IRS Debt Indicator 

As you may know, our industry is facing unique challenges related to the IRS decision to no longer provide the debt indicator (DI) to tax preparers and, with customer consent, associated financial institutions. The DI informs taxpayers of any outstanding federal debt and it has been an important tool used by banks to qualify taxpayers for Refund Anticipation Loans (RALs). By supplementing sophisticated underwriting criteria with the DI, banks managed to reduce RAL pricing despite an environment of increased credit costs. With the current economic climate these cost savings were good news for many consumers that are often not credit worthy or may be facing financial hardships. These savings for taxpayers will be reversed as RAL prices are increased to offset the risk caused by the elimination of the DI. More stringent underwriting criteria will be implemented meaning fewer taxpayers will qualify for loans and the additional risk will force smaller loan amounts. As a business owner in this industry, you understand the impact this will have on your tax season.

We encourage you to contact your federal representatives, urging them to ask the IRS to reverse its decision to reinstate the debt indicator. H & R Block has provided a useful tool here for tax professionals and taxpayers that helps you find your local representatives and provides a letter that you may use as a template. This can be used by anyone and was developed for the entire industry.

Time is of the essence, so we encourage you to act now in order to have a chance at changing the decision before this tax season begins. We hope that the industry can persuade the IRS to reverse its decision, thereby providing taxpayers with affordable loan products and real time access to their financial information. Despite these challenges TPG will continue to develop and responsibly offer Refund Anticipation Loan products that meet consumer demand. We thank you in advance for your participation.

Team TPG