cancel
Showing results for 
Search instead for 
Did you mean: 

Income verification

Tomew2000
Regular Contributor

Income verification

My significant other received a Discover Card a few months ago,with a 8500 limit.  She used that, and has been making regular on time payments.   They contacted her today asking her to sign a 4506 form,so they can verify info on her tax records.  Problem is, she hasn't filed 2017 or 2018 yet.   
   I'm assuming that they'll pull her credit line at that point, and make her pay off the balance.  Anyone have any insight as to why they're asking now?  How will that affect her credit?  if anyone knows if that will raise any red flags at the IRS, I'd appreaciate it 

79 REPLIES 79
Saeren
Mega Contributor

Re: Income verification

Unfortunately she's not alone. 

https://ficoforums.myfico.com/t5/Credit-Card-Applications/DISCOVER-FORM-4506-T/m-p/5645421

 

If she hasn't filed taxes, they will close her card. It's not clear why they've been doing this. 

As for impact, it depends on how the closed card is reported but it's a good idea to pay it off ASAP. 





Message 2 of 80
Remedios
Moderator

Re: Income verification


@Tomew2000 wrote:

My significant other received a Discover Card a few months ago,with a 8500 limit.  She used that, and has been making regular on time payments.   They contacted her today asking her to sign a 4506 form,so they can verify info on her tax records.  Problem is, she hasn't filed 2017 or 2018 yet.   
   I'm assuming that they'll pull her credit line at that point, and make her pay off the balance.  Anyone have any insight as to why they're asking now?  How will that affect her credit?  if anyone knows if that will raise any red flags at the IRS, I'd appreaciate it 


If she hasn't filed taxes, what did she put on her application? 

They specifically ask for source of income. 

Message 3 of 80
FortifiedHM
Valued Contributor

Re: Income verification

Banks can ask for these for a variety of reasons. There are movements recently in cutting CLs, closing accounts, asking for 4506s from multiple large lenders. Although hard to guess the motives individually, collectively, I tend to think there are some undercurrents in global economics that is driving banks to be more cautious.

 

At this point, I would suggest adding her to some of your cards as AU and open some cards in her own name just to maintain some sort of reasonable UTIs.

ᑭ⍶ndeᲠi८ ѠαԼԼεէ : ᙪ൦ſΛ ८☕ Λlti-ၺ ✈☕թroթⅇl
⛪✈☕⸿ⵢᖇ ⍟Ԑժᑭ ⍟८ſ ┊Ҩⵢ ☏८ſⴑ ⛽ෲթƧ/βiz ⛽iէ | ८✙ ┊❡olδ┊ↇᏨ ☕▲B ⍟Ⲙilⅇⴑթ ⛪
⸨ꜷ ᐰmzn ᐰ√ ☏⸿i⸿┊⸿iⴑ ⚕ᙪᙪթ⍟wſ -√ ⚕ᙪᙪ८⸩ Ձ൦Ձ❶ ✢ᖇēẉαrժ✙

PⵢA: Wear a respirator (Π95, Кп95, ҞҒ94), period.
Message 4 of 80
Revelate
Moderator Emeritus

Re: Income verification


@Remedios wrote:

@Tomew2000 wrote:

My significant other received a Discover Card a few months ago,with a 8500 limit.  She used that, and has been making regular on time payments.   They contacted her today asking her to sign a 4506 form,so they can verify info on her tax records.  Problem is, she hasn't filed 2017 or 2018 yet.   
   I'm assuming that they'll pull her credit line at that point, and make her pay off the balance.  Anyone have any insight as to why they're asking now?  How will that affect her credit?  if anyone knows if that will raise any red flags at the IRS, I'd appreaciate it 


If she hasn't filed taxes, what did she put on her application? 

They specifically ask for source of income. 


You basically have 3 years to file taxes though there's of course restrictions and some penalties there like anything but the IRS isn't going to come looking for a pound of your flesh until after that point.

 

Basically you can amend your taxes for 3 years after the original filing date and as such no harm no foul as long as you make it right by that point.  If you haven't filed your taxes by then, double bonus round where the IRS files a Substitute For Return (SFR) and trust me, nobody wants that in their lives.

