HOW TO STOP BULLYING BY BANKS
“You borrowed money from us and never gave us copies of your tax returns! Now it’s time to pay!!”
GEORGE WILSON ADAMS CPA MBA
January 6, 2022
Is your bank a bully? If you have a commercial line of credit or mortgage chances are your bank wants copies of your income tax returns each year. Some banks are very aggressive and demand copies of returns even if you have a valid extension of time to file with the IRS. The worst banks will make threats, cancel lines of credit, charge penalty interest rates, and impose other adverse actions on their customers.
I’ve seen many clients hounded and harassed by bank loan officers who demand copies of tax returns even when more time is needed to prepare accurate returns. Some bank loan officers can be worse to deal with than the IRS. Here in this article I will explain how you can put a stop to this kind of nonsense and end the harassment.
The Good, The Bad and the Ugly
Not all banks are the same. Banks differ significantly in how they treat their customers. And so the concept of the good, the bad and the ugly applies to banks just like it applies to people. As a CPA I have a unique perspective that allows me to compare apples to apples. I have two clients (let’s call them Al and Zack) who are very similar and own millions of dollars of commercial real estate with very large corresponding mortgages.
Al is harassed by his bank every year. This abusive bank demands copies of his tax returns starting in February. But Al has complex tax returns which reflect a large volume of transactions. It is not feasible to finish his returns in February or even by April 15th. Every year poor Al battles his bankers for more time to prepare his taxes, even though he has a legal extension of time to file from the IRS. Even the morons in Congress know that some people and businesses need extra time to prepare their tax returns.
For decades the tax law created by Congress has allowed for extensions of time to file returns with the IRS. Most extension forms are ‘automatic’, which means taxpayers don’t even need to give a reason to the IRS for why the extension of time is requested. It seems some banks are not aware of this fact, or deliberately choose to ignore it.
Zack and his business are identical to Al but Zack uses a different, very friendly bank. The friendly bank never bothers Zack about his taxes. As long as they receive copies of his tax returns once per year they are content. They never harass Zack and patiently wait until his taxes are finished every year, usually in September.
Here are two identical clients who are treated very, very differently. Why? The answer of course is that banks do indeed differ in how they choose to treat their customers. Know and beware of this.
Contact me privately if you would like to receive my own list of “Good Banks” and “Bad Banks” based on my professional experience. As for ugly banks, this is an issue of lesser importance. As is true with people a bank can still be good even if it’s ugly.
A Friendly, Helpful Acronym
I’ve developed a friendly, helpful acronym that will assist bank loan officers to understand precisely why some companies and individuals need extra time to file accurate tax returns. I suppose it’s possible some bank loan officers may not be quite as bright as the wonderful folks in Congress who passed a law many, many years ago that allows for extensions of time to file tax returns. Here is my friendly, helpful acronym:
| B |
BIGGER companies have more transactions and accounting activity and, therefore, need more time to process the work.
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| A |
ACCURACY takes time. All U.S. income tax returns are filed under penalties of perjury. The IRS imposes penalties on returns that contain inaccurate information. It costs money if you make a mistake on your tax returns.
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| C |
COMPLEXITY also requires time to evaluate and manage. Complex tax returns contain many curve balls that must be catched to avoid severe consequences.
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| K |
KNOWLEDGE takes time to gather. Questions must be asked. Gaps in accounting records must be filled with correct information.
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| O |
ONCE per year taxpayers must file returns. This complies with the tax law and is good enough for the IRS. It should also be good enough for banks who want copies of tax returns to verify income and the ability to keep paying on a loan. Banks have a legitimate need for copies of tax returns. Nothing in this article is intended to challenge this fact.
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| F |
FEES for accounting services during tax season are at a maximum. This is because good accountants tend to be extremely busy and schedule work in a fair and reasonable manner. The other kind of accountant has plenty of free time on his hands and is eager to accept new work and promise to get it done immediately. Good luck using the ‘other’ kind of accountant. Clients can save money by scheduling tax preparation after tax season when fees are at a minimum.
