The IRS announced changes to its policy regarding releasing information about taxpayers’ debts. The debt indicators as they’re called, used to be passed on to inquiring financial institutions, but now the information will be withheld. The information was typically used by financial groups that provide refund anticipation loans. The organizations could then tell if someone’s tax refund might be held to cover back taxes, unpaid child support, or delinquent federal loans.
Consumer groups told The Associated Press they completely support the move. “The federal government should not be sharing taxpayers’ personal information for the profit of banks and tax preparers by operating what is essentially a free credit reporting service for them,” Jean Ann Fox, director of financial services for Consumer Federation of America, said in a statement to the Associated Press.
The CEO of Liberty Tax, a provider of Refund Anticipation Loans, says now RALs could become more expensive. That’s because without this information, the banks take on more risk by underwriting the loans to tax payers. “The demand for refund anticipation loans is customer-driven,” Hewitt told the Associated Press. “This really isn’t the time to take financial options away from those who choose them and — more importantly — need them.”
Tags: Tax refund, Finance, Refund anticipation loan, Internal Revenue Service, credit
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So basically, this is for the convenience of tax preparers, right? If I am not mistaken.