We recommend obtaining a taxpayer consent form for any taxpayer whose tax return information you will be requesting from the IRS. For a non-borrowing spouse, your bank may be requesting a joint tax return that will include tax return information for both spouses, and in that case, we recommend obtaining both spouses’ consent.

If a borrower refuses to sign a taxpayer consent form, we believe that a loan may be denied on that basis. While you may be able to obtain tax return information directly from the borrower, your bank may understandably prefer to obtain this information directly from the IRS. We do not believe that a loan denial on the basis of a refusal to sign the consent would present any fair lending concerns, although we do recommend documenting your reasons for denying the loan as a business necessity. 

For resources related to our guidance, please see:

• Internal Revenue Code, 26 USC 6103(c) (“The Secretary may, subject to such requirements and conditions as he may prescribe by regulations, disclose the return of any taxpayer, or return information with respect to such taxpayer, to such person or persons as the taxpayer may designate in a request for or consent to such disclosure, or to any other person at the taxpayer’s request to the extent necessary to comply with a request for information or assistance made by the taxpayer to such other person. However, return information shall not be disclosed to such person or persons if the Secretary determines that such disclosure would seriously impair Federal tax administration. [Additional text added by the Taxpayer First Act, effective December 28, 2019: Persons designated by the taxpayer under this subsection to receive return information shall not use the information for any purpose other than the express purpose for which consent was granted and shall not disclose return information to any other person without the express permission of, or request by, the taxpayer.]”)

• FFIEC Interagency Fair Lending Procedures, page iv (“When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a ‘disparate impact.’ . . . The fact that a policy or practice creates a disparity on a prohibited basis is not alone proof of a violation. When an Agency finds that a lender’s policy or practice has a disparate impact, the next step is to seek to determine whether the policy or practice is justified by ‘business necessity.’ The justification must be manifest and may not be hypothetical or speculative. Factors that may be relevant to the justification could include cost and profitability. Even if a policy or practice that has a disparate impact on a prohibited basis can be justified by business necessity, it still may be found to be in violation if an alternative policy or practice could serve the same purpose with less discriminatory effect.”)