More on Rebate Delays

Saturday May 10, 2008

The IRS has a bit of a problem. They were supposed to send the first economic stimulus payments to everybody who signed up for direct deposit. However, some taxpayers who expected direct deposit will have to wait for a paper check -- some will wait until July. We gave you some initial details on the rebate delay problem yesterday.

You have to applaud the IRS for trying to automate things in years past and for using direct deposit. It's faster, safer, and uses less paper. However, the rebate payment program was not ready for prime time, or the way that millions of Americans pay taxes. To make things "easy", your tax preparer sometimes offers a refund anticipation loan, or they offer to take your preparation fees out of your refund. When this happens, an intermediary bank stands between your bank and the IRS, and things get complicated.

The IRS will not send rebate payments to the intermediary bank. Unfortunately, tax rebate delays may throw a wrench in plans to stimulate the economy, and some people who planned on having the money will find themselves in a pinch. Of course, these rebate delays are a prime example of why it's important to have emergency savings.