In our last two blogs, we discussed the importance of the relationship between a tax servicer and tax agency, and how a good relationship benefits the lender. As a quick recap, here is the general concept.
Tax servicers must work closely with tax agencies to obtain tax amounts and due dates, but each tax office has its own process to follow. Obtaining this information is no small feat for the servicer, and the tax collector is also extremely stressed during this hectic time. Tax servicers who proactively reach out to the tax agencies to discover the best process for both parties and develop a good relationship generally have an easier time collecting the information they need in a timely and cost-effective manner—which directly benefits the lender and its borrowers.
There are countless markers of a good tax servicing partner for lenders to work with, as these vendors are certainly not all created equal. This blog will focus on the servicer’s relationship with tax agencies, and how a lender can assess this to make an informed outsourcing decision.
How to assess a tax servicer in this area
If you are a lender exploring vendors to outsource this operation - or even if you already have a tax servicer - you may wonder how you can assess the company’s cooperation and relationships with tax agencies. Considering the increased value to lenders when this positive relationship exists, it is certainly worth adding this factor to a purchasing or evaluation decision.
You may want to start, especially if you already work with a vendor, by simply asking how they work with tax agencies to obtain the needed information. Look for answers that mention proactive communication, a tailored process for different agencies or others that suggest high levels of cooperation. On the flip side, if the servicer brushes the question, gives you a “deer in the headlights” look or says they have a “one-size-fits-all” approach, that should give you all the answer you need.
If you are evaluating potential vendors, you may want to make this part of your RFP process. Consider adding a couple questions around this topic to your standard RFP, and do additional digging as you move along the evaluation process. You may also want to talk to some local tax agencies to see who they have experience working with, and which companies they have good (or bad) relationships with.
Additional resources
Ready to get started but want more direction? Download our Tax Servicers and Tax Agencies: Better Together resource for a sample list of questions to ask a servicer and more suggestions on evaluating vendors.
