| Citing that they prey on the working poor and include | | | | begin issuing guidelines on how they were marketed to |
| fees that can translate into annual interest percentage | | | | tax preparers. Within their guidelines, the IRS reminded |
| rates between 50% and as high as 500%, the Internal | | | | the tax preparers of their responsibility to their clients |
| Revenue Service announced that starting in 2011 they | | | | and also proposed new competency guidelines. The |
| would make it more difficult for income tax preparation | | | | continued promotion of refund anticipation loans and |
| companies to also provide tax refund anticipation loans. | | | | the related high fees has caused the IRS to |
| Originally designed to provide instant tax refund for | | | | re-evaluate their position and concur they have been |
| consumers, many consumer advocates have | | | | aiding and abetting tax preparers in making |
| protested that having to pay major fees to borrow | | | | high-interest loans to those who can least afford them. |
| what is essentially your own money, offers no benefits | | | | In the past the IRS provided tax preparation services |
| and is definitely not a service for the consumer as the | | | | with special information referred to as "debt indicator" |
| tax preparation companies promote. | | | | for every taxpayer. Debt Indicator's let the preparation |
| Comparing their tactics as comparable to a downtown | | | | company know whether that taxpayer's income tax |
| pool hall loan shark operation, consumer advocates | | | | refund was going to be seized by the government for |
| have been attempting to educate the massive | | | | things such as back taxes, child support or delinquent |
| numbers of Americans who every year take out loans | | | | student loans. Whenever the taxpayer's debt indicator |
| on their tax refunds, just how much they are paying to | | | | showed that the taxpayer was not getting a refund, |
| get an advance on their own money. Initially believed to | | | | the tax preparation company knew not to lend that |
| be of benefit to consumers when, originally offered in | | | | particular person money in the form of a refund |
| early 2000, tax refund anticipation loans were positively | | | | anticipation loan. According to the IRS, the debt |
| endorsed across the board. But these days they are | | | | indicator was never intended to be used for this |
| being denigrated as largely useless because, thanks to | | | | purpose. Starting in 2011, the IRS will no longer provide |
| modern technology, most tax payers can have | | | | debt indicator information to tax preparation |
| access to their tax refund within days. | | | | companies. |
| Refund anticipation loans are actually short-term loans | | | | This will somewhat stifle tax preparers from making |
| with high interest rates. Marketed as "instant tax | | | | quick decision on future instant income tax loans. But |
| refunds," they target those who are least likely to be | | | | people are creatures of habit. The vast majority of |
| able to afford them...the working poor. Since the tides | | | | them use the same tax preparer every year. Most tax |
| have changed regarding their true "loan intent," a few | | | | preparers will simply just check previous years refund |
| of the giant tax preparation companies have been | | | | information and be able to make a decision. Is the IRS |
| sued due to the way they market this service. | | | | decision really that much help in discontinuing this |
| The average tax payer has already lent their | | | | usurious practice? |
| hard-earned money, interest-free, to Uncle Sam for an | | | | You do not have to apply for an instant tax refund |
| entire year and now they are expected to pay | | | | loan for fast access to your anticipated income tax |
| interest and fees on a $3,000 refund of slightly less | | | | refund. Here are two things that will help you get your |
| than $100 for instant access to it. It is a well | | | | refund faster: |
| understood fact that there are a number of | | | | 1. File your income tax forms electronically...it is much |
| Americans who do not have a bank account and | | | | faster than paper. |
| therefore can not use direct deposit. There are also | | | | 2. Request your tax refund be directly deposited into |
| those who are desperately in need of the money and | | | | your bank's savings or checking account. |
| insist on using one of these loans to get it as soon as | | | | Combining these two simple practices could enable |
| possible. But this is the exception, not the rule. | | | | you to get your tax refund within 8 to 15 days. |
| Due to the massive complaints and negative publicity | | | | Just think...if everyone did this, instant income tax refund |
| surrounding refund anticipation loan practices, the IRS | | | | loans would not even be necessary. |
| begin checking into instant tax refunds and in 2008 | | | | |