The Taxpayer First Act, a new law passed in July of last year, includes important provisions for lenders regarding the use of IRS tax transcripts, effective December 28th, 2019.
According to this legislation, lenders are now required to obtain signed borrower consent to obtain tax transcripts, and to consent to share the data with other entities affiliated with the loan transaction. As with all other origination and servicing records, a copy of the signed consent must now be included in the loan file.
The IRS has stated that they will not be offering a standard template for providing these disclosures at this time. The Mortgage Industry Standards Maintenance Organization (MISMO®), however, has drafted a sample Taxpayer Consent Form which both Fannie Mae and Freddie Mac have endorsed. The language in this consent template provides permission for lenders to share tax return information with other loan participants and specifies the required purpose for which the data will be used. This form is available to organization members. To become a MISMO member, click here.
The language provided by MISMO is a resource that can be revised by individual lenders as appropriate. Many major stakeholders were involved in the creation of the form. However, organizations are still encouraged to communicate with their investors to ensure that use of the MISMO language is acceptable and legal counsel to confirm its compliance with the new Taxpayer First Act obligations.
The IRS has indicated that it will not be making any changes to 4506-T tax forms with regards to consent, but is leaving it to the industry to ensure proper taxpayer consent is obtained.
If you have questions or concerns about the Taxpayer First Act with regards to Tax Return Verifications, please contact email@example.com.