Diligence in underwriting can be the difference between a successful lending relationship and one that ends up in default. This is the first installment in a series of 6 regarding improving underwriting habits to protect the lenders collateral.
Bad Habit #1. Assuming a Federal Tax Lien Will Be Filed If a Tax Debt Exists.
The IRS does not always file a tax lien. According to the U.S. Government Accountability Office, only 40% of all unpaid payroll tax liabilities currently in the IRS’ inventory have a tax lien filed against them.
Ten days after the IRS sends the taxpayer the initial notice of assessment, a “statutory” or “silent” lien is in place as an operation of law. The IRS does not have to file the notice of federal tax lien (NFTL) or provide public notice to third parties before they can seize assets!
Since the “silent lien” may already exist and will not be discovered by a public records search, the existence of this lien can have a big impact on the lender’s collateral.
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, monthly monitoring/real-time lender risk alerts, and resolution/compliance