Delay in 2017 Tax Refunds May Negatively Impact Illinois Consumers

Were you counting on receiving your 2017 tax refund check almost immediately after filing your taxes? According to a recent article in the Peoria Journal Star, many Illinois consumers plan to file taxes as soon as their W-2s become available, assuming that they will be able to rely upon a tax refund soon thereafter. However, tax refunds will be delayed in 2017 for “taxpayers who file returns claiming two credits available for low-income workers and families,” according to the article. In other words, the people who will be impacted are likely to be among the group of Illinois residents most in need of their tax refund check.
Why are certain federal income tax refunds being delayed? In brief, this delay for certain refunds concerns a “change in federal law aimed at detecting fraudulent returns.” If this change in the law will impact you, what else do you need to know?
Using Tax Refunds to Help Pay Down Debt From the Recent Holiday Season
One of the primary issues surrounding delayed tax refunds is that there are many families in Illinois who rely on tax refunds to help pay down some of the debt they incur during the holiday season. Numerous Illinois residents assume that they can repay some of what they owe as soon as they file their taxes and receive a federal income tax refund. However, as Matt Leas, a spokesperson for the Internal Revenue Service (IRS) made clear, “I want to remind folks that as we move into the holiday season, some refunds will be delayed next year so they should plan ahead.” He went on to emphasize that, “to avoid any further delays, it’s important that taxpayers file as they normally would and not wait until later in the filing season.”
The IRS indicates that the delay in federal tax refunds after the new year “could have an impact on hundreds of thousands of Illinois residents.” In total last year, the IRS provided approximately $1 billion in “additional child tax credits on 773,400 Illinois returns,” and “$2.5 billion in earned income tax credit on 994,000 Illinois claims.” There is no reason to anticipate that those numbers will vary drastically this year.
Limitations for Paying Off Loans with Federal Tax Refunds
The article makes clear that the delay on federal income tax refunds likely will not be available for Illinois residents who have “taken out high-interest loans to pay for Christmas gifts,” anticipating that they would be eligible to receive a refund during the first month of the year.
At the same time, it is likely that fewer Illinois consumers will be able to obtain loans from tax preparers. As the article clarifies, the Refund Anticipation Loan Reform Act (2013) “barred loan providers from charging interest, reducing the availability of such advances.” As such, it is likely that more consumers will turn to high-interest loans this holiday season, and if they are unable to pay them off just after the new year, they could find themselves in a cycle of debt from which it can be difficult to break free.
If you have questions about your rights as a consumer or as a debtor, an experienced Oak Park consumer protection lawyer can answer your questions today. Contact the Emerson Law Firm to learn more about our services.
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