If you have questions about the SBA Procedural Notice 5000-829416 and Tax Guard’s process, get answers to the most frequently asked questions here:
What is SBA Procedural Notice 5000-829416?
- Effective March 9th, 2022, Procedural Notice 5000-829416 states that SBA Lenders may use either IRS Form 4506-C or IRS Form 8821 to obtain tax data needed for 7(A) and 504 loans.
- These procedural changes will be incorporated into the next update of SOP 50 10.
Why did the SBA issue this notice?
- Historically, SBA lenders have obtained IRS verified Tax Return Transcripts through various channels, including IRS Form 8821. This notice offers additional guidance on SBA Lender’s SOP requirements regarding the usage of Form 8821.
Why are lenders now required to be a designee on the Form 8821?
- Our understanding is that the SBA wants to confirm that the required Tax Return Transcripts are being provided directly from the IRS through a lender or authorized third party, not from the borrower or their accountant. Having the lender listed as a designee on Form 8821 confirms that the borrower intends to disclose these official tax documents to their lender and Tax Guard.
What is the CAF number listed on line 2 of Form 8821 and why do I need it?
- An IRS CAF number is a unique nine-digit identification number and is assigned the first time your organization files a third-party authorization with IRS. The issuance of an assigned CAF number to your organization is an administrative act for internal recordkeeping at the IRS. The IRS will record that your organization has the authorization to request the information on behalf of the taxpayer (borrower and/or seller).
How do I get a CAF number and how long does it take?
- Tax Guard will add your organization as a designee to the Form 8821 in Section 2, and after the IRS processes your initial submission, they’ll issue your organization a CAF number. Within 3 to 6 months (dependent upon the IRS’ capacity), the IRS will mail a confirmation letter via USPS assigning the CAF number to your organization’s address listed in the designee section of Form 8821.
What do we do when we get our assigned CAF number in the mail?
- Contact Tax Guard’s Customer Success team via support@tax-guard.com or call 877-550-6325 ext. 1, with the assigned CAF number to update the Form 8821 associated with your account.
Will you still offer the ability to complete 4506-C forms for our records?
- For the time being, yes. Please note, if you are utilizing Tax Guard’s solution to acquire your borrower’s federal tax data, you are not required to have a Form 4506 –C in the borrower’s loan file.
- If you still have our 4506-C creation feature turned on and wish to turn it off, please contact Tax Guard’s Customer Success team via support@tax-guard.com or call 877-550-6325 ext. 1.
How can I ensure my transcripts include any changes to the return after processing?
- Per this SBA Notice, “SBA Lenders must ensure the type of transcript requested contains any changes to the original return, if filed by the small business borrower.”
- The Record of Account transcript is the closest thing to that requirement that is available via the IRS systems.
- Tax Guard can preselect this transcript type for you in the portal so it comes with your orders automatically. Please contact Tax Guard’s Customer Success team via support@tax-guard.com or call 877-550-6325 ext. 1 to set up this default setting.
What are Record of Account Transcripts and how are they different from Tax Return Transcripts?
- A Record of Account Transcript combines the tax return transcript and tax account transcripts into one complete transcript.
- It offers peace of mind by providing insight into the taxpayer’s return information that might have changed after an original return was filed.
- The transcript is available for the current tax year and returns processed during the prior three years.
- This feature is available for all API and portal users and can be added to any order type.
Are the procedural changes in the notice permanent?
- This Procedural Notice technically expires on March 1st, 2023. However, the notice confirms that, “these procedural changes will be incorporated into the next update of SOP 50 10.” The SBA has indicated that this next SOP update should occur in 2022 — prior to this notice’s expiration date.
For additional questions, please contact Tax Guard’s Customer Success team via support@tax-guard.com or call 877-550-6325 ext. 1.
