Where’s All That Tax Refund Money?
We’ve heard from a number of different collection agency executives in the industry that the 2007 tax refund season hasn’t been as lucrative as in years past.
Typically, the first quarter of any given year is a boom time for collectors as indebted consumers get lumps sums of cash from their state and federal tax return refunds and apply them to outstanding debt. Perhaps it’s just a coincidence, but some of the people insideARM has spoken with have commented that those payments are weak this year.
The matter has come up in the news at least once: in its parent company’s earnings conference call, ARM giant WAM noted that “tax refund liquidation in the quarter was not as high as the company is accustomed to seeing,” (“WAM to Reduce Debt Buying in 2008 Over Funding Flap,” April 18).
Just today, I spoke with a collection agency owner on another topic and he said something very similar. A recent thread on the insideARM Discussion Forum also addressed lagging tax refund settlements.
Mike Ginsberg, CEO of ARM advisory firm Kaulkin Ginsberg, blogged a few weeks ago on the impact a sour economy was having on collections.
Is that the answer? Is a bad economy forcing consumers to use tax refunds differently this year? Or are tax refunds just smaller this year?
Are we even hearing this correctly? And if it is true, will the stimulus checks set to go out soon help fill the void?
We’d love to hear the experiences of those in the industry on tax refund payments this year. Please feel free to comment below.
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Comments
Comment from collectone on April 23, 2008 at 3:11PM EST
We experienced our major jump in revenue from tax season refunds during the month of February. We had a major drop off in March compared to 07. Our collectors found that most people who do use their refunds to pay bills file electronically and receive their money by direct deposit in February. The increase of electronic filings will continue to reduce the seasonal effect in March and beyond. We will be agressively pursuing our accounts to attempt to take advantage of the influx of funds from the stimulus checks.
Comment from SH on April 23, 2008 at 5:51PM EST
I tought it was just me, but yeah, I look forward to this time of year and it was pretty weak. I'm guilty of it too though. I usually pay ahead as far as i can with my refund, but used it for "fun" stuff this time. Maybe when the second wave comes it will get better. That's what I was planning myself.
Comment from JN on April 30, 2008 at 8:13AM EST
I really just think it's a matter of fear. Consumers are afraid to part ways with any extra money. Tax season this year is probably as bad as it's ever been. If creditors aren't going to sue, then the consumer could care less about their bills. Which is why I think there SHOULDN'T be a SOL on financial transactions!!!