The Better Business Bureau advises consumers to be wary of these
costly loans. They deliver refunds only slightly faster than the
Refund anticipation loans are similar to payday loans.
They're short-term loans with high interest rates that can range
from 50 to 500 percent. In some cases, they have hidden
administrative fees. If the tax preparer makes a mistake in
calculating your refund, borrowers could be required to pay fines
and fees also.
"Consumers may assume that the loans will be paid off quickly
when their refund arrives, but if the refund is less than the loan,
consumers will have to repay the difference, plus fees and fines,"
said Bonnie Bakin, BBB president and CEO.
The IRS usually delivers refunds in as few as 10 days after a
consumer files a tax return, if the consumer files the return
electronically and takes the refund by direct deposit to a bank
account. The speed makes most refund loans unnecessary.
This year, the IRS has another option for refunds if a consumer
doesn't have a bank account: a prepaid debit card. The cards,
available only by invitation, can be used to get money from ATM
machines or to buy goods and services from retailers. The cards
arrive faster than checks, the IRS says, and may allow consumers to
avoid check-cashing fees.
The BBB advises consumers to be wary of two common tax-time
schemes are promoted by companies that claim they can help
consumers reduce what they owe the IRS by working on their
behalf with the IRS. However, the BBB has taken complaints from
consumers who paid thousands of dollars to such companies, only
to find out that the companies didn't reduce the amount they
owed and, in some cases, had never contacted the IRS.
BBB advice: If you have a debt with the IRS, consult an
IRS enrolled agent, a certified public accountant or a tax
attorney to determine whether you qualify to file for anything
other than paying your taxes, fines and penalties in full.
may say that there's an issue with taxpayers' refunds, that they
are being audited or that a problem is delaying processing of
their taxes. Many include a link to a website set up by
scammers, where victims are asked for Social Security numbers,
bank account or credit card information. Some sites are designed
to automatically install viruses or other malicious software on
the victims' computers.
BBB advice: The IRS doesn't email people about their
taxes. The agency typically contacts taxpayers by mail. Tipoffs
that an email is fraudulent may include spelling or grammatical
mistakes. The BBB advises consumers not to open any attachments
or click on links in the emails.
[to top of second column]
If you decide to hire a tax preparer, the BBB advises that you:
from friends, but before you hire anyone, check out the preparer
with the BBB at www.bbb.org or
by calling 314-645-3300.
Is the preparer a certified public accountant, a tax lawyer or
an enrolled agent? Will the preparer sign your return and
provide you with a copy? Does the preparer belong to a
professional organization that requires members to adhere to a
code of ethics?
Be wary of
promises. Until the preparer knows your situation, there is
no way to know whether you'll get a refund or how big it will
accessibility. You may need to contact your preparer after
tax season is over. Will he or she be available?
Read the contract.
Know what the service will cost, what it covers and whether the
cost changes if you have a complicated return. Will the preparer
represent you in case of an audit?
Check your return.
Before you sign the return, read it over to check for mistakes.
Ask the preparer to explain anything you don't understand.
[Text from file received from the
Better Business Bureau of
For 100 years, the Better Business
Bureau has been helping consumers find businesses, brands and
charities they can trust. In 2012, consumers turned to BBB more than
100 million times for reviews on more than 4 million companies and
reports on 11,000 charities, all available for free at
www.bbb.org. The Council of Better
Business Bureaus is the umbrella organization for 114 local,
independent BBB's across the United States and Canada, as well as
home to its national programs on dispute resolution and industry