IRS Issues Clarification on Taxpayer Consent, Disclosure Requirements
The Internal Revenue Service yesterday posted a clarification on the effective date of new taxpayer consent and disclosure requirements needed to obtain and share IRS tax transcript information with investors, servicers and due diligence firms.
The clarification (https://www.irs.gov/newsroom/taxpayer-first-act-cybersecurity-and-identity-protections) notes Section 2202 of Taxpayer First Act “applies only to disclosures made by the Internal Revenue Service after December 28, 2019, and any subsequent redisclosures and use of such information disclosed by the Internal Revenue Service after December 28, 2019.”
With this clarification, seasoned loans and loans in the pipeline with transcript information received from the IRS prior to December 28 are not covered by the new consent requirement.
MBA, which has been working with the IRS and industry stakeholders on this issue, said its expects the GSEs will update their published guidance to reflect this IRS clarification.
MBA has been working with a broad range of stakeholders and policymakers, including the IRS and Treasury Department, the Federal Housing Finance Agency, Fannie Mae, Freddie Mac and Congress to obtain clarification ahead of the December 28 effective date and before the holiday break, that addresses market uncertainty about whether the new consent requirement could impact seasoned loan sales and loans in the pipeline.
MISMO, which worked to develop consent language that would meet the requirements of Section 2202, updated its FAQs page to reflect this much-needed IRS clarification (http://www.mismo.org/standards-and-resources/additional-tools-and-resources/taxpayer-consent-language).
For more information on this issue, MBA members can contact Fran Mordi, MBA Associate Vice President of Residential Policy, at firstname.lastname@example.org or (202) 557-2860 or Rick Hill, MBA Vice President of Industry Technology, at email@example.com or (202) 557-2718.