Shutdown affecting job and loan applications

To many – if you sketch in a few ornery politicians – this is what a painted picture of the government shutdown looks like.  But what about the unintended consequences, which aren’t so physically apparent and are perhaps an afterthought to most?  The inconspicuous effects of the shutdown are actually rather daunting when you consider the millions of job-seeking, credit-worthy Americans who are being told to “hold on” when it comes to beginning a new career or securing a financial loan.

At Equifax, one of the main functions of our business revolves around verifying individuals’ employment and sources of income information.  We provide this service to potential employers who want to bring on new hires, to banks and lenders who want to ensure that their customers can afford to take on additional lines of credit, to auto dealerships that want to guarantee new car owners will make their payments, and so on.

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In order for our suite of income and employment verification services to run successfully, we work closely with the IRS to obtain individuals’ tax transcripts and wage statements, using 4506-T taxpayer consent forms..  Equifax requests tens of thousands of these forms every single day in order to speed up businesses’ hiring processes, or to help Americans get access to new credit.  The standard operating procedure is for Equifax to send our 4506-T orders for fulfillment to the IRS, per their rules and regulations.  The IRS still uses fax machines for this program to receive all incoming requests.

Due to the government shutdown, the IRS service center employees are involuntarily furloughed so those IRS fax machines are currently out-of-commission.

This means that while our requests have been piling up, job-seekers and loan applicants have been perpetuated into shutdown limbo.  Equifax experts are estimating that this backlog is currently affecting millions of American taxpayers; including thousands of credit card applicants, hundreds of thousands of mortgages, and many loans which might have been bundled or packaged for distribution into the investment market.  While Equifax is continuing to accept IRS income verification orders, we are no longer sending them to the IRS as a precaution to prevent any potential risk associated with documents sitting unattended while the IRS service centers are closed.   

In all fairness, there is an end in sight to the shutdown, but a return to normalcy might be easier said than done once the “re-open” sign flips on the federal government’s doors.   To bolster efficiency once the government is back online, Equifax plans to submit orders using a first-in, first-out approach so that each form is submitted to the IRS in the order it was received.  However, further conversations will be required to determine how the IRS will prioritize the backlogs on their end once they re-launch.  The topics of overtime, working weekends, and adding temporary staff will be dependent upon whether or not the IRS receives a fully-funded budget and what guidelines will need to be incorporated as a result of being forced into shutting down this “non-essential” government function. 

A last item to consider is how these unintended consequences could be avoided in the future by the possible adoption of further technological innovation by government agencies.  By using a proven private sector practice like Equifax for scalable, secure solutions, orders could be transmitted from one safeguarded system to another.  Not only would this serve as a substantial cost saving measure in the midst of a major budget crisis, it would also eliminate outdated technologies like actual fax machines for the future processes.  Additionally, by using more intelligent transaction metrics, government agencies like the IRS would be able to better manage orders and could service multiple vendors, locations, and aggregative activity into one monthly report.  Lastly, by allowing transcript information to be securely accessed by a private sector system, existing staff would be freed up from the fax machine and reassigned to more important duties like tax filing support and helping to detect and prevent taxpayer fraud.

While undoubtedly a bust for the economy and the millions of Americans left hanging out to dry – the shutdown has at least shed light on one area where our federal government can make marked strides toward improving cost efficiency, technology, and ultimately its service to the people that work very hard to keep Uncle Sam’s doors open with their tax dollars.

Knott is assistant vice president at Equifax.