The 4506-C in Mortgage Underwriting 2026: What It Pulls, When, and Why It Matters

The 4506-C authorizes the IRS to release transcript information to a designated third party, typically the lender or servicer. It is a standard component of the mortgage file but the specifics of what it retrieves and when discrepancies arise are frequently mishandled at the origination level.

What the 4506-C Retrieves

The form designates the third party on line 5a and specifies what type of transcript is requested. The box selection determines whether it pulls W-2 data, full 1040 return information, account transcripts, or wage and income information. Line 6 specifies the tax year or years. Most investors require two years of transcripts and lender certification that the transcripts were reviewed and match borrower-provided documents within tolerance.

The Match Requirement

Transcripts must match the returns the borrower provided. A material discrepancy between the documents the borrower submitted and what the IRS shows is a red flag that triggers underwriter review and possibly a fraud referral. The most common source of mismatches is an amended return: if the borrower filed a 1040-X amendment and the lender pulled the original return transcript, they will not match. Always determine whether the borrower amended before ordering the transcript.

Income Issues That Surface Through the 4506-C

• ✦Schedule C income that differs from what the borrower provided due to filing timing or amendment
• ✦K-1 income from a partnership whose return was filed late, causing a transcript mismatch
• ✦Unreported 1099 income: the wage and income transcript shows every 1099 the IRS received; income the borrower did not include on their return will appear
• ✦Unreported business income: if the borrower has income shown on a 1099-NEC that did not appear on their Schedule C, underwriting will require an explanation

When Transcripts Are Not Yet Available

If a transcript returns as not on file, it may mean the return has not yet been processed by the IRS. Lenders in this situation typically require a copy of the signed return plus documentation that it was filed (e-file confirmation or certified mail receipt). Check investor guidelines specifically; some have explicit procedures for recently filed returns or extension filers that differ from the standard transcript requirement.