IRS always looks at past practices and past years data to identify if any tax rules have been obsolete or would require any changes. For 2011 IRS Tax return season, IRS did exactly that.

I just read a news article today that stated IRS will now not use the Debt indicator in calculating a tax payer's refunds. This in a way will impact the lenders who used to base their decisions on the debt indicator.

IRS head Doug Shulman mentioned that the IRS system is so much advanced now that the debt indicator is not needed by them anymore.

This in a way is going to change the way the banks are honoring refunds. Previously a person used to get refund loans from the bank quickly because banks used to do underwriting on the basis of Debt Indicator. Since this indicator will not be in use any more in 2011 IT Income tax returns, it will be interesting to see what measures bank take. Perhaps they may increase the interest rates to mitigate the risk.