'Tis the season to start thinking about federal taxes! Have you stared thinking about reviewing OBB literature and planning tax clinics?
This year the IRS will not be giving a debt indicator to tax preparers who file client's taxes online. The debt indicator told the preparer whether or not there would be any amount of the refund withheld to pay any federal tax debt, like unpaid child support. Tax preparers could use the information from the debt indicator to underwrite Refund Anticipation Loans, which often included high fees and interest rates.
The IRS has now eliminated the debt indicator, hoping that the 10-day turnaround on refunds for electronically filed tax returns (and up to 70% of returns were filed electronically last year) will put the money in people's pockets soon enough they won't need a Refund Anticipation Loan.
Information on federal debts withheld from refunds can still be found from the "Where's my Refund?" service of IRS.gov
Here is an article for more information on this change.
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