Comparing Tax Transcript Retrieval: IVES 4506-C v. Halcyon’s Tax Wallet

Income verification continues to be one of the most critical—and complex—steps in the mortgage underwriting process. Whether you're working with self-employed borrowers, multiple co-applicants, or multi-year income histories, the task of gathering accurate tax data from the IRS can be time-consuming, expensive, and prone to delays.

For many lenders, the standard process remains IRS Form 4506-C, fulfilled through the Income Verification Express Service (IVES). But as lending teams push for more efficiency, new solutions are emerging that better support digital workflows and borrower expectations. Among them is Halcyon’s Tax Wallet, an API-powered income verification tool designed to retrieve IRS data faster and more affordably. While both methods serve important roles— and are GSE-accepted—understanding their differences can help determine the right fit for each scenario.

The 4506-C Model: Familiar but Friction-Filled

Form 4506-C is the most commonly used method for requesting tax return transcripts. It’s a well-established process, but one that introduces several operational hurdles.

The IVES model relies heavily on manual steps. Borrowers must complete and physically sign the form. Lenders then submit it to the IRS, where it is processed at one of several regional service centers. Turnaround times typically range from a few days to over a week…and even longer during IRS backlogs or federal closures.

Rejections are also a concern. Minor issues like a missing digit in a ZIP code or a mismatched name can result in denials, often without explanation. These errors trigger resubmissions, delays, and repeat costs. Each transcript request incurs an IRS fee, and most vendors charge additional service fees per borrower and/or per year. For complex loan files, costs escalate quickly.

Halcyon’s Tax Wallet: Designed for Digital Lending

For lenders looking to modernize their workflow, Halcyon’s Tax Wallet offers a compelling alternative. Rather than relying on IVES, Halcyon retrieves tax records using borrower authorization via IRS Form 8821. This enables secure, ongoing access to tax data for up to three years without resubmitting paperwork or incurring repeat fees.

What sets this model apart is how it supports both lenders and borrowers:

• Faster Access: Once a borrower authorizes access—either through a digital signature or by verifying their identity using ID.me—Halcyon connects directly to the IRS via API. Most requests are fulfilled in minutes, not days.
• Reduced Rejections: Halcyon’s automated intake process significantly minimizes the chances of error. Where 4506-C workflows may see rejection rates as high as 40%, Halcyon reports an error rate of less than 1%, a meaningful operational advantage.
• Improved Borrower Experience: Borrowers aren’t required to print, sign, and scan forms. Instead, they can authorize access through a digital process that fits their expectations for speed and convenience.
• Integrated Data Delivery: Halcyon delivers transcript data in both PDF and JSON formats, allowing lenders to ingest and interpret the information quickly. The platform also includes an Income Analyzer that applies agency-compliant logic to calculate qualifying income, helping underwriters reduce manual review time.

When 4506-C Still Makes Sense

While Halcyon’s model supports a modern lending experience, Form 4506-C still plays an important role in today’s market.
That’s why Informative Research supports both models: Halcyon’s Tax Wallet for lenders who prioritize speed, automation, and borrower ease; and IVES 4506-C for loans where legacy fulfillment is preferred.

Choosing the Right Fit

Each method has its place. Here's how to think about when to use which:

Use Case	Choose 4506-C If...	Choose Halcyon If...
You prefer the official IVES verification process
You need a one-time tax transcript for a specific year
You're dealing with multiple borrowers or multiple tax years
You want a digital, automated, and fast borrower experience
You need ongoing access to tax data for post-close or refi purposes
You're looking to reduce costs, delays, and rejections

By offering both options within its income verification suite, Informative Research enables lenders to tailor their approach based on compliance requirements, loan complexity, and borrower expectations.

Final Thoughts

As lenders look to accelerate loan cycles and control costs, solutions that simplify income verification without sacrificing accuracy are increasingly valuable. While Form 4506-C has its uses, options like Halcyon point to a more modern, digital path that’s better aligned with today’s lending demands and tomorrow’s borrower expectations.

To learn more about how Halcyon and other Informative Research solutions can support your workflow, connect with your IR representative.