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| F |
FLORIDA is the winter refuge for many Mainers. I have many clients who avoid harsh Maine winters by staying in Florida. They return home in May or June and begin work on their taxes in the summer months. The IRS allows this. Who gave banks the authority to nullify federal law and ignore valid extensions of time to file tax returns?
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| If your bank loan officer pressures and harasses you about tax returns that are on extension tell him or her to B.A.C.K.O.F.F. |
Hopefully this acronym will help bank loan officers correct, improve and revise their knowledge of this sensitive issue. Feel free to give your bank loan officer a copy of this article. If your loan officer has questions about this article I’d be delighted and eager to answer them. My office phone number is (207) 989-2700.
The public’s love for banks is rather less than it used to be (not that it was ever great.) In the good old days, long gone now, banks would give new customers coffee makers and toaster ovens. In the harsh era of austerity that we now live in make sure you receive basic courtesy and common decency from your bank: don’t ever settle for less than this.
A CPA Confronts a Bank Loan Officer
Bob Bigshot, Senior Vice President of BigBank, meets with Mr. CPA to discuss a mutual client:
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Bob Bigshot:
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“Your client is late again with his taxes. We need copies of his returns immediately.”
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Mr. CPA:
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“My client has a valid extension of time from the IRS. We need more time to prepare accurate tax returns.”
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Bob Bigshot:
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“We don’t care about that.”
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Mr. CPA:
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“Irrelevant. Consider the public relations disaster that would occur to your bank if people found out how you treat your business customers who have commercial loans with you. Even the morons in Congress know some people and companies need extra time to file their taxes. It’s unwise and self-defeating for your bank to hassle your own customers. Why are you doing this? Is your bank in trouble with the Feds? Are you under federal investigation and if so why? I’m going to put your bank on my SH*T list of Bad Banks.”
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Bob Bigshot squirms awkwardly. He is not used to being talked to in this manner. As a senior V.P. of commercial lending at BigBank he is used to being treated as a Master of the Universe because he controls money, peoples lives and their livelihoods.
Is Your Bank In Trouble?
The government would like us to believe that all banks are the same. It is true that all bank deposits are legally protected by the F.D.I.C. This is where the similarity among banks ends. Banks have different cultures, different management styles, and different business personalities. Some banks have problems and may be under scrutiny by federal banking regulators because they made too many bad loans, or other poor business decisions. Why should you be punished because your bank is in trouble?
License Bank Loan Officers
Bank loan officers have enormous power over businesses and peoples lives. I have personally seen and been forced to work with many poorly trained, under-qualified loan officers who really don’t know what they’re doing. This situation is like a drunk behind the wheel of a car.
The solution is obvious: unite knowledge with power. I believe all bank loan officers should be licensed and required to pass an objective test where they prove basic knowledge of relevant topics including economics, finance, accounting and taxes. It is impossible for commercial loan officers to do their job effectively without such knowledge. Power without knowledge is unfair to customers, society in general, and loan officers too.
Bank loan officers can cause enormous harm and economic destruction by wrongfully denying or granting loans.
The Last Resort: Call the Cops
In extreme cases bank loan officers will be so abusive that they cross the line which separates acceptable behavior from unacceptable behavior. If your bank is this awful you should move to another, good bank through refinancing debt, etc.
However, as I’ve argued elsewhere, the failure to report an offense is another offense. I strongly recommend that businesses and individuals who are victims of abusive banks report the offense to the appropriate government agency. In this context the cop who polices banks is the Consumer Financial Protection Bureau. Their website is:
You can file a complaint against a financial institution by calling the Consumer Financial Protection Bureau:
1-855-411-2372
An even more effective response is to warn your friends and neighbors of abusive banks. Deprive abusive banks of customers and sooner or later they will cease to exist.
Arrogance is the worst form of stupidity
Photo Acknowledgements and Credits: Uncertain BusinessMan by ©SrdicPhoto | iStockphoto.com / Angry Businessman with Chainsaw by ©Piotr Marcinski | Dreamstime.com / Funny Businessman with Axe by ©Elnur | Dreamstime.com / Composition & Modifications by Shawn Hill | VASTmicro
George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339
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