CARY, N.C. — As the calendar approaches the midpoint of 2013, lenders,
dealers and service providers are getting a clearer picture about just how
unusual this year's tax season was for the used-vehicle industry.

Among the perspectives collected by SubPrime Auto Finance
News, the two-decade-old viewpoint from Bill Neylan, the president and chief
executive officer of Tax Refund Services, was among those that stood out.

"It was definitely a learning experience," Neylan said. "I've
been doing this almost 20 years, and the first 18 years have been just status
quo. The last two years, there's been more change than my whole history in
doing this.

"I think things are going to settle down now, and I think
going forward what happened this year is going to be the norm," he continued. "I
think from the IRS' perspective, things really processed smooth. A lot of people
say tax money didn't come until Feb. 15. That's because the majority of
Americans didn't file until Feb. 1."

Debate by federal lawmakers about the Fiscal Cliff didn't
conclude until New Year's Eve, forcing the Internal Revenue Service into not
accepting personal income tax filings until Jan. 31. However, Neylan contends
the IRS might have been taking returns earlier since his system that helps
buy-here, pay-here dealers turn vehicles based on expected refunds first
spotted activity as early as Jan. 17.

"They actually opened a little earlier. They just didn't
tell people," Neylan said. "The year before, the IRS had their systems crash.
This year, in my opinion, I think they said they were opening Jan. 30, expecting
some to trickle in early so they could test their systems and avoid the
catastrophe that happened last year.

"From the IRS' processing view, it was the smoothest
processing season we've had in many years," Neylan went on to say. "If I was
with the IRS, I'd say, ‘Let's do that again.'"

If the next tax season unfolds like this past one did, major
operations might have some performance metrics to better predict how their
quarterly results unfold.

An example of how late-arriving tax refunds eventually
boosted used sales came from the performance of Credit Acceptance, the 40-year-old
subprime auto financing company.

After declining 2.9 percent during the first quarter, Credit
Acceptance highlighted that its unit volume increased 19.8 percent in April as
compared to same month a year earlier.

"We believe a delay in tax refunds in the current year
contributed to both the decline in the first quarter and the increase in April.
In addition, April 2013 had one additional business day as compared to April
2012," Credit Acceptance officials said in paperwork filed with the Securities
and Exchange Commission.

Meanwhile, BHPH dealership chain America's Car-Mart certainly
witnessed how delayed tax returns affected the close of its fiscal year that
came on April 30. Chief financial officer Jeff Williams estimated that the
company collected almost $2 million less because of a combination of delayed
refunds as well as an increase in federal taxes squeezing income of its
customers who oftentimes live paycheck to paycheck.

"I think it's fair to say that the delays had some effect,"
Williams said. "The customer certainly maybe chose to save a little of that
money this year or do something else with it as opposed to getting a little
ahead or paying extra on the contract with us. Certainly the delay itself had
some effect on that behavior.

"This year we were very successful in the percentage of customers
who made their payments," he continued. "In prior years, we had seen customers
actually make more in terms of extra payments, or payments in addition to what
was required. That was not quite as prevalent this year. That could have been
due to an extent on the delay in refunds."

So should lenders and dealers prepare for a tax season that
doesn't begin in earnest until the second month of the calendar year?

"My hunch is that's going to be the norm," Neylan said.

Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.