Openly citing that they target the working poor and include certain fees that can easily translate into yearly interest percentage rates ranging between 50% and as high as 400%, the IRS (Internal Revenue Service) declared that in the beginning of 2011 they would make it even more hard for income tax preparation firms to also offer tax refund anticipation loans. Initially intended to offer instant tax refund for clients, many consumer advocates have actually protested that paying major fees just to borrow what is basically your own money, offers absolutely no benefits and is certainly not a service for consumers as promoted by the tax preparation companies.
Comparing their maneuvers to a downtown pool hall loan shark operation, the advocates have been trying to educate Americans who annually take out loans on their tax refunds, on just how much they are actually paying to get an advance on their own cash. Originally believed to be of huge benefit to every consumer when, first offered in early 2000, the tax refund anticipation loans were confidently recommended across the board. But today they are being disparaged as largely useless simply because, thanks to advanced technology, most taxpayers can actually access to their tax refund within few days.
Refund anticipation loans are normally short-term loans with very high interest rates. Promoted as "instant tax refunds," these loans usually target individuals who are least likely to afford them -the working poor. Since the tides changed concerning their true "loan intent," some of the giant tax preparation firms have actually been sued because of the way they market this particular service.
The average American taxpayer has already lent his or her hard-earned cash, interest-free, to “Uncle Sam” for a whole year and now he or she is expected to pay the interest and fees on a $3,000 refund of somewhat less than $100 for immediate access to it. It is very clear that there are certain Americans who actually don’t have a bank account and therefore can’t use direct deposit. There is also a group of those who desperately need the money and just insist on using one of these available loans to get it immediately. But remember this is the exception, not actually the rule.
Due to the negative publicity and the massive complaints surrounding refund anticipation loan practices, the Internal Revenue Service (IRS) began to keenly check into the instant tax refunds and in early 2008 it began issuing guidelines on exactly how they were promoted to tax preparers. Within guidelines provided, the Internal Revenue Service reminded all tax preparers of their responsibility to their customers and also suggested 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 years the Internal Revenue Service offered tax preparation services with special information commonly referred to as "debt indicator" for each and every taxpayer. Debt Indicators allow the preparation firm know exactly if that taxpayer's income tax refund was actually going to be held by the government for things like child support, back taxes, or even delinquent student loans. Every time the taxpayer's debt indicator indicated that the taxpayer was never getting a refund, the preparation firm knew not to lend that individual money in form of a refund anticipation loan. On the word of the Internal Revenue Service, the debt indicator was actually never designed to be used for this particular purpose. In the beginning of 2011, the IRS stopped providing debt indicator data to tax preparation firms.
This will slightly stifle the tax preparers from quickly deciding on future instant income tax loans. But human beings are creatures of habit. Majority of them normally use the same tax preparer every single year. In fact, most tax preparers will only check previous years refund data and be in a position to make a decision. But is the IRS decision actually offering that much help in stopping this usurious practice?
Individuals don’t really have to apply for an instant tax refund loan for quick access to their anticipated income tax refund. The following are two things will assist you in getting your refund faster:
1. Request that your tax refund be deposited directly into your checking account or bank's savings.
Combining these two simple practices could enable you to get your tax refund within 8 to 15 days.
2. Always file your income tax forms electronically. It is much quicker than paper.
Just think about it. If every individual did this, instant income tax refund loans wouldn’t even be necessary.
We at Tax Problem Resolutions, Inc. believe that your success is our success. We believe that you need to be equipped with the necessary knowledge so as to lawfully benefit from the tax refund. Furthermore, we understand that to find a tax professional with a good track record in Rancho Cucamonga, California and it’s environ is not an easy task. Reach out to us today by clicking the link below and our professional accountants will handle you with the level of professionalism you expect.
