Today TaxMama hears from Jim in Delaware who tells us. “I am applying to open a business account and they want 2 years of personal tax return records. However, I have not filed recently. If I create the numbers on a 1040 form using information I believe is correct, will that pass bank scrutiny? Do banks have any way of quickly verifying that the forms I submitted are correct? I am only opening a checking account and I have money and good credit, I actually think that my taxes are none of their business, but that’s another story.“
That’s a very good question. When you create a tax return that you think is reasonable, FILE IT WITH IRS. And tell them that you are filing it now.
If you don’t, when the bank asks IRS for the transcript of the return, they will be informed that none has been filed.
Do the banks have any way of quickly verifying that the information is correct? Yes. You will be signing a form authorizing them to get a transcript of your tax return. They can get that in about 3 days or less. If the bank is tapped into IRS’s e-services, they may even be able to look up the transcript online, on the day they receive your authorization.
If you feel it’s none of the bank’s business to see your tax returns when you open a checking account, then go to another bank.
Is this a new practice? Or just local to DE banks?
True, it’s been a while since I opened a checking account, but I have not heard of California banks asking for tax returns to simply open a checking account. If you were asking for a line of credit, I would understand that. But not simply to open the account.
Hmm…go shopping. See if other banks are more agreeable. Or, consider opening an online bank account. You can mail your deposits in, or have your vendors or employer make the deposits
electronically. And you can draw your money via checks or ATM withdrawals.
But whatever you do, once you provide the information to a bank, be sure to provide the same information to IRS as well.
And remember, you’ll find answers to questions about cross-referencing and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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