You may have heard of the 45-day rule, but the intricacies and complexity involved can make it confusing. The rule is dense; it spans Internal Revenue Code (IRC) sections 6323(c) and (d), IRC section 6321, written agreement terms, state laws, and more. It’s natural that something so expansive is tricky to navigate, but understanding it has never been more important. What is the 45-day rule?  In summary, IRC sections 6323(c) and (d) grant lenders priority over the federal tax lien to the extent the loan or purchase is made (a) within 45 days of the filing of the notice of federal tax lien ..read more

The lending landscape is in a state of transformation, and with rising loan defaults, lenders are facing new challenges.  According to the latest from S&P Global Ratings, the US loan default rate is forecasted to hit an all-time high this year. In October 2023, the leveraged loan default rate sat at a still-elevated 1.9%. But according to projections, the leveraged loan default rate could climb to 3% by September 2024 as economic growth slows.  These increased loan defaults will likely be a result of macroeconomic conditions, as inflation, while slowly cooling, is still running ..read more

TAB Bank Needed An Assist   Since 1998, TAB Bank’s invoice factoring services have transformed how trucking businesses access working capital.  TAB Bank was utilizing an internal process for managing IRS 8821 forms, collecting IRS information on prospective clients, and ongoing credit monitoring. Managing all of these activities internally generated two key issues for TAB.   Tag-Teaming Form 8821  The first issue was the time delay when submitting 8821 forms for prospective clients. “Time is of the essence when you’re trying to fund someone with a cash flow probl ..read more

NEW YORK, September 14, 2023 (Newswire.com) – New York-based Cogency Global Inc., a global provider of corporate compliance and transactional legal support services, announced today that it has acquired Colorado-based Tax Guard, LLC., a leading tax risk due diligence and monitoring services provider, from Falfurrias Capital Partners. Terms of the transaction were not disclosed. Raymond James served as Tax Guard’s financial advisor. This strategic combination aims to expand Cogency Global’s comprehensive suite of compliance services and solidify its presence in the financial ser ..read more

Meeting the government’s high standards is no small task for SBA lenders  Chicago-based Byline Bank is the nation’s second largest Small Business Association (SBA) lender, with close to $1 billion in assets. To realize this success, Byline Bank has had to navigate a substantial amount of risk. After all, SBA lenders primarily work with many startups and early stage small businesses, who often are newer borrowers. SBA loans are backed by a government guarantee, which grants lenders a degree of security when doling out riskier small business loans. The tradeoff? Increased government scruti ..read more

Errors and delays threaten struggling small businesses  BayFirst National Bank, headquartered in St. Petersburg, Florida, has had its sights set on becoming the premier bank of the Tampa Bay area since 1999. The bank has grown from an independent community bank to a top nationwide SBA lender with a team of more than 200 residential mortgage originators. Recently, many small businesses with thin credit profiles have needed funding as soon as possible to survive. BayFirst was looking to rise to the occasion and confidently offer rapid assistance to as many borrowers as possible.  ..read more

Fraudsters Present A Big-Time Concern For Small Business Lenders  Kapitus, a small business lender based in Arlington, Virginia, needed assistance in reliably identifying applicant tax debts. The need to collect tax transcripts to verify borrower information and prevent potential loan fraud was top of mind for this lender. Countering attempted fraud isn’t just a concern for Kapitus—it’s a fundamental concern for all savvy lenders. “In our industry, we see a lot of fraud. It is fairly easy to doctor a tax return,” said Steven Podhorzer, Senior Vice President of Underwriting at Kapitus.&nb ..read more

The IRS is tasked with a challenging and vitally important job – protecting American taxpayers’ most private data, their personal and business tax records. Appropriately, the IRS has high-security standards, one of which is creating a significant but understandable barrier when it comes to third parties obtaining tax records on a taxpayer’s behalf. Let’s dig into the current state of the IRS’ electronic signature (e-signature) options and what the future has in store for lenders.  In 2021 the IRS rolled out a new option that allowed for e-signatures on Forms 8821 and 2848, forms that ena ..read more

The underwriting process can be filled with unexpected twists and turns impacting borrowers and lenders alike. One prominent example: copies of tax returns provided by clients are not always a reflection of what the IRS has on record. The savviest lenders avoid accepting falsified documents and fraudulent data by working with a trusted vendor to secure income and compliance information directly from the IRS system.  Verifying a borrower’s income with the help of IRS tax return transcripts sounds simple, but unfortunately, the reality is often far more complicated. There’s no shortage of ..read more

Despite technological advances, the IRS is a slow-moving bureaucracy While the IRS collects approximately $4.1 trillion a year (about 96% of the U.S. gross revenue), including almost every business and individual in the U.S., its ability to process this amount of data quickly and efficiently is massively impacted by consistent underfunding and understaffing issues. The agency is outfitted with antiquated technology, hardware, and code, dating back to the JFK administration.  While the IRS has been attempting to join the 21st century for years, the $80 billion recently allotted to the ins ..read more