 

I lost a F'n decade financially because of that, dumb dumb dumb dumb dumb dumb dumb dumb....




        
Message 5 of 80
kerplunk
Frequent Contributor

Re: Income verification

I imagine that someone who hasn't filed or paid their taxes in three years would already be red-flagged by the IRS. 

As for Discover, just maxing the credit limit may have triggered this account review.

Message 6 of 80
steelers1
Frequent Contributor

Re: Income verification


@Tomew2000 wrote:

My significant other received a Discover Card a few months ago,with a 8500 limit.  She used that, and has been making regular on time payments.   They contacted her today asking her to sign a 4506 form,so they can verify info on her tax records.  Problem is, she hasn't filed 2017 or 2018 yet.   
   I'm assuming that they'll pull her credit line at that point, and make her pay off the balance.  Anyone have any insight as to why they're asking now?  How will that affect her credit?  if anyone knows if that will raise any red flags at the IRS, I'd appreaciate it 


She needs to file her taxes. I know that's not what your asking however her Discover issue is miniscule compared to an IRS issue.

 

As far as Discover goes they will shut her down. Once her tax filing is caught up then she can always reapply.

Message 7 of 80
thornback
Senior Contributor

Re: Income verification


@kerplunk wrote:

I imagine that someone who hasn't filed or paid their taxes in three years would already be red-flagged by the IRS. 


Not if you file simple taxes and are due a refund.  You can go without filing for 3 years in those cases.  Many single filers with no property ownership can do this without penalty  - and many do.  IRS knows whether or not you owe because they receive their own copies of tax docs/taxable income.  

 

With Disco - they will close her account because they want the most recent year's return and will not accept any other form of verification - like pay stubs.  Though the account will be in good standing, it will be notated as "closed by credit grantor". 

 

However, she can close it before they do (before the 5 day period to grant access expires), in which case, the account will be noted as "closed at consumers request".   

 

Either way, once the account is closed, she'll regain access to the account online for the next 12 months and will be able to continue making payments during that time.   However, the account will close with a balance which will temporarily affect her scores -  so if she can PIF,  that'd be best.

 

Sorry OP.

 

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2020: EX 780 ✦ EQ 771 ✦ TU 781
Current FICO 9s | 11/2020: EX 793 ✦ EQ 780 ✦ TU 778
2020 Goal Score | 800s


My AAoA: 3.8 years not incl. AU / 4 years incl. AU
My AoOA: 7.10 years not incl. AU / 9.10 years incl. AU
Inquiries: EX 0/6 | 1/12 ✦ EQ 1/6 | 2/12 ✦ TU 0/6 | 1/12
Report Status: Clean


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 8 of 80
K-in-Boston
Moderator

Re: Income verification


@Tomew2000 wrote:

My significant other received a Discover Card a few months ago,with a 8500 limit.  She used that, and has been making regular on time payments.   They contacted her today asking her to sign a 4506 form,so they can verify info on her tax records.  Problem is, she hasn't filed 2017 or 2018 yet.   
   I'm assuming that they'll pull her credit line at that point, and make her pay off the balance.  Anyone have any insight as to why they're asking now?  How will that affect her credit?  if anyone knows if that will raise any red flags at the IRS, I'd appreaciate it 


As others have stated, without them receiving tax transcripts the account will likely be closed.  Since there is no 2007 or 2008 data, I wouldn't even bother to submit the form.  There shouldn't be any new red flags raised with the IRS; they would simply not be able to supply the transcripts for 2007 and 2008 because they do not have them.  As for how it will affect her credit, Discover generally reports closed accounts with balances with the original credit limit, so it would be treated the same for scoring as an account that is still open.  Once it's paid off, there would be no harmful effects unless it caused overall utilization to go out of whack, or other scoring factors like credit mix if there are no other revolving cards open.

 

If taxes are owed for 2017 and 2018, it's of course in her best interest to get those filed and either paid or set up with a payment plan ASAP as they are still accruing fees and penalties.  If there's a refund involved, it's getting smaller every day.

Message 9 of 80
kerplunk
Frequent Contributor

Re: Income verification

*** I'm on my phone (mobile version of this forum website) and the quotations were off when I responded about amending the tax returns. Please disregard my posts. 

Message 10 of 80
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.