A borrower’s tax transcripts come back blank. Your verification vendor says, “Contact the IRS.” Your loan sits in limbo for 60-90 days while a CPA figures out the business filed as a 1120S but needed to be a C-Corp.
This happens every week for our 20+ commercial lender clients. And it happens because the tax data infrastructure market has been sliced into three disconnected layers—verification, discovery, and servicing—and nobody owns the full stack.
Until now, that fragmentation was just friction. In a world where AI can move data in minutes instead of weeks, it’s becoming a competitive disadvantage for vendors who only touch one piece.
For context, verification is day-to-day tax and income retrieval—transcripts, W-2s, 1099s delivered to close loans and verify employment.
At the consumer level, Equifax dominates. Reports are that the WorkNumber generated $5B+ annually in 2025, mainly in mortgage. One of our mortgage partners pays $300,000/month for 1,000 applications—because they pull verification three times per loan:
“We pull WorkNumber upfront to validate income for borrower qualification. Then we pull it to ingest into the Automated Underwriting System to get Day 1 Certainty from Fannie Mae. Then we pull it a third time for final VOE.”
For businesses, it’s more fragmented. Our biggest competitor in this segment claims (60% market share, $60-70M revenue). They’ve uncovered 386,007 tax liabilities worth $10.3B. Eighteen of the top 20 SBA lenders use them.
But here’s the gap that has allowed us to convert ten of their customers in the last 3 months: when transcripts return blank, verification vendors return nothing else. No explanation. No next steps, just simply, “Contact the IRS.”
The operator insight: Verification is table stakes. Every loan over $500K requires it. Every SBA 504 requires it. But verification alone doesn’t tell you why transcripts are missing—and that’s where deals die.
→ We deliver same-day transcripts via an API or direct portal—no expedited fees, no 7-10 day waits. See how it works
Discovery is pre-verification intelligence. It confirms entity status before you request tax transcripts.
This layer doesn’t exist for individuals because the consumer filing variance is 1. For businesses, that variance can be 100. A single SBA deal can often involve 5-12 entities: ownership stakes, guarantors, buyers, sellers, and related businesses. Each unique entity needs verification. Each can fail for different reasons.
“No record found” can mean:
Wrong entity type (filed as S-Corp, should be C-Corp)
Unfiled years (formed November 2023, doesn’t require 2022 return)
State-level inactive status
The entity doesn’t exist at the IRS yet
Here’s what we hear from lenders:
“Typically, even with Vendor A and Vendor B, they just say ‘no records’ unless we approach them. Usually it ends right there. We just have to tell borrowers to call the IRS directly.” — National leader in 504 SBA lending
Discovery turns this on its head. We partner with ClearFirm to power this inside ModernTax. Key insights include:
Entity filing status: Is this really a partnership? An S-Corp? When was the election held?
Establishment dates: Does 2022 even require a return if they formed in November 2023?
NAICS code eligibility: Critical for SBA size standards
State registration cross-reference
Filing history gaps
Real example from last week: ABC Corp’s verification came back blank. A competitor said, “Contact the IRS.” Our ClearFirm discovery showed: business was state-inactive since 2016 but still operating, no IRS filings on record for the required years. The borrower needed to back-file before verification could succeed.
That insight saved weeks of back-and-forth and let the lender make an informed decision on the timeline.
The market gap: Discovery is essentially a new category, as it goes beyond core KYB and gets to the details of real compliance scoring as it relates to specific underwriting criteria for specific offerings. Verification vendors don’t do it—they’re optimized for throughput, not investigation. CPAs could do it, but they don’t have the data infrastructure.
→ ClearFirm explains every "no record found." Plans start at $499/month for 50 lookups. Request a demo
When discovery reveals problems, someone has to fix them. That’s servicing: tax prep, resolution, amendments, payment plans.
The market is ~$23B. Consumer is dominated by H&R Block ($3.6B revenue) and Intuit ($180B market cap). Business servicing is fragmented among local CPAs and a host of newly funded rollups, full-stack tax and accounting firms backed by venture capital.
The B2B opportunity is clear:
When verification finds a missing 2023 return, someone has to file it
When discovery reveals an incorrect S-Corp election, someone has to amend it
When a business has an IRS balance, someone has to negotiate a payment plan
Why don’t verification vendors do this at scale? Different expertise (compliance vs. accounting). Different business model (transactional vs. relationship). Different risk profile (data delivery vs. professional liability).
The operator insight: Most lenders refer to the borrower or the borrower’s third-party CPAs when issues surface. That creates handoffs, delays, and costs. What we’ve also learned is that the disconnect usually forces lenders and borrowers to miss the mark and deadlines, and to do things that are unruly to get deals done. An integrated servicing layer converts compliance problems into solved problems without the borrower scrambling for help.
→ We handle back-filing, amendments, and payment plans —so your borrowers get loan-ready without the CPA scramble. Learn more
Building verification, discovery, and servicing in one solution wasn’t manageable 24 months ago. It is now.
Why integration wins:
1. Discovery → Verification sequence. This allows our customers to confirm entity status before requesting tax transcripts. Stop wasting 8821s on entities that will return blank. The cost savings here are real, as pure transcript ordering costs per loan balloon to thousands of dollars.
2. Verification → Servicing conversion. When you find problems, you fix them. No handoffs, no lost deals.
3. AI augmentation across layers. Because of our design to deliver across all three of these areas, the same data infrastructure powers all three—establishment dates inform verification requests, inform resolution timelines.
This week, I spent time with SBA leaders reviewing the new E-Tran system updates for 2026. The policy shift is real: small-dollar loans now require the same underwriting criteria as large loans. More paperwork. Same teams.
Meanwhile:
IRS modernization continues ($80B+ funding) while headcount is down significantly
AI voice agents now navigate government phone systems in minutes
Processing times are dropping from 7-10 days to 1 business day
Lenders won’t hire teams to solve these problems. They’ll buy tools tailored to their workflows.
The tax data market is $50B+ across verification, discovery, servicing, and intelligence. Most of it still runs on 30-year-old processes.
Vendors who handle one layer will keep handling one layer. Infrastructure that spans all three—with AI augmenting each—is what financial institutions will embed.
Discovery is the unlock. Without it, verification is just data retrieval. With it, you’re solving the actual problem: getting loans closed.
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Matt Parker is the founder of ModernTax, a tax verification infrastructure company serving 160+ commercial lenders, insurers, and fintech platforms.
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