It seems like you can't turn around anymore with out seeing an advertisement for a tax refund “now” loan. It seems like all the franchises are offering these rapid refunds, but what are they really?
The truth is, these rapid refunds are no better than the much criticized “pay day” loans. Commercial tax preparers are getting in to the action by offering customers faster, or in some cases, instant refunds at an expense anywhere between 40-and-700 percent APR.
According to Carl W. Maier, CPA, CVA with Cahan and Company in Southampton, PA, electronic filing, referred to as eFiling, has cut the standard wait time for a refund down dramatically.
Even waiting for a paper return to be accepted is a better deal than paying 700 percent interest on a tax refund loan.
According to the Center for Responsible Lending, a study conducted in 2005 found that about $1.57 million of earned income credits that were supposed to go to working parents, ended up in the pockets of tax preparers and other refund lenders.
Tax payers should take a close look at any income tax return loans they may want to take advantage of, remembering the old adage - “if it sounds too good to be true, it probably is.”
For more information about how to eFile your federal and state income taxes, or for advice and guidance to plan for next year's taxes, contact Carl at 215-364-7777 extension 106.
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