How Can Advocates Prepare Taxpayers for Refund Delays?
By Tyler Bishop
In December 2015, Congress passed legislation to make permanent expiring provisions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). But to the chagrin of many antipoverty advocates, the bill included an anti-fraud measure that forces the IRS to delay refunds for taxpayers who collect these credits until February 15 at the earliest.
Many low- to middle-income Americans plan their financial year around filing their taxes and receiving the credits as early as possible, often by the end of January. These families immediately put their refund checks towards pressing financial needs, such as overdue car repairs or winter heating bills. The new delays could come as a big surprise to these families, potentially forcing them to turn to predatory lending practices such as payday loans.
The Corporation for Enterprise Development (CFED) recently hosted a webinar to equip tax groups and advocacy organizations with the tools to effectively spread the word about the impact of the 2017 changes and help taxpayers develop contingency plans. Here are some of recommendations that came out of that presentation:
- Make sure taxpayers still file as they normally would. Karin Rice, the corporate and executive communications manager for the IRS, emphasized that while the entire refund for those claiming the credits will be held until at least February 15, taxpayers should submit their returns as usual to get the earliest possible refund.
- Encourage families to plan for the delay. The IRS recently warned taxpayers to “be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.” The Consumer Financial Protection Bureau has released a set of tools designed to help individuals, families, and tax preparers deal with dilemmas like mounting bills, responding to debt collectors and effectively planning a schedule to pay outstanding balances.
- Remind taxpayers that no one can speed up their refund. Predatory lenders may take the refund delays as an opportunity to lure taxpayers with false promises. Taxpayers should be aware of this and file at free Volunteer Income Tax Assistance (VITA) sites if possible.
- Spread the word in your community. Resources, including template press releases, are available to help local organizations spread the word about changes in 2017. The National Consumers League will also lead a national communications campaign to help empower and promote VITA programs.
For more information about the latest news on federal tax policy and ideas for spreading the word about refund delays, follow TCWF on Twitter.