will there be a third stimulus check in march

#WILL THERE BE A THIRD STIMULUS CHECK IN MARCH SERIES#

If the IRS focuses on this problem, they can detect which direct deposits are really RACs. Because of this, regulatory and public pressure previously shrunk the RAL market to under 2 million people, but RACs continue to spring up. They’ve become an expensive way for tax preparers to make huge profits off middle- and low-income earners. RACs are marketed as a way for consumers to avoid paying the cost of the tax preparation upfront, and emerged as a successor to the Refund Anticipation Loan (RAL) product. The remaining funds are given to the consumer through a direct deposit into their regular account, onto a prepaid debit card, or through a paper check. The tax preparer takes its service charge, RAC fees, and other costs from the account. They instruct the IRS to direct deposit the consumer’s refund into this new account. RACs are offered by tax preparers who create a temporary bank account for a consumer in their name.

According to the National Consumer Law Center, 21 million of those filers were not using their bank account, but rather one set up specifically to provide expensive short term financing through something called a Refund Anticipation Check (RACs). 92 million filers received direct deposit refunds in 2019-roughly 60% of total filers. To avoid further delay, many will rush to check cashers who, for a fee, provide instant access to funds.Īt first glance Treasury’s direct deposit solution covers a lot of people. This law, written in an era where paper checks were mailed, has not been updated, and the Federal Reserve has chosen not to use its legal authority to require quicker funds availability. Deposit your check Saturday morning at your bank and it will not be available until Tuesday (or Wednesday if Monday is a holiday). Banks are allowed to hold Treasury checks for one ‘business day,’ before crediting customers’ bank accounts.

When the stimulus checks do come, Americans will rush to access the funds, exposing problems in our slow payment system. Roughly 8% of Americans are heavy bank overdraft users according to the Consumer Financial Protection Bureau (CFPB). Four bank overdrafts typically cost $140, a routine part of life for many consumers. That is the only way the product works.Įven if the payday loan costs borrowers $120 (5 to 10% of the total stimulus) that loss may be necessary to put food on the table, avoid car repossession, or handle medical bills, but regularly overdrawing from bank accounts is more expensive. Every payday loan borrower has a bank account. People will get funds deposited immediately, by giving the payday lender a postdated digital check to get paid back once the stimulus funds have been deposited. Online payday lenders will fill this gap. There are more payday lenders than McDonalds in America for a reason: our financial system excels at providing those with money cheap sources of liquidity and is horrible at providing those working paycheck-to-paycheck with small dollar loans.

#WILL THERE BE A THIRD STIMULUS CHECK IN MARCH SERIES#

Many of those waiting on a paper check will be forced to choose between a series of expensive and unpalatable alternatives. They will have to wait extra weeks, maybe months, which given the economic tsunami of COVID will be devastating. Using the unrealistic assumption that none of the remaining 10 percent used direct deposit for a refund (or did not receive a refund at all), this figure drops to about 48 million taxpayers.

The Urban-Brookings Tax Policy Center estimates that about 90 percent of tax filers will receive some benefit. Not all of those will be eligible to receive a benefit. This means there are around 63.8 millions taxpayers that the Treasury Department cannot send a direct deposit to because they didn’t use a direct deposit refund. Roughly 70 million American families are likely to have to wait at least another month, or more, for their money. However, slightly more than four out of every ten tax filers in 2019 did not receive a direct deposit refund. The Treasury Department’s initial solution is to provide payment directly to people’s bank accounts through the direct deposit authorization provided in their previous tax return. The majority of people impacted by this deal are living paycheck to paycheck but lack access to low cost small dollar credit.

Will there be a third stimulus check in march