Today, we talk about a big one for the vehicle finance sector – tax season. While many auto finance pros are already aware of the shorter tax season, the 15 things you need to know about tax season covers all the reasons the season is shorter and how to make the most of it.
- The PATH Act stands for Protecting Americans from Tax Hikes and was passed in late 2015.
- The PATH Act is monumental for extending or making several tax provisions and credits that benefit millions of Americans, permanent.
- The PATH Act has delayed a majority of tax refunds. With the passing of the PATH Act, most refunds cannot be issued until after February 15.
- While it will delay tax returns, the PATH Act includes over $620 Billion in tax reductions for families and small businesses.
- The delayed refunds has shrunk tax season to an estimated 6-9 days, approximately February 28-March 9. Before the PATH Act went into effect, tax season was closer to 60-90 days. With delayed returns, buyers have less advance to use their returns on down payments.
- To combat the shorter sales window, auto financers can partner with a tax advance program (like TaxMax) to allow buyers advances on their refund.
- To increase auto loan originations safely, financiers use GPS devices like GoldStar™ to help verify references and provide payment reminders.
- A study indicates 84% of lenders and dealers that use GoldStar report reduced delinquencies.
- The shorter time to receive refunds does NOT reduce the number of people that want to use their return for down payments on auto loans!
- In 2017, 90% of all refunds were released in two days (Feb 22 and 23rd).
- In 2018, refunds will be issued on February 27 for those affected by the PATH Act.
- Individuals that claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) are affected by the PATH Act.
- The IRS believes that 20% of eligible Americans that could take advantage of these credits are missing out on a tax break worth up to $6,318 each year.
- Spireon has heavily researched tax season and its affects on lenders, dealers, and consumers. Fortunately, all of that information is available in the PATH Act Resource Center.
- Some people affected by the PATH Act don’t even know it! Dealers and lenders can increase trust by informing customers and guiding them through the process with the information above.
Celebrating Spireon’s 15th anniversary of being in business, we are celebrating all year with insights and information we’ve gained over the years. Celebrate with us all year as our blog features a special feature on the 15th of every month.