WASHINGTON - Congressman Patrick McHenry (NC-10) and Congressman Jimmy Panetta (CA-19) released the following statements following introduction of H.R. 3335, the IRS eIVES Modernization and Anti-Fraud Act of 2023. This legislation would make changes to the eIVES program to improve its performance and ensure the IRS more closely follows Congressional intent for the program as it was originally passed in the Taxpayer First Act.
“It is imperative for entrepreneurs trying to grow their businesses and create jobs to have quick and timely access to capital," said Rep. McHenry. "Regrettably, the IRS’ IVES program used by lenders to verify borrower income is overly burdensome and has created unnecessary delays for qualified individuals and small businesses. This bipartisan legislation would help resolve those issues by removing hurdles for consumers, reducing fraud, and increasing access to and the speed at which capital can be secured.”
“As a member of the Committee on Ways and Means, we worked hard to pass the Taxpayer First Act to modernize the IRS and prioritize American taxpayers. However, the implementation of that law by the IRS is being hindered by burdensome barriers placed on borrowers trying to secure loans,” said Rep. Panetta. “Our bipartisan legislation, led by Chairman Patrick McHenry, would ensure that the responsibility of authentication falls on the financial institution rather than the borrower. Such commonsensical laws will uphold the intent the Taxpayer First Act by improving the speed and safety by which consumers and small businesses can access capital.”
The Income Verification Express Service (IVES) program is used by mortgage lenders and others within the financial community, including the Small Business Administration, to confirm the income of a borrower during the processing of a loan application. The IRS provides return transcript, W-2 transcript and 1099 transcript information to a third party with the consent of the taxpayer – a process that takes days to weeks
The Taxpayer First Act of 2019 authorized the IRS to develop an automated system to receive these forms in lieu of the current system, which relies on the forms to be sent to the IRS via secure fax.
The above provision directed IRS to build a near real-time, API-based system that could be used by more financial providers, including small business and others.
In the IRS’ implementation of the eIVES API, the Agency decided to assume the responsibility for authenticating a borrower’s identity, which historically has been the responsibility of financial institutions that are already required by federal law to Know Your Customer (KYC).
This legislation would significantly reduce friction for borrowers in applying for a loan, reduce fraud, increase access and speed in which consumers and small businesses can access capital.