What Happens to Your Tax Refund in a Debt-Ceiling Stalemate?

You may not get one... Is what happens!

From NJ

Expecting a federal tax refund? Perhaps you should hurry up and file.

As House Republicans struggle to coalesce around a strategy for embracing an increase to the nation's $17 trillion-plus debt ceiling so the nation can keep paying its bills, Democrats on the Ways and Means Committee are floating a new bogeyman if the delay continues.

A wave of bank runs by worried depositors was blamed for helping to drive the United States even deeper into the Great Depression in the 1930s.

Now, suggest the Democrats, there could be a potential "panic" when Americans in upcoming weeks file their income-tax returns, particularly if fear builds that the Treasury Department might not be able to immediately refund all that it owes to taxpayers.

Democrat party members in a letter Monday to Speaker John Boehner warned that Republican default threats on the debt ceiling---may trigger a panic among people who are counting on receiving a tax refund.

"First come, first served," said one senior Democratic aide on Wednesday of the millions of refunds paid out each year, adding that "Treasury can only pay out what it has."

Meaning there's only so much to go around and with a $17 trillion-plus black hole what little is left in the till might not be enough to pay said refunds to all est. 110 million tax filers. Democrats are preparing a "fact sheet" outlining this tax-refund doomsday scenario in which the government will simply run out of money before making all refund payments...?

The wife and I filed yesterday and now that I read this I'm glad we did because the only bit of advice they offer is to file early because the longer you wait to more likely your refund will be delayed

reply to post by HardCorps


Awesome! So the money I paid in, that should still be there, I won't get now! Awesome!

The sad part is, the tax refund is a tiny little portion returned of the tens of thousands I pay in..Gotta love it...

Tell me again why we, as Americans, don't fire everyone and start fresh again?

reply to post by Chrisfishenstein


Okay I agree--- we should fire them all---
out of a cannon--- aimed at a thick concrete wall!

Thing is I know more than one family that rely on their refunds.
Some see it as their savings account and wait for the payout to do things like buy big ticket items.
I never said it was a smart thing to do but many folks still do it

reply to post by HardCorps


Just print more money?

Sounds like a scam so the feds don't have to pay out as much this year. It's not the American peoples problem that these elected officials suck at their jobs and can't budget the money... They should take it from the elected officials pockets, not ours...

-SAP-

reply to post by SloAnPainful


To be frank I half suspect the Democrats of doing a little fear mongering.
By throwing this at the House Republicans now, they've put them on the spot, damn if they do, damned if they don't.

In the world of CYA I think it's a pretty slick move--- with one news article the blues have targeted the reds as the people you blame if you don't get your refunds.

Political suicide...

that is what will happen to anyone who tries to tie the debt ceiling to income tax returns. I can not fathom a scenario where any average Joe, even the most partisan ones, would encourage his congressman to stand firm on their debt ceiling stance in lieu of their tax return.

reply to post by HardCorps


Of course they did. It's always the Republicans or the Democrats fault. No one in Washington can take responsibility for their own actions, mistakes, and failures. It's always someone else's fault...

-SAP-

What if I owe the IRS?

I'm guessing that a debt ceiling limit disagreement in Congress won't help me out at all.

No one should be getting tax refunds.

What your doing is giving the US government a interest free loan.

reply to post by neo96


Everything with the government is "interest free" or "payment free", just ask China...

-SAP-

SloAnPainful
reply to post by neo96

 

Everything with the government is "interest free" or "payment free", just ask China...

-SAP-

Yeah really.

If people like that lump sum payment at the end of the year they should throw it in to a savings account, or a money market that earns that compounding interest, and get more money than they would instead.

Or they could use that cash to live on.

Tax refunds never made sense to me. It means people over paid.

neo96

Tax refunds never made sense to me. It means people over paid.

That complete lack of concern for personal finances is what makes taxation possible.

It's a lot easier to steal the ball when your eye isnt on it.

Withholding is genius. Now instead of bitching about writing checks to the government people jump for joy when the gov says "we took too much from you this year" and returns a fraction of what they stole.

Im a 1099 employee so I always have to pay at tax season.
Up side to that is I don't pay taxes during the year.

reply to post by SloAnPainful


Nothing. The money is still there unless the Government, Company or wherever you money is goes under, you may loose everything. What worries me is if there is a run on the banks and you want your money you may not get it. The money the banks or wherever your money is at don't have enough paper currency to give out. There is not enough paper currency to give out in the whole world if everyone wanted there money. So I assume.

Any thoughts?

I don't feel sorry for the ones who don't pay and just get money back every year. You know that Earned Income Credit, compounded by the extra kids.

neo96
No one should be getting tax refunds.

What your doing is giving the US government a interest free loan.

For a long time, I would claim the max exemptions, and just cut a check at the end of the year.

Funny, the years I got Audited where when I was doing that, 2 in fact.

Guess they don't like that...

Really they shouldn't be withholding our money at all. It was started, go figure, during the reign of that last great progressive hope, FDR. They started withholding to make things simpler during the war years, but it was really about the government spending money faster than they could take it in, so they needed it directly siphoned off of taxpayers checks.

It was supposed to be temporary and end after the war. Funny how these things never happen.

But before that, everyone was responsible for just writing a check for their taxes and sending them in. There was no tax return at all.

If my refund is delayed, is there any way to charge the IRS interest on the payment?

No doubt that if i owed the IRS and was late on my payment, they would charge me interest.

reply to post by ketsuko

Really they shouldn't be withholding our money at all

I agree with this. There should be no income tax period.

They wouldn't lose money at all. They would make up the difference by other taxation because people would be spending more in other areas.

HardCorps
reply to post by SloAnPainful

 

To be frank I half suspect the Democrats of doing a little fear mongering.
By throwing this at the House Republicans now, they've put them on the spot, damn if they do, damned if they don't.

In the world of CYA I think it's a pretty slick move--- with one news article the blues have targeted the reds as the people you blame if you don't get your refunds.

I *Fully* suspect fear mongering !!

They will pay the refunds on schedule because the revenues keep coming in.

I think during last year's "shutdown" some payouts were deemed as "essential" or something like that.

They are lining up the scapegoats in advance.