TAP 05-040

Debt Indicator Elimination

Statement of Issue:

By providing the debt indicator to third parties who file returns electronically, the IRS encourages refund anticipation loans (RALs) and makes it appear the IRS endorses RALs. Providing the indicator also raises major privacy issues.

Proposal:

TAP recommended that the IRS stop providing the debt indicator to third-party Electronic Return Originators who arrange RALs for their taxpayer clients.

Response Notes: