In Financial Inclusion, Legislation

September 28, 2017 – U.S. Rep. Patrick McHenry (R-NC) and U.S. Sen. Cory Booker (D-NJ) today introduced the IRS Data Verification Modernization Act of 2017, H.R. 3860, to automate income verification through a modern digital interface at the Internal Revenue Service. FIN supports introduction of this legislation.

The following statement is attributed to Brian Peters, Executive Director of Financial Innovation Now:

“FIN commends Congressman Patrick McHenry and Senator Cory Booker for their leadership on this important effort. Their legislation will offer consumers and small business a modern, efficient way to help qualify for loans and other financial services. Quite simply, 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. We cannot let antiquated government systems hold back consumers and small businesses.”

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).

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