April 19, 2018 – The U.S. House of Representatives today passed legislation to automate income verification through a modern digital interface at the Internal Revenue Service. FIN has advocated for this legislation and looks forward to working with the Senate towards final passage into law. The House today passed a larger tax modernization package, H.R. 4554, which included legislation authored by Rep. Patrick McHenry (R-NC) and U.S. Sen. Cory Booker (D-NJ), the IRS Data Verification Modernization Act of 2017, H.R. 3860.
The following statement is attributed to Brian Peters, Executive Director of Financial Innovation Now:
“Today’s House action helps bring the federal government one step closer to better enabling digital financial tools. Paper-based verification has no place in a 21st century economy, and FIN looks forward to working with Congress and the U.S. Treasury to ensure the Internal Revenue Service can build a robust and secure interface for digital income verification. FIN thanks Congressmen McHenry and Blumenauer for their leadership on this important effort.”
Background: As part of the loan and mortgage processes for consumers and small businesses, applicants often must complete an IRS form called a “4506-T,” which gives the lender the right to access a summarized version of their tax transcript. This manual process at the IRS takes days, whereas technology companies and financial institutions are using APIs and other ways to leverage data for nearly instantaneous verification and underwriting. The IRS Data Verification Modernization Act of 2017 was introduced in the House by Reps. Patrick McHenry (R-NC) and Earl Blumenauer (D-OR), along with companion legislation in the Senate by Senator Cory Booker (D-NJ) and Mike Crapo (R-ID).