topic Re: 2011 IRS Installment Plan and Closing in Mortgage Loans

2011 IRS Installment Plan and Closing

JGWantsAHouse — Thu, 08 Mar 2012 13:20:07 GMT

My lender has asked for a copy of my tax returns from 2010 or 2011. I can not find my 2010 return so I decided to complete my 2011 return (otherwise I’d have to wait forever to get a copy of my 2010 return). I owe about $2600 and plan to go into an installment agreement with the IRS, but I’m not sure how this will effect my mortgage loan application.

Will I have to pay my balance due to the IRS before closing? Will it be factored into my DTI ratio?

Re: 2011 IRS Installment Plan and Closing

llecs — Thu, 08 Mar 2012 14:59:08 GMT

Don't volunteer that info; I don't think they'd know anyway. As far as they know, you used an alternative account or CC to pay the bill. Or even wait until April 15 to enter into an installment with the IRS to buy a month.

Re: 2011 IRS Installment Plan and Closing

JGWantsAHouse — Thu, 08 Mar 2012 15:04:07 GMT

Thanks! I was going to print it and sign it but not send it until April 17th. I just don't want them asking for me to pay it at the last minute. I don't even know why thy need it. Heck they are already ordering 3 years tax transcripts.

Re: 2011 IRS Installment Plan and Closing

llecs — Thu, 08 Mar 2012 15:12:12 GMT

JGWantsAHouse wrote:
Thanks! I was going to print it and sign it but not send it until April 17th. I just don't want them asking for me to pay it at the last minute. I don't even know why thy need it. Heck they are already ordering 3 years tax transcripts.

That's weird they are asking for a copy from you if they already requested it via a 4506-T. Maybe they wanted to jump on it while they wait to hear back from the IRS? I dunno.

Re: 2011 IRS Installment Plan and Closing

JGWantsAHouse — Fri, 09 Mar 2012 17:06:42 GMT

I guess so. They are requesting 2009, 2010 and 2011 transcripts from the IRS and either 2010 or 2011 returns from me.
I'm just going to submit 2011 taxes and cross my fingers that I'm not required to pay them before closing.

*edited to correct the years of transcripts requested.

Re: 2011 IRS Installment Plan and Closing

courtney091082 — Thu, 08 Mar 2012 18:39:03 GMT

Is it typical for a lender to ask for that many years in tax transcripts? Just wondering...

Re: 2011 IRS Installment Plan and Closing

BreezyWe — Thu, 08 Mar 2012 19:32:01 GMT

Mine asked for 2010 2011

Re: 2011 IRS Installment Plan and Closing

chan85 — Fri, 09 Mar 2012 16:10:56 GMT

Do they want the tax transcripts or can i just provide my copies of the taxes i filed electronically through TurboTax??

Re: 2011 IRS Installment Plan and Closing

JGWantsAHouse — Fri, 09 Mar 2012 17:15:30 GMT

From what I have read online tax transcripts are required to close the loan. I signed an 4506-T form at the very beginning of the process.

Re: 2011 IRS Installment Plan and Closing

Dagstar — Fri, 04 May 2012 18:15:40 GMT

So, did it all work out?

Re: 2011 IRS Installment Plan and Closing

JGWantsAHouse — Fri, 04 May 2012 18:46:21 GMT

It did. I submitted my tax returns and nothing was ever said about it.

Re: 2011 IRS Installment Plan and Closing

Dagstar — Fri, 04 May 2012 21:03:16 GMT

I have kinda the same thing going on. I provided all the detail and documentation that I was asked for. We got an immediate approve/elligible. I understand that's the best type of response. We locked in the rate and away we go. Now, I get the forms in the mail and they want me to sign a 4056t form. I was not asked to provide tax information before....just w2's. My concern is that for our 2011 taxes we owe more than ever before. I filed the takes on time and started to request an installement agreement online, but could never get it past the 1st screen on the irs web page.

I called the irs today. The reason I couldnt do it on their web page was because my return hasnt been processed yet. The irs agent found my return and set up a payment plan.

So, I feel I did all the responsible appropriate things I was supposed to do but I wonder about a few things.

