But the news is not all bad. Banks in the tax refund realm are currently embarking on their 2nd year of a program to help keep the money flowing prior to February 15.
Starting back in January of 2016, banks successfully tested the return of tax refund advances. The pilot program featured 24-hour checks of up to $750 to $1,000. For 2017, many banks are preparing to launch same-day refund advances of up to $1,200.
So what does this mean for dealerships and how can you prepare for this change?
1. Do not rely on the information provided in tax company commercials. Much of what is
advertised will not apply to your business model. When they advertise ‘free tax
preparation’ on TV, your customer rarely qualifies.
2. Do not rely on information your accountant gives to you. Time frames for businesses and
people who make over $60,000 per year are different from the Special Finance consumer.
For example, January 31st is your deadline to provide W-2 Forms to your employees, but
many payroll contractors send these out the 1st or 2nd week of January.
3. Understand that your customer can file as early as January 2nd and more than ½ of your
customers will file BEFORE February 1st.
4. Lean on experts within your industry. Local IADA, NIADA, NABD, and other associations can
steer you to the right people who specialize in selling cars and the tax refund customer.
5. The refund advances of up to $1,200 begin when the IRS opens in mid January. Approval
requires W-2 forms, bank approval, and IRS approval.
6. Manage your finances accordingly. Realize that a majority of your customer’s refund
money will not arrive until at least February 15th.
7. Expect more than 50 to 70% if ALL tax refund dollars to hit the market within a 1-3 day
period! You will not have the manpower to handle all of the traffic, so be ready. Encourage
employees to avoid vacations from February 15th to February 28th.
Preparation and planning will be key for the 2017 tax refund season. Many dealers claim that tax refund season is ‘dying.’ But in fact, the average refund within the Special Finance market has more than DOUBLED in the last 10-12 years.
The cause of many failures is the shortening of the tax refund payout season. It used to be a month or 2 back in the 1990’s. It shortened to a matter of weeks in the past 15 years. Now the season could be condensed to a matter of days.
The “Sit & Pray” approach to Tax Refund Season no longer works. Sit and be prey is more accurate. There are too many sharks in the refund tank for the old method to be effective anymore. If you do not actively pursue the tax refund customer, more aggressive competitors from multiple industries will take them from you.
Chip Wiley is the Dealer Training & Marketing Specialist with TRS Tax Max. He has 15 years of experience, specializing in the Buy Here Pay Here demographic.
Article provided by GIADA: https://giada.org/2017-tax-refund-season-breaking-news/