Must be nice not to have to file taxes....or is it?

He doesn't file taxes, can he still get a loan?

Have you ever worked with a client who wasn't required to file tax returns?  Our office was recently working with a gentleman who, because of his age and earnings, wasn't required to file a tax return.

In recent years, lenders have been REQUIRED to pull what's called a 4506-T, or verification of Tax Transcript.  It's been required from really an auditing standpoint to make sure that the tax returns the borrower provides the lender for qualifying purposes are INDEED the same returns they provided the IRS.  In a nutshell, it's all to make sure that the borrower isn't falsifying earnings.

Well, in the above scenario, since the client isn't required to file, the question came up of "how will that effect his ability to obtain a loan?"  Investor guidelines are VERY specific in that ALL transactions require a 4506-T to be obtained prior to the closing of the loan.

We were informed that the borrower will need to obtain written verification from the IRS substantiating the fact that they were not required to file.

The investor may still elect to pull the 4506-T, (which will probably come back stating "no match found")however by having the written verification directly from the IRS that pertains to this client, the underwriter can move the file forward without the normally required 4506-T

So, for any of you agents working with folks who may fall under this scenario, it may be a good idea to have them get a head start on contacting the IRS prior to getting overly involved in the loan process, as who knows how long it might take for the IRS to respond to this particular request.