1) Is the mortgage company even going to pull this from the IRS before my scheduled closing in 30 days? I've read that it often gets pulled after the closing and put in the file for documentation of fraud in case there is a default (for employeed applicants, not self-employeed). I've read that the IRS is taking 4-6 weeks to return these documents.

2) If it does get pulled and reviewed prior to the closing, will they use the payment plan as part of my debt to income ratio.

My gut feel is that this is simply a formality that gets put into a file after the fact since I'm not self employeed (I'm salaried) and I provided W2's, pay stubs, and documentation from my employer.

Any thoughts

Re: 2011 IRS Installment Plan and Closing

rckstrscott — Sat, 05 May 2012 04:57:20 GMT

Dagstar wrote:
I have kinda the same thing going on. I provided all the detail and documentation that I was asked for. We got an immediate approve/elligible. I understand that's the best type of response. We locked in the rate and away we go. Now, I get the forms in the mail and they want me to sign a 4056t form. I was not asked to provide tax information before....just w2's. My concern is that for our 2011 taxes we owe more than ever before. I filed the takes on time and started to request an installement agreement online, but could never get it past the 1st screen on the irs web page.

I called the irs today. The reason I couldnt do it on their web page was because my return hasnt been processed yet. The irs agent found my return and set up a payment plan.

So, I feel I did all the responsible appropriate things I was supposed to do but I wonder about a few things.

1) Is the mortgage company even going to pull this from the IRS before my scheduled closing in 30 days? I've read that it often gets pulled after the closing and put in the file for documentation of fraud in case there is a default (for employeed applicants, not self-employeed). I've read that the IRS is taking 4-6 weeks to return these documents.

2) If it does get pulled and reviewed prior to the closing, will they use the payment plan as part of my debt to income ratio.

My gut feel is that this is simply a formality that gets put into a file after the fact since I'm not self employeed (I'm salaried) and I provided W2's, pay stubs, and documentation from my employer.

Any thoughts

Well, the transcripts will indicate that you still owe taxes for 2011, but 2011 is so recent, I don't know what the protocol is (naybe they dont look at 2011 yet?)... my lender advised me really early on that this would happen (the transcript pulling), and I had to pay off about 9k of back taxes prior to apping for the house as opposed to payment plans..

I had to give them 2009, 2010 and 2011 W2s, my tax filings with schedules, and they were still pulling the transcripts.. I think the idea is, W2s can be faked, your tax documents can be faked, but the transcripts cannot. I can give a lender a W2 I fabricated on my computer. The only way they can verify it is to match the numbers up with the IRS

My LO (who is a poster on this forum from time to time) indicated to me that if I entered into a payment plan, they will need to see ontime payments at the minimum of 6 months (more likely a year) and that would be included into my DTI.. it just wasn't worth it for me, so I took some downpayment money to address it.

Re: 2011 IRS Installment Plan and Closing

Dagstar — Wed, 23 May 2012 13:27:59 GMT

After doing more research, I think the 2nd comment on this thread is dead on. FannieMae guidlines updated this month state that a lender needs to get a signed 4506t either during processing or at closing. It does not state that the 4506t needs to be ordered from the irs. It does state that the transcripts need to be ordered if the loan is pulled for qc. Also, FannieMae clearly states that this form is for income verification...not looking into paid or unpaid taxes. Not for the purpose of finding out if a customer has paid taxes or is in a payment plan with the IRS.

Additionally, the 4506t form from the IRS clearly states that a Return Transcript does not provide information on if a tax has been paid or not.

So, what gives with comments on other posts about being rejected if you havent been in a payment plan more than 6 months or needing to pay taxes in full immediately?

In my case, we filed our taxes on time always. This year we did as well. We owe tax for the first time in years. I immediately attempted to set up a payment plan, but couldnt because you cant until the irs has processed the tax documents. In between that time we started the mortgage process. W2s were provided for loan process. Tax copies were never requested. The process is well on the way and looking good. We have now entered into a payment plan with IRS. So, in a perfect world all would seem fine.

But again, you read some of the comments on here from mortgage people an its all doom and gloom.

