Refund Anticipation Loans (RAL) are a tool used by many tax preparation services and are coming under increased scrutiny by many consumer advocacy agencies. www.Taxhead.com does not offer refund loans, but still manages to get tax refunds to people in days.
(PRWEB) February 18, 2006 -- Refund Anticipation Loans (RAL) offer to get tax refunds to tax filers in a few days, but RAL's come with a high cost, are not endorsed or encouraged by the IRS, and are under suit by many consumer advocacy agencies. Online tax services such as www.Taxhead.com do not offer refund loans, and for good reasons: With IRS e-file a person can receive a tax refund in less than two (2) weeks, and as fast as nine (9) days. As an alternative to refund loans, www.Taxhead.com promotes e-file and direct deposit. This is the fastest, lowest-cost way to receive a tax refund.
For the official IRS refund cycle chart go to >> http://www.irs.gov/pub/irs-pdf/p2043.pdf
Still, many other major tax preparation services offer tax refund loans. Those offering "free" tax services often make their money selling refund loans to tax filers, many of which are of low income or otherwise under financial distress. These are costly and may even be illegal.
An executive from www.Taxhead.com said, "Beware of Tax Refund Loans. It is better to use eFile and direct deposit. We do not offer tax refund loans, but still manage to get our customer's refunds deposited into their bank account in as few as nine days. Our easy, fast tax software combined with IRS e-file makes all this possible."
Recently, California Attorney General Bill Lockyer filed lawsuit* against H&R Block for "illegally Marketing and Selling High-Cost Loans as ‘Instant’ Tax Refunds -- Refund Anticipation Loans Enrich Firm, But Drain Millions from Low-Income Families", according to the Attorney General's press release.
"February 15, 2006 -- Attorney General Bill Lockyer today filed a lawsuit against H&R Block alleging the tax preparation giant has violated 15 state and federal laws in marketing and providing high-cost refund anticipation loans (RALs) mainly to low-income families."
"Millions of Californians have placed their trust in H&R Block, and unfortunately H&R Block has repaid them by violating that trust," said Lockyer. "In marketing and selling these expensive loans, H&R Block has profited greatly, but deceived consumers, violated their privacy rights and taken money from California families who can least afford it. This lawsuit seeks to hold the company accountable for unlawful business practices, prevent future violations and compensate victims."
The complaint alleges the H&R Block defendants have violated 15 state and federal laws that regulate debt collection practices and contracts, and prohibit false or deceptive advertising, unfair business practices, and unauthorized use or sharing of individuals’ tax return information.
RALs are loans, they are not tax refunds. These refund loans are sold to taxpayers and secured by their expected refund. According to the complaint, Internal Revenue Service rules prohibit tax preparers from providing the loans themselves, so they often contract with banks for that purpose. However, the tax preparer often provides clients the loan applications, fills out the applications, sends the applications to the banks, and distributes the loan checks to customers.
If a person uses a tax refund loan, depending on the amount of refund, the refund loan fees can force customers to pay the equivalent of annual interest exceeding 500 percent, according to the complaint.
Additionally, according to the complaint and other research performed by www.Taxhead.com, many tax services that offer "free" tax preparation, including many participants in the IRS "Freefile" initiative, use and share customers’ tax-return information without clients’ written consent, in violation of state and federal law.
The www.Taxhead.com official said, "We offer a safe, sane environment for our customers. We will not sell, trade or otherwise release our customers personal information, except to file their tax return for them. People should go by the old wisdom 'there is no free lunch'. If someone offers to file taxes for free, there is probably a catch, a hidden cost, or the misuse of consumer's personal information. We do not, will not, and never have done this to our customers. With www.Taxhead.com we charge a small fee to e-file your tax return. And, your tax and personal data is kept safe and secure. No hidden fees, not gimmicks, no catches."
The California Attorney General Press Release and Official Complaints are availble at http://ag.ca.gov/newsalerts/release.php?id=1261
*Reference Superior Court of California, San Francisco County, court case # CGC-06-449461
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