SBA SOP 50 10 8, A.Ch5.B — IRS TAX TRANSCRIPT/VERIFICATION OF FINANCIAL INFORMATION
Verbatim text of SBA SOP 50 10 8 section A.Ch5.B (IRS TAX TRANSCRIPT/VERIFICATION OF FINANCIAL INFORMATION), effective 2025-06-01. 3 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, A.Ch5.B — IRS TAX TRANSCRIPT/VERIFICATION OF FINANCIAL INFORMATION — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 A.Ch5.B
B. IRS TAX TRANSCRIPT/VERIFICATION OF FINANCIAL INFORMATION 1. The purpose of SBA’s Tax Verification process is to determine if: The Applicant filed business tax returns; and The Applicant’s financial statements provided as part of the application agree with the business tax returns submitted to the IRS. 2. If an Applicant has not filed required Federal tax returns, the Applicant is not eligible for SBA financial assistance. 3. For a sole proprietorship, the SBA Lender must verify the Schedule C. For a change of ownership, the SBA Lender must verify the seller’s financial data, including a selling sole proprietor’s Schedule C, except when there is an acquisition of a division or a segment of an existing business, the SBA Lender may use alternative forms of third-party verification such as third-party CPA-prepared or reviewed financial statements, sales tax payment records, transient occupancy tax, credit reporting services, etc., to verify the seller’s financial data. 4. SBA Lenders must obtain tax return transcripts and reconcile the Applicant’s financial data against the tax transcripts, for 7(a), prior to first disbursement of loan proceeds, or for 504, prior to submitting the request to fund the debenture: If the Applicant is determining eligibility under the SBA size requirements using the:
SOP 50 10 8 A.Ch5.B.i
i. NAICS Size Standard: For the Applicant, or the Operating Company if the Applicant is an EPC, for the last 3 years, (unless Applicant or Operating Company is a Start-Up Business). If the business has been operating for less than 3 years, the SBA Lender must obtain the information for all years in operation.
SOP 50 10 8 A.Ch5.B.i.ii
ii. Alternative Size Standard: For the Applicant, or the Operating Company if the Applicant is an EPC, for the last 2 years. If the business has been operating for less than 2 years, the SBA Lender must obtain the information for all years in operation. iii. The requirements in i. and ii. above does not include tax information for the most recent fiscal year if the fiscal year-end is within 6 months of the date SBA received the application. If the Applicant has filed an extension for the most recent fiscal year, the SBA Lender must obtain a copy of the extension along with evidence of payment of estimated taxes. SBA Lenders may obtain tax transcripts through either of the following methods: i. Through the IRS’s Income Verification Express Service (IVES) program: SBA Lenders may either enroll in IVES or contract with an IVES participant. Additional information on IVES enrollment is available at www.irs.gov/individuals/ives-enrollment-procedures. Or; ii. By fully completing and submitting IRS Form 8821: a) SBA Lenders must ensure the type of transcript requested contains any changes to the original return. b) The SBA Lender must be listed as designee on line 2 of IRS Form 8821. If the SBA Lender uses an LSP for the application, both the SBA Lender and the LSP must be listed as designees on line 2 of IRS Form 8821. c) SBA will not permit the borrower or its own tax preparer or enrolled agent to file IRS Form 8821 for an SBA loan. If the IRS advises that it has no record on the Applicant or no record of any of the required years of transcripts, no disbursements may be made on the loan and either the loan must be canceled, or the closing must be postponed until the issue is resolved. For loans where 3 years of transcripts are required: If the IRS transcript reflects “Record Not Found” for the middle year of the 3 years requested, and the SBA Lender has verified the other 2 years, AND the Applicant has some record of either receiving a refund or paying the taxes for the missing year, then the SBA Lender may reasonably assume that the Applicant filed a return for the missing year. If the SBA Lender documents all these steps in its loan file, the SBA Lender has demonstrated to SBA that it has made a good faith effort to satisfy the verification requirement. If the SBA Lender does not receive a response from the IRS or the copy of the tax transcript within 10 business days, the SBA Lender must follow up with the IRS to obtain and verify the tax data by resubmitting a copy of IRS Form 4506-C or IRS Form 8821 to IRS with the notation “Second Request” in the top right-hand side. Any significant differences must be resolved to the satisfaction of the SBA Lender, and, if processing the loan under non-delegated procedures, to the SBA loan processing center. i. For a 7(a) Lender processing a loan under its delegated authority, the Lender may proceed to close and disburse the loan; however, if the Lender disburses the loan and is unable to obtain the tax transcript and, when applicable, reconcile the tax transcript with the financial data provided by the Applicant, the guaranty may be subject to repair or denial; ii. For a CDC processing a 504 loan under PCLP or ALP Express authority, the CDC may proceed to close and disburse on the interim loan, however, the CDC may not submit the closing package for the debenture sale until the CDC is able to reconcile the IRS information. 5. Exception for U.S. Territories: For Applicants located in U.S. Territories when the Applicant is not required to file Federal income tax returns, in lieu of obtaining and verifying tax data from the IRS, SBA Lenders must verify the receipt-stamped copies of the income tax returns filed with the territory’s taxing authority, as applicable. This exception applies any place in this SOP that references tax transcripts.
Operationalizing SBA SOP 50 10 8, A.Ch5.B — IRS TAX TRANSCRIPT/VERIFICATION OF FINANCIAL INFORMATION
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Source of record: https://claudeforcompliance.com/regs/sba-sop-a-ch5-b/
· register sba-sop-a-ch5-b · Claude for Compliance. Free to read and download;
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