Tax Liability Risk Assessment

Protection for Lenders from The Adverse Effects of

the Tax Liabilities of their Borrowers

We have created a revolutionary process designed for lenders to protect themselves from the devastating effects when the borrower has or develops a tax liability.

Public record searches are not enough to make funding decisions!

We have a proven track record of preventing losses through a three-step process of detection, monitoring/real-time alerts, and resolution/compliance.

Many lenders rely on a public record search and credit bureau reporting to detect tax liens, as part of their risk assessment.

Unfortunately, IRS only files a tax lien about 60% of the time. Under IRC § 6321, a lien is effective from the date of the assessment of tax. The IRS is not required to record a lien with the County Recorders Office, for the lien effective. Perhaps even more important are the tax issues both current or non-compliance issues for which a lien has not been filed. A public records search is just not enough to determine the lender's risk.

As of April 16th, 2018 the three big nationwide credit reporting agencies (Equifax, TransUnion and Experian) announced that they will stop reporting tax lien data and remove all tax liens from credit reports.

The only way to truly protect the lender security position is an Initial Tax Liability Risk Assessment. Overall Portfolio health, for our lenders, comes in the form of detection, identity check, monthly monitoring/real-time lender risk alerts, and resolution/compliance.

DETECTION

➡️ Initial Tax Liability Risk Assessment

Lenders want to know both the initial and future potential risks before funding a borrow. As part of our Tax Liability Risk Assessment (LTRA) (See Sample Below), we perform an analysis looking for any liabilities, outstanding returns/form, unused deposits and provide a compliance requirement. More important to the Lender is the Risk Score and Summary of Risk.

➡️ Risk Score and Risk Summary

At the top of our Tax Liability Risk Assessment (LTRA) is a Risk Score and Risk Summary. The risk score determines the overall risk to the lender in funding this borrower. The Risk Summary is a convenient summary of the most important areas that make up the lenders risk. A risk scoring key is provided with each report so the lender may determine how the Risk Score was determined.

➡️ Liabilities

As part of the liabilities section of the Tax Liability Risk Assessment (LTRA) we contact the IRS on behalf of the borrower to determine any current outstanding liabilities and the level of risk that it presents to the lender. We also determine if the taxpayer has entered into an installment agreement for any of the liability periods. Even more important for the lender, we determine if the taxpayer has been a Trust Fund Recovery Penalty, which indicates that they have been accessed personally for any payroll tax liabilities.

➡️ Outstanding Returns/Forms

In this section of the Tax Liability Risk Assessment (LTRA) we determine any outstanding returns/forms. Outstanding returns/forms are an indication of a potential future problem and/or additional assessments.

➡️ Unused Deposits

Unused deposits section of the Tax Liability Risk Assessment (LTRA) point to a potential solution, but they can also be an indication of a deeper problem.

➡️ Compliance Requirements

In the compliance requirements section of the Tax Liability Risk Assessment (LTRA) , we indicate the necessary items required for the taxpayer to be in compliance with the IRS.

MONITOR

➡️ Monthly Monitoring

While the Initial Tax Liability Risk Assessment (LTRA) is absolutely critical as part of any lender’s due diligence, monthly monitoring is imperative to ongoing funding decisions. We provide a month risk assessment to our lenders.

➡️ Real Time Lender Risk Alerts

We send a real-time Lender Risk Alerts when a borrower's tax account has 'significantly" changed. This gives the lender the opportunity to manage their risk in real-time.

RESOLUTION

Legacy Tax & Resolution Services is a national tax resolutions firm dedicated to resolving tax problems. Not only do we provide initial risk assessment, monitoring (both monthly and in real-time), we will actively solve your client’s tax problems and work with them to remain in compliance. We will work with your borrower directly and with their permission keep the lender apprised of the progress. We maintain open communications with the taxpayer so they always know where they are in the progress towards their resolution.

➡️ Resolution Options

We offer your clients all of our normal resolution options, however, the top two are usually more pertinent to lenders:

Installment Agreement

Subordination (Lien Release)

Remove Wage Garnishments

Release Bank Levies

Offer in Compromise

Federal and State Tax Audit Representation

Innocent Spouse

Delinquent and Unfiled Returns/Forms

Reduction or Elimination of IRS Penalties

Expiration of Collection Statutes