It is true that most taxpayers, whether individuals or small businesses rely on the tax return filing software. The tax software provides simplified and quick tax return filing without needing to understand all the complicated terms of IRS, Federal, and State taxes.
TurboTax, H&R Block, and similar tax software provide an easy way of filing returns. At the same time, the tax software collaborates with other service providers for their corporate services.
For instance, SBTPG LLC is a company that provides services to taxpayers and tax software. Such software provides services like refund transfer to their clients(tax service providers), auto collects to collect payments from past due to clients, etc.
On the one hand, the collaboration of these service providers brings ease to the consumer (taxpayer end), but on the other hand, sometimes, it can become a problem for the taxpayers. When they do not read the terms & conditions carefully or do not understand the right way of doing things, it can lead to frustration.
One often reported problem by some of the TurboTax customers is they receive a refund deposit less than what it should be. Although, this can happen to anyone, even filing a direct return to IRS.
We will discuss the common reasons why refunds are less than the expected amount. Besides, we will focus on the case of TPG Products and Turbotax customers and will try to solve the query.
So let’s get into it.
What Is TPG Products SBTG LLC?
TPG Product SBTG LLC is a company that was founded in 1991. It stands for Santa Barbara Tax Products Group or formally known as TPG. They have been serving the consumers with tax-related financial products and services.
The company identifies itself as a consumer-friendly service provider with fair pricing. It’s a B2B company, and most of its financial products are for tax-preparation franchises, independent tax professionals, and online tax preparation service providers.
The company is located in San Diego, California. Although founded in 1991, the company became a Green Dot Company in 2014.
If we talk about Green Dot Corporation, it is a wholly-owned subsidiary bank, Green Dot Bank. The headquarters of the company is in Austin, Texas. Whereas Green Dot Bank is headquartered in Prov, Utah.
What Services Do They Offer?
The company provides different products and services and support for the taxpayers and tax services providers. We won’t dive into the detail of what every service of TPG is about. However, we have enlisted the products offered by TPG.
Here are different products of TPG in 2022:
- FastCash Advance
- Software Purchase Assistance
- Refund Transfer
- Marketing Pro
- Direct Main Programs
- Credit & Debit Card Processing
- Free Social Media Content
- Simply Paid For Tax Professionals
- ProSeason Funds
It’s not our domain to discuss each of the products offered by the company. We will only focus on the refund transfer service TPG provides to its online tax service provider clients.
What Is Pay-By-Refund?
As named by Santa Barbara Tax Products Group, Pay-By-Refund is a service directly for the taxpayers and facilitates the tax professionals & tax service providers as they can offer different options to their clients.
Pay by refund option provides the taxpayers with an option that they can easily pay for tax preparation fees when the IRS issues a refund of their tax. They don’t have to pay anything upfront when they avail of the option.
IRS process refunds and it is received by TPG. TPG will deduct the processing fee & tax preparation fee of the tax service provider and issues the refund to the client.
How Does Pay-By-Refund Works?
Many users and taxpayers get confused about how this option work and how everything goes. Here is a three-step working process of the pay-by-refund option:
Step 1: You Choose Pay-By-Refund Option With Your Tax Preparation Service Provider
If you’re getting services from one of the tax professionals or online tax preparation services that have partnered with TPG, you will get this option. Once you choose the option, you’re agreeing that your total refund amount should be adjusted with the tax preparation fee.
Step 2: Tax Return Filing
The next step is filing the tax return in whatever way your tax professional or service provider has specified. IRS (for federal tax) or State returns will contain TPG information. However, one thing different in your tax return is that it will also include information about TPG company as a refund receiver.
Step 3: Refund Processing
After due processing by IRS or State, the refund amount is transferred to TPG company. They will subtract the tax preparation fee and transfer it to your tax service provider. The remaining refund is transferred to you through the payment method that you had specified when choosing a pay-b-refund option.
Why Do You Receive Deposit Less Than It Should Be? TurboTax Users
The method as specified above looks pretty simple, and there’s nothing grey. However, many customers complained about not receiving an expected refund when using TPG and TurboTax. Even many clients have concerns that the refund is less even after deduction of the tax fees.
The common concerns shown by many clients on forums look like this:
“My refund is $59 less, not including the $117 I was charged by TurboTax. And comes from “TPG PRODUCTS SBTPG LLC.” Is TPG PRODUCTS SBTPG LLC affiliated with TurboTax? And was I charged an additional fee? I do not believe I was informed about this additional charge. Can I apply for a refund for that charge?”
What can be the possible reason?
When there’s no obvious reason or letter received from IRS specifying why your refund amount is less than expected, you must check for the following reasons:
You didn’t check the processing fee for a refund, which is around $45. The refund processing fee is charged by the TPG company, and it is also deducted from your refund amount. So the total amount deducted from the tax refund would be the tax fee for TurboTax + the refund processing fee.
Other Reasons Why Your Tax Refund Was Lower Than Expected
When everything else seems to be on point, and you do not understand why the refund has been lowered from the expected amount. You should try to contact your local IRS office and get things sorted out.
In an ideal case, IRS should send you a letter explaining why the refund amount was lower or higher(in some cases). From the analysis of most cases, the common reasons that can be identified are:
Refundable credit adjustments
The advance refundable tax credits that you’re paid in advance against your future tax returns. If your situation changes(income, filing status, dependents, etc.), it will be reversed by IRS. It can also be one reason why you have a lower refund than what was informed by TurboTax.
Tax refund offset
Treasury Offset Program(TOP) is a reason why your tax refund was less than expected. The total refund you were entitled to be adjusted to cover any debts you owe to other federal agencies. The offset program is implemented against the non-IRS Debt Offset that can be checked in tax topic code 898.
The payment offset can be under one of the following items:
- Past-due child support;
- Federal agency non-tax debts;
- State income tax obligations; or
- Unemployment compensation debts owed to a state
Any changes in tax reforms or laws
There can be any change in tax reforms or laws that can lower the tax refund. In the case of the U.S., tax reforms and laws have been in effect in the last few years, resulting in taxpayers getting lower refunds than expected.
Unemployment tax income exclusion removal
As the pandemic hit the world, millions of Americans also ended up being dependent on the government for enhanced unemployment benefits. However, many of them didn’t bother to check that these benefits were taxable.
So what happened?
They expected a refund when they got back to jobs or got new employment and filed a return. But actually, the jobless workers had to adjust their withholdings from their unemployment paychecks. Therefore, IRS made adjustments based on 1099G forms resulting in a lower refund.
You might see a lower amount of refund credited to your account due to reasons related to the income tax rate and withholdings claimed via your W4. The most common causes can be multiple jobs, too few withholdings, or making more money than last year.
Let’s discuss a case of multiple jobs. If you’re filing a return with TurboTax, it shows you are entitled to a refund of $400. However, you worked for two different companies last year.
Tax withholding with one company was around $1,200, and the salary was around $15,000. It was around the same amount as the second company, with a salary of $14,800.
Mary has received a lower refund than expected because each employer calculated a separate withholding tax based on what she has earned with each company. But actually, she was making double the amount that each of the companies calculated as withholding tax.
When IRS adjusts her W4, she will be entitled to a lower refund than she actually thinks.
We have discussed every possible reason why your refund with TPG SBTPG LLC was lower than expected. The most obvious reason can be that you ignored the processing fee of TPG. Besides, we have also mentioned other reasons that can be behind receiving a lower refund from IRS via TurboTax or independently.