Building a Proprietary Dataset of Business and Individual Tax Records

April 19, 2023

It's worth noting that the IRS IVES program has been criticized for not working well for businesses, despite being designed to assist employers and other approved entities with their compliance needs. According to IRS sources, the IVES system has never really worked for businesses. In a recent report published by Treasury Inspector General for Tax Administration, it was revealed that a request for tax transcripts through the 4506-C process took up to 550 hours in 2022.

At ModernTax, our mission is to build the largest database of public and private tax records on businesses. Our goal is to help other businesses utilize this data for better monitoring, transactions, and overall business with the 30 million US small businesses.

We primarily source our data from the IRS and are focused on building a proprietary dataset of business and individual tax records. Our aim is to make this data more accessible and create a more transparent experience.

ModernTax works with financial institutions and partners such as Kanmon Lending, Principal Financial Group, and Flyhomes Mortgage. We either add to their current data on a consumer or business, or use it for traditional KYB/KYC, income verification, and revenue recognition.

In this document, we will lay out our process of utilizing the IRS's 8821 processes for accessing tax records and how ModernTax is using it to build our proprietary dataset.

The Advantages of the 8821 Process

When asked why ModernTax favors the [8821 processes]( Form 8821 to%3A,revoke prior tax information authorizations.) over the 4506-C process where there are already 600 or more IVES vendors, we felt that the IRS offered a better, more reliable system with the 8821 process which lives on the TDS system designed to serve the tax preparation industry and versus the mortgage or financial services industry.

The choice was not novel, it was practical because the IRS makes most of its money from the tax preparation industry versus financial services, so there's a lot better technology stack built there. There's a larger network effect as well that includes over 70,000 registered tax professionals who can get near real-time access to tax records.

The Coverage of ModernTax's Proprietary Dataset

ModernTax's proprietary dataset currently covers hundreds of thousands of proprietary and private tax records on US-based businesses. We have been building ModernTax 2.0 in the past three months, and as more representatives sign up, they're able to license that data out. While they're not at scale yet for a one-to-many verification, that is a growing part of their business. The company's goal is to cover as many small businesses and individuals as possible.

Ongoing Monitoring Capabilities

The choice made to utilize the 8821 processes also gives ModernTax a unique advantage of ongoing monitoring capabilities, which are part of their data business. We work with tax agents to go validate business records, and they provide and license out that data to other parties like banks, credit unions, direct insurance carriers, and others. The tax agents that work with ModernTax to validate business records and license out that data to other parties like banks, credit unions, and direct insurance carriers create a network effect.

Automating the 8821 Process

ModernTax's decision to use the 8821 process requires them to build more infrastructure to keep the tax agents job automated, track each unique request, and track error rates, and SLAs. Additionally, they must deliver the data in a format where their customers can quickly access the data, add it to their credit models, and make decisions. The IRS has a fax-based process for how you request this information. If you've automated and used their API on the backend, there's an actual human doing the underwriting of the request, checking for a business name, EIN number, and officer, and all the proper 8821 line items are checked manually. The end goal is to provide the data to their customers quicker, faster, better, and cheaper than it would take other vendors. They do all the heavy lifting on the back end of this process to make it more efficient and faster for their customers.

Helping Underwriters Make Better Decisions

While ModernTax's proprietary dataset is useful for many different industries, the company's value proposition is helping an underwriter make a decision faster and more efficiently. They help banks say yes to more good notes and more bad ones. Modern Tax is always looking for ways to help speed up the underwriting process for banks.


ModernTax's proprietary dataset of business and individual tax records, primarily sourced from the IRS using the 8821 processes, is a game changer for America's small businesses. Traditional methods to access IRS tax records can take weeks or even months, a time frame that is simply not feasible for small businesses that need real-time data to make informed decisions. By automating every part of the 8821 process except for the actual underwriting of the request, ModernTax is able to provide data quicker, faster, better, and cheaper than other vendors.

One real-time use case for Modern Tax's proprietary dataset is in the banking industry. When small business owner applies for a loan, they need to provide the bank with their financial information, including tax records. Banks use this information to decide whether or not to approve the loan. With access to ModernTax's proprietary dataset, banks can get up-to-date information on a business's financial situation, which helps them make better underwriting decisions. This can result in more good loans being approved and fewer bad loans being approved, which ultimately benefits everyone involved.

Another real-time use case is in the insurance industry. Insurance companies use a variety of factors to determine a business's risk level, including its financial situation. With access to ModernTax's proprietary dataset, insurance companies can get a more accurate picture of a business's financial situation, which helps them determine the appropriate premiums to charge. This benefits the insurance company by ensuring they are charging the appropriate amount, and it benefits the business by ensuring they are not overpaying for insurance.

ModernTax's focus is on helping underwriters make better decisions by providing data quicker, faster, better, and cheaper than it would take other vendors. While the company's proprietary dataset currently covers hundreds of thousands of records, its goal is to cover as many small businesses and individuals as possible. With ongoing monitoring capabilities and a fully automated 8821 process, Modern Tax is well-positioned to help businesses stay up-to-date with changes in their financial situation and make better underwriting decisions.

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