won’t go through if the seller wants to use these forms to verify your income with the IRS. And unfortunately, if another buyer comes along who’s willing to pay cash, that could result in their offer getting accepted before yours has a chance to be reviewed.
The same goes for other types of credit such as credit cards or loans. This doesn’t just affect individual buyers but businesses seeking loans as well. And in this stunted economy, the inability to issue new credit could have a ripple effect for months to come.
No Tax Transcripts Could Prevent You from Getting that Job Offer
It’s become a recent trend for employers to check potential hires’ financials before extending an offer and this can include credit scores and tax transcripts. The good news is that one potential hire won’t lose out to another since no one can currently obtain their tax transcript (unless the paperwork was filed prior to October 1). The bad news is that any offers that would have happened may be delayed until the end of the shutdown. This is yet another hit on a struggling economy as the unemployed may have to wait even longer to obtain work.
What You Can Do About It
This may seem like a hopeless situation as there’s little any of us can to do get the government to come to an agreement and reopen the doors. However, there may be things you can do to workaround the inability to obtain tax transcripts. For example, you could search for other paperwork to prove your financial standing and see if your lender or prospective employer might accept that instead.
Other paperwork that proves your financial standing includes bank statements, paycheck stubs, credit reports, and the previous year’s tax returns – or all of the above. It will be up to the discretion of the reviewer if this information is good enough to bypass the need for a tax transcript, but it’s always worth a try! You can obtain your bank statements from your bank’s website, previous paycheck stubs from your current or previous employer’s human resources department, and your credit report from annualcreditreport.com. And if you don’t know where to find your previous year’s tax returns, your tax filer should be able to send you a copy. Arm yourself with this information and don’t let the government shut down put a pause on your life.
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