Re: 2011 IRS Installment Plan and Closing

rckstrscott — Wed, 23 May 2012 13:46:21 GMT

Dagstar wrote:
After doing more research, I think the 2nd comment on this thread is dead on. FannieMae guidlines updated this month state that a lender needs to get a signed 4506t either during processing or at closing. It does not state that the 4506t needs to be ordered from the irs. It does state that the transcripts need to be ordered if the loan is pulled for qc. Also, FannieMae clearly states that this form is for income verification...not looking into paid or unpaid taxes. Not for the purpose of finding out if a customer has paid taxes or is in a payment plan with the IRS.

Additionally, the 4506t form from the IRS clearly states that a Return Transcript does not provide information on if a tax has been paid or not.

So, what gives with comments on other posts about being rejected if you havent been in a payment plan more than 6 months or needing to pay taxes in full immediately?

In my case, we filed our taxes on time always. This year we did as well. We owe tax for the first time in years. I immediately attempted to set up a payment plan, but couldnt because you cant until the irs has processed the tax documents. In between that time we started the mortgage process. W2s were provided for loan process. Tax copies were never requested. The process is well on the way and looking good. We have now entered into a payment plan with IRS. So, in a perfect world all would seem fine.

But again, you read some of the comments on here from mortgage people an its all doom and gloom.

I personally wasn't being doom and gloom, I was merely relaying my experience and what I was informed by my loan officer.. I have no way to verify what my lender did or did not do, all I know is I did what I was advised to do and I close on Thursday :) It worked out for me, so I am happy. But it seems to be working out for you the way you wanted it to, and that is awesome as well.

My loan officer would not even give me a pre-approval with my back tax issue, unless I was under payment for 6 months. So I opted to pay it. That is what gives with my comment that you would have to be under a payment plan for 6 months. In my situation, it was what was required of me.

Conversely, whether or not the 4506t can be used for checking the back taxes you owe (which it sounds like your research, it doesn't) you still have to disclose you owe this money on your application, and it YMMV at that stage. My lender would not approve with back taxes. Period. Not doom and gloom, just my lender, my experience.

I am glad this worked out for you!

-scott

Re: 2011 IRS Installment Plan and Closing

Dagstar — Wed, 23 May 2012 13:55:11 GMT

I should add that the doom and gloom comment was not referring to anyone that commented on this specific post. It was referring to comments I've read on other posts.

Re: 2011 IRS Installment Plan and Closing

rckstrscott — Wed, 23 May 2012 14:04:34 GMT

Dagstar wrote:
I should add that the doom and gloom comment was not referring to anyone that commented on this specific post. It was referring to comments I've read on other posts.

I will agree with you.. While I did appreciate the 'direct' comments when I started getting ready, I don't think the process itself was nearly as difficult as I expect it to be..

-scott

Re: 2011 IRS Installment Plan and Closing

Catacam — Wed, 23 May 2012 15:01:12 GMT

We had to clear the 4506 before they fund. I think all federal loans do. They also have to pass a LDP and GSA search. Many people don't ever see this happen because it happens in the background. I can only see it because I figured out the lenders wholesale site and can look at my file whenever I want!

Re: 2011 IRS Installment Plan and Closing

GMTII — Fri, 28 Sep 2012 15:36:17 GMT

I had filed an extension in april and had an agreement for my 2009 taxes to pay them around novemeber. I've tried to do a lot of searching on what to have done, and one thing I overlooked was to have had this years taxes filed. It never crossed my mind, and I was never asked. Lucky for me I ran across it. I filed last night, paid last night, and paid $2600 this morning to pay off my installment. The bad thing is, it looks like it takes a while after you file to get transscripts. I'm guessing this is going to delay my closing. I sent my LO the copy of the check, and the stamp the IRS put on it. The stamp, just says they recieved it. I noticed that the IRS had already accpeted my return though, that's a good thing.

I wonder if I'll have any chance to close by the end of october, and what I can do to push it out...

Re: 2011 IRS Installment Plan and Closing

rkb84 — Tue, 27 Nov 2012 18:37:01 GMT

GTMII how long did the IRS take to accept your return once you sent it late? I am going to have to wait on them I think hope it goes through before the 19th of Dec.