Al Radeshak hopes to close on a house in North Irwin in July.
He’s lining up movers and has most of the paperwork in order.
There’s one hang-up: He can’t get his federal tax records.
“It could affect the closing date,” Radeshak said. “I have an (interest) rate locked in for July 1. If that doesn’t happen, my rates could go up and cause a big mess.”
The mess is much bigger than Radeshak. On Tuesday, the Internal Revenue Service said thieves had stolen information of 100,000 taxpayers using the online system for getting transcripts of their federal income tax filings. The breach surfaces as would-be homebuyers, such as Radeshak, have been frustrated by delays in obtaining those transcripts, which more mortgage lenders are requiring since the housing crisis.
It is not clear whether the breach, which occurred February to May, delayed legitimate online requests. An IRS spokeswoman declined to comment while the breach is under investigation. The agency has stopped processing tax transcript requests online temporarily and says it will send them out by mail.
The situation highlights the struggles of a federal agency decimated by budget cuts even as it attempts to improve security and handle a higher volume of work.
Hoping to avoid the poor documentation practices during the housing bubble, many lenders are requiring tax transcripts as proof of a borrower’s income. They want these to come straight from the IRS, instead of from borrowers, to avoid potential forgeries.
That has fed increasing requests for tax transcripts even as the IRS has fewer resources to manage them. The agency’s budget has been cut 10 percent, or $1.2 billion, during the past five years despite having to process more returns. In response, the IRS has been offering more automated services online.
But offering easy access to taxpayer information online exposes the agency to greater risk of fraud, said Andy Tormasi, federal project manager for Tiversa, a Downtown cybersecurity firm.
“They want to make this very user friendly and helpful to people,” Tormasi said. “But they slip up on the security aspect.”
The IRS could put the information in a vault and it would be more secure, or give all taxpayers a personal identification number to enter online that would curtail fraud, Tormasi said. But there is increasing pressure to make tax information easily accessible.
Online tax transcript requests — from individuals, lenders and credit agencies — have more than quadrupled in the past five years, to 18.5 million in 2014 from 3.9 million in 2010, according to IRS data. That higher volume and, more recently, problems related to the breach may have led to delays, Tormasi said.
In the past few months, document requests that once took a day or two are now taking weeks to process, according to real estate professionals, adding another barrier to closing on home purchases at a time when the market is heating up.
Most mortgage companies use third-party data processors, such as CoreLogic, to submit transcript requests to the IRS. Online requests from anyone who is not the actual taxpayer invites heightened scrutiny from the IRS, Tormasi said.
Any inconsistency between the application and the original tax filing — a comma out of place, a dropped initial — results in a rejection from the IRS over fraud concerns, brokers said. Even clean applications are turned away with no explanation.
“We have a perfect request, and it’s still delayed,” said Sonny Bringol, owner of Victorian Finance in Bridgeville. “And I don’t know why.”
Karmen Pugh, 37, of East Pittsburgh said she still doesn’t know why the IRS refused to release her transcripts in April. She called the IRS for an explanation. She was told she had a fraud alert on her account but received no other details.
“I said, ‘I didn’t even know there was a fraud alert on my account,’ ” Pugh said. “(The IRS employee) said, ‘Well, this is to protect you. I said, ‘I understand that, but I’m trying to buy a house. I’m giving you permission to release them.’ ”
Weeks later, she was able to get the documents faxed to her lender in time for her closing this Friday. Until then, she was racked with anxiety.
“It was a very frustrating experience,” she said. “We spend all this time trying to find a particular house in a neighborhood we wanted and it could be gone because of a fraud alert I never knew was on my account.”
Brokers and borrowers have been searching for ways to work around the issue. Bringol said he puts in the request earlier, anticipating delays.
Radeshak is still looking for a way to get his transcripts. The IRS rejected his lender’s request several weeks ago for reasons unknown to him. On Friday, he said, he spent nearly two hours on the phone with the IRS before his phone ran out of power and forced him to hang up.
In the meantime, he is meeting with movers, scheduled a closing date and trying to take care of other details to move.
He is concerned that his information may have been compromised in the IRS data breach, but said he isn’t losing sleep over it. He just wants his documents.
“With everything else going on,” he said. “You don’t need anything else in your life.”
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