Smaller Tax Refunds
It’s hard to believe that April 15 has already come and gone. It was a challenging tax season, as we experienced the first full year of the Tax Cuts and Jobs Act.
The jury is still out on all of the law’s implications – we’ll have more clarity as the IRS continues to offer guidance on many of the gray areas – but one thing is clear: Refunds are down.
The IRS said it had paid $220.7 billion in tax refunds as of April 5, a $6 billion drop from last year.
The average refund check was only down about $30 – to $2,833 – by that date. However, fewer people had gotten a refund, because they did not adjust their withholdings sufficiently or at all and ended up owing at the end of the year.
This has big implications for many of our clients who cater to the consumer market. Middle-income taxpayers who were affected probably won’t be making as many splurges as they usually do the next few months. The new car, kitchen remodel, and vacation may have to wait. It looks like consumer spending may already be slowing down, with retail car auto sales dipping by 4% the first quarter. People may also postpone necessities, like long-overdue medical and dentist appointments, since the refunds they counted on to cover these costs may not have materialized.
Obviously, this isn’t good news, but I look at it as an opportunity. If you run a B2C business, there’s still time to up your game and find new ways to give customers a reason to buy. If you wait six months and consumer spending slows significantly, the situation could be more pressing.
Now is an ideal time to take a fresh look at your company’s strategic plan to make sure it’s still relevant. Making a few changes now can make a tremendous difference in how your company fares in the months ahead.
It’s also a great time to take stock of your advertising and marketing efforts to make sure they’re delivering the returns you expected. With all of the digital advertising options out there, it may be time to try some new avenues and to make sure you’re taking full advantage of existing ones, like mobile.
I’d also recommend casting a fresh eye on the products and services you’re offering. Will they still be compelling to your customers if market conditions change? Is your pricing working for you? If not, now’s the time to make any needed adjustments.
And, of course, it’s important to be sure you have access to enough financing to execute on your plans in the months ahead. As most business leaders know, the best time to secure capital is when you don’t need it.
One of Marcum’s specialties is helping our clients plan for changing market conditions and adjust their plans accordingly. Whether you need a sounding board, want to run the numbers on any new ideas you’re considering, or need to overhaul your strategic plan completely, I encourage you to reach out to your Marcum professional. We’re just a phone call away and we’re here to help.
Today is Good Friday, with Easter taking place this Sunday. As many of you know, in the Weiner household we celebrate both Passover and Easter. As is our tradition, the Weiners will be hosting the first Seder tonight down in South Florida, as well as Easter Brunch on Sunday, after the annual Easter egg hunt in our neighborhood. To all of you, whatever you may celebrate, enjoy the holiday weekend.
