Utah CPA Boss Warns Against Borrowing Against Your Tax Return
Inside Subprime: Feb 11, 2019
By Lindsay Frankel
Many Americans rely on their tax returns to make ends meet, or even to take care of imperative needs like medical care each year. In anticipation of that, many tax preparation offices, banks, and payday lenders offer short-term loans intended to be paid off with tax returns. However, this year, many Certified Public Accountants (CPAs) are warning consumers not to borrow against their tax returns.
This fear over tax refund timelines started during December and January’s 35-day federal government shutdown — the longest shutdown in the history of the United States, during which 36,000 IRS workers were required to return to work without pay.
During the shutdown, Susan Speirs, CEO of the Utah Association of CPAs, said that although her sources at the IRS reported “business as usual,” she still thought that the government shutdown would impact refund processes.
“It’s a little scary,” she said. “I think we’re all going into uncharted territories.”
On top of that, we are not yet out of federal-shutdown danger: If Congress and President Trump do not agree on a budget deal by February 15, the continuing resolution that re-opened the government for three weeks on January 25 expires. If no new budget is signed, another shutdown will commence, throwing general federal functionality (including everyone’s tax return timelines) into further jeopardy. Given that IRS workers received permission to skip work for financial hardship and others skipped work in protest of being forced to work without pay during the first 2019 shutdown, it seems reasonable that these uncertainties would continue to grow in the face of another shutdown — especially as the end of tax season draws near and more Americans continue to file their taxes.
For those in desperate need of quick tax refunds, CPAs are warning not to borrow predatory payday loans or cash advances against those anticipated refunds. If tax refunds are delayed for any reason, the fees and interest that could rack up from those lending sources could easily push borrowers into debt traps that will cause financial harm in the long run.
Speirs advises everyone to be prepared to wait longer than usual for tax refunds. Consistent with the IRS’s recommendations for quickest access to tax refunds, she also advises e-filing and setting up a direct deposit repayment for any refund you’re granted. Regardless of what happens with the February 15 federal budget deadline, taxes must be filed by April 15 — whether the government shuts down again or not.
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