What is the purpose of a 4506-T form?

The form 4506-T is specifically designed for lenders to request a transcript of a borrower’s federal tax returns directly from the Internal Revenue Service (IRS). This is crucial in the mortgage approval process, as it allows lenders to verify the income information that borrowers have provided on their loan applications. By obtaining these tax return transcripts, lenders can ensure that the reported income aligns with what the IRS has on record, thus reducing the risk of income misrepresentation.

Understanding this function directly relates to the critical role taxation plays in assessing a borrower’s financial situation, making the ability to access accurate tax information essential for making informed lending decisions. The other choices reflect processes that are not covered by the 4506-T form, highlighting its specific purpose within the scope of mortgage lending.