Citing that they prey on the working poor and include fees that can translate into annual interest percentage rates between 50% and as high as 500%, the Internal Revenue Service announced that starting in 2011 they would make it more difficult for income tax preparation companies to also provide tax refund anticipation loans. Originally designed to deliver instant tax refund for consumers, many consumer advocates have protested that having to pay major fees to borrow what is essentially your money, offers no benefits and is not a service for the consumer as the tax preparation companies promote.
You do not have to apply for an instant tax refund loan for fast access to your anticipated income tax refund.
Here are two things that will help you get your tax refund faster:
- File your income tax forms electronicallyit is much faster than paper.
- Request your tax refund be directly deposited into your bank’s savings or checking account.
- Combining these two simple practices could enable you to get your tax refund within 8 to 15 days.
Just think if everyone did this, instant income tax refund loans would not even be necessary.
How much are they paying to get an advance?
Comparing their tactics, as comparable to a downtown pool hall loan shark, operationconsumer advocates have been attempting to educate the massive numbers of Americans whom every year take out loans on their tax refunds, just how much they are paying to get an advance on their money. Initially believed to be of benefit to consumers when, initially offered in early 2000, tax refund anticipation loans positively endorsed across the board.
However, these days they are being denigrated as largely useless because, thanks to modern technology, most taxpayers can have access to their tax refund within days.
Refund anticipation loanshigh-interest rates
Refund anticipation loans are short-term loans with high-interest rates. Marketed as “instant tax refunds,” they target those who are least likely to be able to afford them…the working poor. Since the tides have changed regarding their true “loan intent,” a few of the giant tax preparation companies have been sued due to the way they market this service.
Unintended tax security consequences
Due to the massive complaints and negative publicity surrounding refund anticipation loan practices, the IRS begin checking into instant tax refunds and in 2008 start issuing guidelines on how they were marketed to tax preparers. Within their guidelines, the IRS reminded the tax preparers of their responsibility to their clients and also proposed new competency guidelines.
The continued promotion of refund anticipation loans and the related high fees has caused the IRS to re-evaluate their position and concur they have been aiding and abetting tax preparers in making high-interest loans to those who can least afford them.
In the past, the IRS provided tax preparation services with special information referred to as “debt indicator” for every taxpayer. Debt Indicator’s let the preparation company know whether that taxpayer’s income tax refund was going to be seized by the government for things such as back taxes, child support or delinquent student loans. Whenever the taxpayer’s debt indicator showed that the taxpayer was not getting a tax refund, the tax preparation company knew not to lend that particular person money in the form of a refund anticipation loan. Visit this site to get more information : http://www.taxreturn247.com.au