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#172531 - 03/23/04 05:28 PM Requesting tax transcripts
TomS Offline
Gold Star
Joined: Jan 2004
Posts: 318
USA
We are putting together some guidelines as to when we will and will not request copies of tax returns or transcripts from the IRS on commercial loans. Does anyone else have similar guidelines that they would be willing to share? We will likely base the decision on some type of loan amount/credit score matrix, but would like to get an idea as to what other banks are doing. Thanks.

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General Discussion
#172532 - 03/25/04 12:30 PM Re: Requesting tax transcripts
Anonymous
Unregistered

I don't have an answer because I'm not a lending officer, but here is an article that gives a good reason why requesting tax transcripts is a good idea.
Fraud Case

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#172533 - 03/25/04 01:25 PM Re: Requesting tax transcripts
Rocky P Online
Power Poster
Joined: Jun 2003
Posts: 7,683
Florida
Lee, we use a IRS form 4506 (request for tax information) on mortgage loans whenever we cannot independently verify the income, or if the information provided "does not make sense". As an example, claimed income of $125K per year but having minimal assets, renting or living in a low priced home, little credit, etc.

The customer signs the form and the IRS will directly provide you with a recap of what was filed. It will either prove, or disprove the income.
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Integrity. With it, nothing else matters. Without it, nothing else matters.

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#172534 - 03/25/04 03:08 PM Re: Requesting tax transcripts
Lestie G Offline

Power Poster
Joined: May 2002
Posts: 3,608
Near the Land of Enchantment
SBA used to require tax transcripts with some of their packages (they may still - I don't know).

I remember one that came back substantially different than the copy of the return that the borrower gave the bank. When asked about the difference, the borrower's response was, "Oh! You wanted a copy of the tax return that we give to the IRS!" Apparently they had one for borrowing purposes and one for IRS purposes. Needless to say, we filed an SAR and declined the loan request.
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#172535 - 03/25/04 03:13 PM Re: Requesting tax transcripts
Rocky P Online
Power Poster
Joined: Jun 2003
Posts: 7,683
Florida
Quote:

"Oh! You wanted a copy of the tax return that we give to the IRS!"



LOL - No, we want the truth, which story is it??
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

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#172536 - 03/25/04 05:20 PM Re: Requesting tax transcripts
TomS Offline
Gold Star
Joined: Jan 2004
Posts: 318
USA
Thanks for the input. We recently had a similar situation where the borrower gave us tax returns that showed substantially more income than appeared on the IRS tax transcript. That's part of the reason why we are putting together some guidelines for requesting the transcripts.
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