IRS removes debt indicator for 2011 tax filing season

Feb 21, 2012

Aug 31, 2011

The IRS will no longer provide tax preparers and associated financial institutions with the “debt indicator” starting with next year’s tax filing season.

Used to facilitate refund anticipation loans (RALs), the IRS finds the debt indicators unnecessary given that returns are processed and returned in 10 days.

The IRS is reviewing refund settlement products and refund anticipation checks (RACs) throughout the tax preparer regulation process, pointing to high error credits in the area along with the Earned Income Tax Credit.

In 2012, the IRS is considering a new tool that would determine the appropriate portion of a tax refund to pay for the services of a professional tax return preparer. The IRS plans to gather feedback from taxpayers, consumer advocates and tax return preparers on whether providing this option is a cost-effective way for consumers to pay for tax return preparation services.