Removing Barriers Blog

IRS Delays Changes to IVES System
Posted October 18, 2016 by CUNA Advocacy

In response to a letter sent by CUNA and others in the financial services industry, the Internal Revenue Service (IRS) recently indicated that it was indefinitely shelving significant proposed changes to the way users could access its Income Verification Express Service (IVES) system. 

IVES is an automated system used by mortgage lenders including credit unions to obtain mortgage applicants’ tax transcripts in order to verify borrower income when underwriting a mortgage. Because the tax transcripts are securely transferred from the IRS to the lender and cannot be altered by the borrower, they provide independent verification of information included in the borrower’s loan application. 

In late September, the IRS proposed requiring so-called multifactor authentication in order to access the IVES system, specifically by requiring the use of a personal mobile phone as the second stage of authentication. The implementation date for these changes was to be October 24, 2016, scarcely a month after the changes were proposed.  

Citing both to the extremely short timeline as well as the impact of the changes themselves, CUNA joined others in sending a letter the IRS describing the potential for significant disruption in mortgage lending markets. In particular, the letter expressed concerns that whereas multifactor authentication by means of a personal mobile phone might be appropriate for some applications, such as verifying an individual account at an e-commerce site, this method is inappropriate for large-scale enterprise purposes such as the intended use of the IVES system. 

Shortly after receiving this letter, the IRS indicated it would delay indefinitely the October 24 implementation date and instead hold discussions with key stakeholders potentially affected by the changes. CUNA will remain engaged in this process to ensure that any potential changes to the IVES system do not unduly burden credit unions’ ability to process member mortgage application in a timely and efficient manner.