MADIGAN ISSUES TAX SEASON REMINDERS
Attorney General Cautions Illinois Consumers about Costly Refund
Anticipation Products and Tax-Related Identity Theft
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[February 02, 2017]
As tax season gets underway, Attorney General Lisa Madigan
today urged Illinois taxpayers to avoid applying for expensive
refund anticipation products that deplete as much as a thousand
dollars from their eventual tax refund.
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Madigan issued advice for Illinois residents in light of a recent
announcement by the IRS that as a way to reduce identity theft and
tax-related fraud, it is delaying tax refunds until February 15 for
more than 40 million low-income families claiming the earned income
tax credit and the child tax credit.
As a result, Madigan’s office expects more taxpayers will be enticed
by tax preparers to apply for “instant cash advances.” These are a
new kind of short-term loan that typically provides taxpayers with
between $500 and $1,000 of the eventual tax refund upfront. Tax
preparers often deceptively market these advances as “interest free”
but the loans carry interest rates over 100 percent in most cases.
Tax preparers offer refund anticipation loans via checks and
temporary debit cards as a way for consumers to receive an instant
cash deposit based on their anticipated tax refund instead of
waiting to receive their full tax refund from the IRS. But this
advance payment comes at a very high cost.
![](http://archives.lincolndailynews.com/2017/Feb/02/images/ads/current/best_friends_sda_120215.png) “When tax preparers promise an instant refund, they are really
giving you an expensive, short-term loan that will reduce the amount
of your eventual tax refund by as much as a thousand dollars,”
Madigan said. “Be skeptical of these high-priced, short-term loans.”
In addition to tax refund anticipation products, Madigan said
consumers should be aware of tax-related identity theft. Complaints
to Madigan’s office have shown that for some consumers, even simply
consulting with a company offering tax refund anticipation products
leads to problems. Consumers have reported instances of companies
filing a tax return in their name but without their authorization
based on information the consumer provided in an initial
consultation.
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Madigan offered tips for consumers to avoid becoming the victim of
tax-related identity theft:
- Do not open or reply to any emails claiming to be from the
IRS that contain a request for personal information. Contact the
IRS directly to find out if the solicitation is legitimate.
- Report any suspicious IRS paper mail correspondence to the
Treasury Inspector General for Tax Administration at 1 (800)
366-4484.
- Contact the IRS Identity Protection Specialized Unit at 1
(800) 908-4490 or visit the IRS website to report tax-related
identity theft.
To report a complaint involving a tax refund anticipation product, contact
Madigan’s Consumer Fraud hotlines:
1-800-386-5438 (Chicago)
1-800-243-0618 (Springfield)
1-800-243-0607 (Carbondale)
Consumers looking for help preparing and filing their taxes free of charge
should contact the Center for Economic Progress, a trusted provider of tax and
financial assistance for low-income and working families, at 312-252-0280 or
visit their website. In addition, the Department of Human Services provides a
list of free tax help sites across the state, which can be found here.
[Illinois Attorney General Lisa
Madigan]
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