[kmeade]

I have some additional questions on the Taxpayer First Act.

1. Do all parties listed on the tax return need to sign a form expressing consent?
2. Does section 2202 of the Taxpayer First Act apply if tax returns are directly received from the taxpayer if no tax transcript is obtained?
3. If a form expressing consent is signed when the taxpayer applies/originates a loan, does it apply for the life of the loan? If yes, does it still apply if the taxpayer submits current tax returns annually for the loan?
4. Is consent required on existing loans when we receive updated tax returns?
5. If an existing loan is renewed (new note) or extended (modification agreement), is a new taxpayer’s consent required?
6. Does receiving the taxpayer’s consent per section 2202 of the Taxpayer First Act apply per loan, per taxpayer, or per tax return.

Topic

[rcooper]

1) I believe anyone that is the subject of the tax return would need to sign the consent.
2) The IRS seemed to imply in their information that this would apply to information obtained directly from the IRS.
3) If the consent is worded properly consent should not have to be reobtained. See #2 regarding obtainin returns from the borrower.
4) This applies to info received after Dec. 28, 2019. If it is an existing loan and you are receiving return information from the IRS it seems consent is required if it hasn’t already been obtained.
5) If consent hasn’t been obtained and you are getting new tax returns from the IRS, regardless if it is for a new loan or a modification, it seems consent would need to be obtained prior to obtaining the tax returns from the IRS.
6) I think it will depend on how the consent form is worded. Something to think about… it might make it easier for loan staff to have one standard procedure for each loan – fewer decisions generally means fewer errors.

https://www.irs.gov/newsroom/taxpayer-first-act-cybersecurity-and-identity-protections
“This provision limits the redisclosure and use of return information in the case of taxpayers who have consented to the disclosure of their return information by the Internal Revenue Service to a third party under IRC section 6103(c). Section 2202 of the Taxpayer First Act applies only to disclosures made by the Internal Revenue Service after December 28, 2019, and any subsequent redisclosures and uses of such information disclosed by the Internal Revenue Service after December 28, 2019.”

[kmeade]

So, do you feel if we obtain tax returns from the borrower(s) (not the IRS), that we would not be required to obtain the taxpayers consent?

[rcooper]

That is my understanding. As long as it is was worded properly, I don’t see an issue with obtaining consent even if the customer hands it to you, if you would prefer to do that.

[Author]

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