Where?s All That Tax Refund Money?

We’ve heard from a number of different collection agency executives in the industry that the 2007 tax refund season hasn’t been as lucrative as in years past.

Typically, the first quarter of any given year is a boom time for collectors as indebted consumers get lumps sums of cash from their state and federal tax return refunds and apply them to outstanding debt. Perhaps it’s just a coincidence, but some of the people insideARM has spoken with have commented that those payments are weak this year.

The matter has come up in the news at least once: in its parent company’s earnings conference call, ARM giant WAM noted that “tax refund liquidation in the quarter was not as high as the company is accustomed to seeing,” (“WAM to Reduce Debt Buying in 2008 Over Funding Flap,” April 18).

Just today, I spoke with a collection agency owner on another topic and he said something very similar. A recent thread on the insideARM Discussion Forum also addressed lagging tax refund settlements.

Mike Ginsberg, CEO of ARM advisory firm Kaulkin Ginsberg, blogged a few weeks ago on the impact a sour economy was having on collections.

Is that the answer? Is a bad economy forcing consumers to use tax refunds differently this year? Or are tax refunds just smaller this year?

Are we even hearing this correctly? And if it is true, will the stimulus checks set to go out soon help fill the void?

We’d love to hear the experiences of those in the industry on tax refund payments this year. Please feel free to comment below.