14 Jan Delay In Tax Return Processing Will Affect Online Lenders
The IRS announced it is delaying processing individual tax returns until January 30th. The IRS’s software systems are being tested and tax forms are being updated to reflect changes mandated by the so-called fiscal cliff bill. This is over a week later than usual. With individual tax return processing delayed, tax refunds will be issued later too—February 8th at the earliest.
The delay in tax refund payments could easily extend the “most wonderful time of the year” for online lenders and call centers. Typically by the third week of January, new loan volume abruptly slows as the holiday shopping season ends and consumers climb over the financial spending hump in the first couple weeks of the year. Some times loan customers rely on tax refunds to pay off any online loans they took out during the holiday season or first of the year.
The IRS is urging filers to submit their returns electronically and opt for direct deposit to hasten refund payments. Regardless, refunds—for electronic filers or not—will arrive later than usual. Consumers may be turning again to online lenders or rolling existing loans as they wait for their personal income tax refunds to arrive. Realistically, IRS delays in processing and refunds could very well result in the loan volume drop off occurring in early February versus mid-January.
The fiscal cliff bill’s passage and IRS delays have a domino effect on collections. Collections pick up when new loan volume falls off. With loan volume expected to be steady for a few more weeks, our collection season will be cut short running from the first week of February through mid-March.
Centrinex is expecting to be very busy collecting on past due customers and doing so in a shorter time span. We have started an internal posting of Workout associates who will be ready immediately when new loans subside and collection services increase.
As more details come out, Centrinex will be sharing insights via our blog and emails to help you adjust to and understand any new information and its implications on the online loan industry. I’m pretty excited about what this could mean for our online lenders and call centers in the first quarter of 2013.