It’s unprecedented. The federal tax filing deadline in 2020 has been waived in the wake of coronavirus disruptions. The president announced there will be no penalties or interest levied for late filing against those affected, and many states will certainly do the same. Amazing development.
But come coronavirus or the Martian measles, taxes will be filed, and refunds issued. In time-honored tradition, tax accountants will prepare forms and the U.S. Treasury will issue payments to millions of Americans via paper check, delivered in an envelope by the United States Postal Service (USPS).
Just when you thought that check couldn’t be any more maligned, along comes a contagion to give people another reason to stop passing paper hand-to-hand. The March 2020 Disbursements Tracker,® done in collaboration with Ingo Money, explores faster payment options that are available to taxpayers and tax preparers in this time of turmoil, so that when refunds are (eventually) issued, they will be digitally disbursed with speed and safety.
Platforms Accelerate Payments
The Internal Revenue Service (IRS) says refunds take an average of 21 calendar days to reach recipients – but as CBS News reported in January 2020, “…the tax agency notes that it can take longer to receive your refund, typically because the IRS needs more time to process the return in case of errors or other problems.”
Electronic filing can speed up the entire process considerably, the IRS says, but it’s still a long way from instant money or anything close to that – and consumers are noticing. Tax firms now have an opportunity to reduce lag times and ease filing frustrations for customers, creating a better overall experience – and maybe make a few extra bucks doing it.
Specialized API-driven platforms engineered to fast-track information exchange are increasingly being used, as various finance professionals are realizing the services they enable.
“While the IRS has been slowly moving away from checks [to] direct deposit, tax firms may even be able to go one step further,” Ingo Money CEO Drew Edwards told PYMNTS. “By leveraging a disbursements marketplace platform … [firms] would have the ability to facilitate even faster access to refunds – and to an account that the customer chooses. As soon as the refund is issued, customers could have funds sent directly to their bank accounts, [sent] to pay off credit card bills, [sent] to Amazon accounts or even split amongst all of those places.”
The March 2020 Disbursements Tracker® details inventive uses of tech that are driving a new wave of faster disbursements, with a feature focus on millennial business owners that “…are 14 percent more likely to struggle with money problems than those who are baby boomers,” it states.
It’s About More Than Taxes
Tax refund disbursements are really just the jelly in the doughnut of a slow migration to instant money. The latest Disbursements Tracker® looks at developments around the world, from value-added tax (VAT) refund kiosks in the United Arab Emirates to first uses of the 3D Secure 2.0 payment protocol in Canada. But the tax action here at home is promising on a few levels.
“Faster disbursements could … alleviate consumers’ debts and related stresses, which could entice them to consider long-term financial goals,” the report states. “Twenty-nine percent of American households have less than $1,000 in savings, and 78 percent of U.S. employees report living paycheck to paycheck, which makes saving funds difficult or even impossible. Tax firms offering faster disbursements could help their customers better manage their bills through educational efforts…” like tax guides or the insights available from digital platforms, notes the report.