Get your surfboard ready to ride the surge. Do not worry; I'm talking about all the tax refund cash about to flood across America. Though few taxpayers are aware of the "cash shortage" that's happening right now - to put it mildly - it IS happening. Here is why it is occurring and how it is going to quickly turnaround.
As I have written in the past, tax legislation passed in December 2015 requires the IRS to hold refunds for select taxpayers with the Earned Income Credit, or part of the Child Tax Credit, until February 15. The IRS is using the additional time to review returns as part of an increased focus on tax refund accuracy and security precautions. The new law changed tax patterns we have grown accustomed to and have depended upon, from filing early in January to receiving refunds within a couple of weeks of filing. How much have these patterns changed? A lot.
IRS announced earlier that their volumes are off by almost 24% and even Intuit and TurboTax, who are responsible for almost 22% of the tax market or 1 in 5 tax returns filed each year, reported this week that they are down 29% from last year. As of February 3, 2017, the total refund amount is down 77.6% compared with the same time last year, IRS stated.
Even though the US economy is the largest on the planet with billions of dollars in transactions, when 10 million Americans who typically file their taxes around the same time get an average tax refund of about $3,000, at about the same time each year, and then all of a sudden... Well, you get the picture. If you need to read it for yourself, check out the latest headlines from Accounting Today and Bloomberg, like "Tax credit processing delays, immigrant fears, and ITIN changes fuel early tax filing slowdown" and "Consumer spending to hit a pothole with tax refunds still in the mail."
The good news is that whether you are a taxpayer awaiting your refund, or a business waiting for the refund spending to begin, this wave of cash is coming. Even knowing that cash is coming, a significant portion of American taxpayers will file later this year - they figure why file early if you cannot even get your refund quickly. The sooner you file, the sooner the IRS processes your return and gets ready to release your refund when they can. Right now, IRS is behind in normal refund payouts, but returns are trickling in and IRS is paying out. However, in the next two to three weeks, I predict about $45 billion dollars, give or take $10 billion, will be flowing into taxpayer's bank accounts. For many Americans, the largest financial transaction of the year is their tax refund.
Don't miss out. Heck, as 7 out of 10 taxpayers get a refund - EVERYONE is likely to have money in the next few weeks. If you haven't filed your taxes yet, do it - so you can get your refund. If you own a business, plan promotions for the third week of February. Hop on that surfboard and ride the wave of refund cash - be it alerting your customers about your products and services, or finally treating yourself. After all, it IS your money - go get it and get it soon.