360° Coverage : Debt Ceiling Fix Eases Fears On Tax Refund Delays

10 Updates

Debt Ceiling Fix Eases Fears On Tax Refund Delays

Feb 15 2014, 11:04am CST | by

Rest easy, folks: your tax refunds are safe. Despite dire warnings that tax refund delays could happen if Congress didn’t address the debt ceiling crisis (the same worries we had last year), we don’...

Filed under: news

 
 
 

23 weeks ago

Debt Ceiling Fix Eases Fears On Tax Refund Delays

Feb 15 2014, 11:04am CST | by

Rest easy, folks: your tax refunds are safe.

Despite dire warnings that tax refund delays could happen if Congress didn’t address the debt ceiling crisis (the same worries we had last year), we don’t have anything to worry about for 2014. Well, at least not as it relates to refunds and the debt ceiling.

In a show of bipartisan cooperation (no, you didn’t read that wrong), a number of Republican Senators, including Senate Minority Leader Mitch McConnell (R-KY) crossed the aisle to overcome a filibuster attempt by – who else? – Sen. Ted Cruz (R-TX). Sen. Cruz had hoped to stall a vote on the debt ceiling. Eventually, Republicans and Democrats garnered enough votes (67) to break the filibuster. All 55 Democrats voted against the filibuster together with 12 Republicans. Those Republican Senators who dared to cross Sen. Cruz are considered some of the most powerful in the Senate and included, in addition to Sen. McConnell (R-KY), Sen. John Cornyn (R-TX), Sen. Orrin Hatch (R-UT) and Sen. John McCain (R-AZ). You see the entire roll call here.

Eventually, Congress did approve a measure to raise the debt ceiling temporarily – with no strings attached. That marked the first time a so-called “clean” debt ceiling raise had been passed in nearly five years. The vote was completely along party lines, with a final tally of 55-43.

That means we should have enough money to pay the government’s bills in February – important for taxpayers expecting a refund since statistically most refunds are issued in February. Last year, the government issued checks worth about $157.59 billion before March 1 to cover taxpayer refunds. That’s about half of all refund dollars: the IRS delivered a total of 109,563,000 refunds in all of 2013 for a total of $301.863 billion.

Without any action from Congress, the government would have hit the debt ceiling by late February (letter from Treasury Secretary Lew Jacob downloads as a pdf). That meant that we would have run out of money. The timing, once again, coincided – unhappily – with the bulk of income tax returns being filed requesting a refund.

It was a scenario that Secretary Jacob warned Congress about, noting that “the government experiences large net cash outflows in the month of February, due to tax refunds.” He also noted that 2014 would be an especially tough year for the concentrated volume of tax refunds “in the weeks after February 7 due to the delayed start of the tax filing season, which was caused by the government shutdown.”

So what would have happened to all of those tax refunds? They likely would have been held. Under the Tax Code, there’s no magic date for issuing refunds. While the Internal Revenue Service does their best to get refunds out for most taxpayers in 21 days (they claim that 9 of 10 taxpayers who e-file get refunds by that time), there’s no law that requires IRS to get refunds out in 21 days. Or 30 days. Or 100 days.

In fact, the only related statutory requirement can be found at 26 U.S. Code § 6611 (e)(1) which states:

If any overpayment of tax imposed by this title is refunded within 45 days after the last day prescribed for filing the return of such tax (determined without regard to any extension of time for filing the return) or, in the case of a return filed after such last date, is refunded within 45 days after the date the return is filed, no interest shall be allowed under subsection (a) on such overpayment.

In other words, the IRS has to pay you interest on a “late” refund but that interest doesn’t start ticking until 45 days after the return is filed. But there’s nothing that says IRS has to pay you by that time. They could, in theory, push it out for a bit – similar to what happened to taxpayers in North Carolina and in California in 2010. Realistically, I can’t imagine that happening on a federal level: it would be political suicide.

Of course, the cycle is such that funds will land in the Treasury eventually. Since the government doesn’t keep a stash of money under the mattress to pay tax refunds, it pays its obligations – including tax refunds – with new revenues from tax dollars and bond sales. Tax dollars are likely to hit in March and April though Jacob advised that the headroom for bond sales and other money that could be freed up is limited. By pushing the debt limit up temporarily, it gives the government some breathing room (we can borrow more money) until we hit the ceiling again.

How much breathing room? The act suspends the debt limit ceiling until March 15, 2015. So, we’ll have this discussion again next tax season. Until then, happy refunding.

