(Fixes typo in paragraph 7)
By Noel Randewich
SAN FRANCISCO, March 1 The flow of income tax
refunds to U.S. consumers is getting back on track following a
slow start this year that has had some retail chains worried
As of Feb. 24, the Internal Revenue Service has sent out
$127 billion in tax refunds, 10 percent less than the $142
billion paid at the same time last year, according to newly
released IRS data.
Due to legal changes, income tax return filings and refunds
got off to a slow start, raising concerns that consumers might
have less money to spend at retailers already struggling with
dwindling mall traffic and harsh competition from Amazon.com
Income tax refunds, which last year totaled $265 billion,
represent a chance for many consumers to buy appliances, do
overdue car maintenance or pay down credit cards.
Behind the delay is a new law requiring the IRS to wait
until Feb 15 to issue refunds related to some kinds of tax
In early February, tax refunds had amounted to just 31
percent of what the IRS had sent out by the same time in 2016.
Employers typically pay income taxes to the IRS on behalf of
their employees. Often, the amount paid is more than the
employee owes after tax deductions are taken into account.
After Best Buy reported weak December-quarter
results on Wednesday, Chief Financial Officer Corie Barry said
on a conference call that delayed tax refunds have hurt demand
for TVs and computers.
Even without the delayed tax refunds, many U.S. retailers
are finding it hard to attract consumers who remain cautious
about the slow pace of economic growth.
Shares of Macy's are down 8 percent in 2017 and
Nordstrom has fallen 6 percent.
Of U.S. consumers expecting a tax refund, 30 percent plan to
spend their money to buy everyday- or big-ticket products, down
from 32 percent last year, according to the National Retail
Federation survey. It found that people mostly planned to save
their refunds or pay down debt.
Car parts retailer Autozone on Tuesday blamed the
slow flow of tax returns for quarterly sales that missed
analysts' estimates, but it said it expects to benefit as people
eventually receive their refunds.
"We expect performance to improve in Q3 if for no other
reason than the shift in timing of income tax refunds," CEO Bill
Rhodes told analysts on a conference call.
(Reporting by Noel Randewich; Editing by Chizu Nomiyama)