The federal government is trying to do the right thing for taxpayers who live paycheck-to-paycheck and rely on their tax refunds to help with the basics of everyday living.
Unfortunately, initiatives the government recently unveiled will only hurt those people by limiting taxpayers' access to their own information, reducing their choices and increasing their costs.
The IRS recently announced that it will restrict information it provides about debts taxpayers owe to the government. This decision prevents taxpayers from accessing their own debt information at the moments they need it most - when they are filing their tax returns or applying for refund anticipation loans, which use a taxpayer's anticipated federal tax refund as collateral. As a result, the IRS decision may actually increase the cost of the loans because lenders - who now will not know of any debts the borrowers owe to the government - likely will increase prices to offset this new level of risk.
These loans serve as a lifeline for 8 million people annually. The real-world implications of this decision are serious for taxpayers who need access to funds faster than the IRS can currently provide in order to prevent eviction, to take a sick child to the doctor or to repair their only means of transportation to a job.