Want more taxgirl goodness? Pick your poison: receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my YouTube channel. If you want to keep an eye on documents I’ve posted, check out my profile on Scribd. And finally, you can subscribe to my podcast on the site or via iTunes (it’s free).
Kelly Phillips Erb
kelly.erb@taxgirl.com
twitter: @taxgirl
Skype: taxgirl.com
267.242.4900/>/>/>/>/>

Visit my blog at http://blogs.forbes.com/kellyphillipserb/
View my YouTube channel: http://www.youtube.com/taxgirlvideos/>

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the s ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million i ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minist ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an all ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Ki ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

WTO fails to reach trade facilitation agreement
Geneva, Aug 2 (IANS) Negotiations at the World Trade Organisation(WTO) has failed to agree on the implementation of the trade facilitation agreement as the deadline of July 31 passed.
 
 
Liberia reports new Ebola cases
Lagos, Aug 1 (IANS) The Liberian government has reported new Ebola cases as of July 28.
 
 
Japanese men's life expectancy over 80 years for first time
Tokyo, Aug 1 (IANS/EFE) The life expectancy of Japanese men stood at 80.21 years in 2013, the first time that men have gone past the 80-year mark in the Asian country, according to the country's ministry of health, labour and welfare.
 
 
Methane created mysterious Siberian crater: Study
London, Aug 1 (IANS) The mysterious crater spotted in the frozen Yamal peninsula in Siberia earlier this month was probably caused by methane released as permafrost thawed, Russian researchers say.
 
 
 

Latest from the Network

Emma Watson stands up for Turkish women
Los Angeles, Aug 2 (IANS) "Harry Potter" star Emma Watson has joined a campaign by Turkish women to rebel against a politician who recently branded females "indecent" for laughing in public. Watson is an ambassador...
Read more on Celebrity Balla
 
Tom Cruise surprises at derby event
London, Aug 2 (IANS) Hollywood star Tom Cruise, who is filming the fifth instalment of the "Mission: Impossible" franchise here, surprised revellers at a horse racing event here. He showed up at the event at the...
Read more on Celebrity Balla
 
Sahana finishes eighth in women's high jump
Glasgow, Aug 2 (IANS) Indian athlete Sahana Nagaraj came out with a disappointing performance to finish eighth in the women's high jump final at the Commonwealth Games here Friday. The gold went to Australia's Eleanor...
Read more on Sport Balla
 
Boxers Sarita, Devendro enter final, Pinki wins bronze (Third Lead)
Glasgow, Aug 2 (IANS) Former world champion L. Sarita Devi and her state-mate L. Devendro Singh came out with stupendous performances in their respective bouts to enter the Commonwealth Games boxing finals after Pinki...
Read more on Sport Balla
 
Discus thrower Seema wins silver, Krishna fifth
Glasgow, Aug 2 (IANS) Indian discus thrower Seema Punia won the silver medal with her season's best performance while her compatriot and defending champion Krishna Poonia finished a disappointing fifth at the...
Read more on Sport Balla
 
India qualify for women's 4X400m relay finals
Glasgow, Aug 2 (IANS) Defending champions India qualified for the women's 4X400 metres relay finals at the 2014 Commonwealth Games here Friday. The team of Debashree Majumdar, Tintu Luka, Ashwini Akkunji and Poovamma...
Read more on Sport Balla
 
Joe Manganiello works hard for unique physique
Los Angeles, Aug 2 (IANS) Actor-filmmaker Joe Manganiello says a rigorous fitness regime has helped him shape up his incredible physique. The 37-year-old actor says that unlike many other famous faces in Hollywood, he...
Read more on Celebrity Balla
 
Cheryl happiest than ever, believes Simon Cowell
Los Angeles, Aug 2 (IANS) Music mogul Simon Cowell says his "X Factor" co-judge and singer Cheryl Fernandez-Versini aka Cheryl is the "happiest he has ever seen her". It's the effect of marrying French restaurateur...
Read more on Celebrity Balla
 
Hamas's denies kidnapping Israeli soldier in Gaza
Gaza, Aug 2 (IANS) The armed wing of the Islamic Hamas movement, Qassam Brigades, denied Saturday kidnapping of an Israeli soldier in the Gaza Strip. "Until now, we have no idea about the disappearance of the Israeli...
Read more on Politics Balla
 
Johnny Depp performs with Aerosmith
Los Angeles, Aug 2 (IANS) Actor Johnny Depp joined his close friend Steven Tyler and his Aerosmith bandmates Tom Hamilton, Joey Kramer, Joe Perry and Brad Whitford here where they played "Big Ten Inch Record" together...
Read more on Celebrity Balla