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Consumer Spending “Pothole” Ahead: IRS Refunds Tumble As New Law Delays Payments

Sunday, February 12, 2017 18:10
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(Before It's News)

width="200" height="107" /> / by Tyler
Durden / Feb 12, 2017
3:33 PM

A period of consumer spending, retail sales and housing weakness
may be imminent, after federal tax refunds tumbled by 78% in the
early part of February compared to 2016, the  result of a new
law which requires the IRS to delay the printing of checks to
households claiming specific tax credits.  The reason for the
slowdown is that in late 2015 Congress passed a law forcing the IRS
to hold back refund checks related to the earned-income tax credit
and the child tax credit until at least Feb. 15. The delay would
reportedly give the IRS more time to match tax returns with income
data on W-2s filed by employers. Allegedly, such payments had
become a tempting target for identity thieves and unscrupulous tax
preparers, who falsify tax returns to get thousands of dollars.

The IRS has told affected taxpayers that they shouldn’t expect
to receive their refunds until Feb. 27 because of weekends,
holidays and bank delays.

While the Joint Committee on Taxation projected the law would
increase federal revenue by $779 million over a decade, it may
result in a period of stagnant spending until the calendar effects
are wrinkled out and US households get the money they are owed.
According to a WSJ analysis, refunds paid through Feb. 3 were only
$13.2 billion, down almost 80% from $58.6 billion through Feb. 5,
2016. Additionally, the average refund also declined, to $1,994
from $3,385.

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