Using IRS data to determine business & financial stability
4506T Form provides a complete record of a business’ financial history and present condition. For example, Form 1120-S contains a brief overview of a corporation’s income, profits and losses. There are income verification companies, such as Private Eyes that retrieve a tax transcript directly form the IRS. This information is passed on to lenders that need to ensure the reliability of their borrowers.
Verification of Identity: SSA-89
Lenders cannot rely solely on words to determine the legitimacy of an individual. An SSA-89 form is an official government document used to verify the names and SSN of an individual.
Verification of Income, Assets, and Expenses: 4506-Transcript
Lenders need to know that a business has the right assets to make loan payments. They must consider the financial history and background of each borrower/entity. 4506T Form provides a brief yet detailed overview of a company’s income, assets and expenses. When lenders do not verify this information, they are more likely to find borrowers who default on their loans.
Special expenses are not related to business and must be thoroughly investigated. Lenders should consider all the investments that a business is making and know if the returns are worth the spending. A business that is investing in a handful of other businesses is more likely to default than one that’s not making any investments.
In the world of business, trust is earned and never given. One business cannot rely solely on the word of another without thorough investigation. In addition, many companies that appear trustworthy on the surface may be embellishing information about their financial data to obtain bigger loans. Using government-issued IRS data is the most reliable way to learn accurate financial details about a business. This verification is necessary to ensure that business owners can afford their loans and repayments.
Have questions on how to get set up for IRS Tax Transcripts? Speak to an expert for more information.