Many taxpayers in need of so-called "rapid refunds" are facing a new challenge this year. Briefly, the process works this way.

Many electronic taxreturn filers(preparers are originators in IRS lingo) may be subject to a bank credit check before their 2007 tax refund can be processed. Tax return filers who need their refunds as quickly as the law allows, receive what is called "refund anticipation loans", which are repaid by any "refund" expected from the IRS as a refund. IRS-approved Banks are certified to participate in these loan programs (check copies of your last year's paperwork to see if your refund was used to repay these rapid loans. If any of you did not keep copies, begin the habit of doing so, as sometimes it is advisable to amend a previously filed return later.

Because of the current bank situation, fraudulent practices by some filers and preparers, and outcries in certain sectors of the public, the IRS has pushed hard for more responsibly "lending" practices by banks who participate in these loans. More information about initiatives in this regard may be found on the website of IRS at www.irs.gov.
Since there are other sites that "mimic" the website of IRS, the government is stressing that the public is to make certain ".gov" is used to access the official IRS website.

Therefore, your professional preparer should be contacted if your refund may seem to be taking longer this year. Of course for those interested, more information can be provided if necessary.

Bill C

quote:

Originally posted by Bill C:
Many taxpayers in need of so-called "rapid refunds" are facing a new challenge this year. Briefly, the process works this way.

Many electronic taxreturn filers(preparers are originators in IRS lingo) may be subject to a bank credit check before their 2007 tax refund can be processed. Tax return filers who need their refunds
as quickly as the law allows, receive what is called "refund anticipation loans", which are repaid by any "refund" expected from the IRS as a refund. IRS-approved Banks are certified to participate in these loan programs (check copies of your last year's paperwork to see if your refund was used to repay these rapid loans. If any of you did not keep copies, begin the habit of doing so, as sometimes it is advisable to amend a previously filed return later.

Because of the current bank situation, fraudulent practices by some filers and preparers, and outcries in certain sectors of the public, the IRS has pushed hard for more responsibly "lending" practices by banks who participate in these loans. More information about initiatives in this regard may be found on the website of IRS at www.irs.gov.
Since there are other sites that "mimic" the website of IRS, the government is stressing that the public is to make certain ".gov" is used to access the official IRS website.

Therefore, your professional preparer should be contacted if your refund may seem to be taking longer this year. Of course for those interested, more information can be provided if necessary.

Bill C

P.S. It is important to remember the banks and not IRS performing any credit checks.

Thank God for refunds and thank you for
this information.

RALS (Refund Anticipation Loans) have been problematic for years. IRS attempts to alert tax professionals, banks, and other interested parties as to whether a taxpayer has an outstanding IRS debt, student loan, child support or other issue that may cause the refund to be partially offset or not issued at all thereby minimizing risk in some instances.

Banks issuing the loans are left holding the bag if the IRS does not issue a refund to pay off the loan. Taxpayers do not generally reimburse the bank or the tax professional. The interest rates on these loans amount to usury. It is a sticky situation for many preparers as the loans are not a good deal for the taxpayer, but the public demands them.

There must be a better way ...

quote:

Originally posted by Sandye:
RALS (Refund Anticipation Loans) have been problematic for years. IRS attempts to alert tax professionals, banks, and other interested parties as to whether a taxpayer has an outstanding IRS debt, student loan, child support or other issue that may cause the refund to be partially offset or not issued at all thereby minimizing risk in some instances.

Banks issuing the loans are left holding the bag if the IRS does not issue a refund to pay off the loan. Taxpayers do not generally reimburse the bank or the tax professional. The interest rates on these loans amount to usury. It is a sticky situation for many preparers as the loans are not a good deal for the taxpayer, but the public demands them.

There must be a better way ...

Yes, Sandye, I had not noticed you had replied to IRS related posts. That is great.

These loans are not a good deal but then, too, a certain segment of the public has no other choice, it seems, but to turn to this type of lending. Looking forward to hearing more from you.

quote:

Refund Anticipation Loans

This is a little off topic but between these high interest RALs (sorry buddy) and cash advance centers located on every corner, more and more people are becoming trapped in a vicious cycle of circumstances that make it so that they have to resort to such desperate acts. I would love to see the government offer FREE money management courses to the working poor so that they can make better decisions and improve their financial situation.

, my dear Sister. Education is the key. I know that some taxpayers may feel that if they don't get their money in one day that their world may fall apart, but people need to learn to be more fiscally responsible. I HATE preparing RALs and I HATE knowing that many of my RAL clients cash their checks at places that charge upwards of 5% of the face value. Poverty is far too expensive. I couldn't afford those rates and I work like a Hebrew slave. I attempt to educate my clients and offer free financial workshops for people who are stuck paying the high cost of poverty. Very few take me up on it, I am afraid.

You are right, Sandye. Education is the key. And I think it is AWESOME that you are making an effort to educate your clients. More people should do that. But I wonder how many people take your advice and wait X amount of days/weeks for their money once they had their mind set on a RAL?

Years ago when I was in my early 20s a company I worked for went out of business. The company hooked us up with a personal finance/money management agency which provided very useful information. I wish everyone, especially college aged kids, could have an opportunity to learn basic personal financial management skills so that they won’t find themselves in desperation mode this time of year.

This is a little off-topic, but ...

When we talk about RALs and Check Cashing Centers being a rip off for the poor, I think the real travesty is that the poor are/have been shut out of legitimate banking. So, when they resist the immediate gratification of the RAL, they receive a check from the US Treasury that they are charged a fee [between $5 and $15] to cash. I wonder how much B of A and all the other banks generate by exploiting the poor?

quote:

Originally posted by Kweli4Real:
This is a little off-topic, but ...

When we talk about RALs and Check Cashing Centers being a rip off for the poor, I think the real travesty is that the poor are/have been shut out of legitimate banking. So, when they resist the immediate gratification of the RAL, they receive a check from the US Treasury that they are charged a fee [between $5 and $15] to cash. I wonder how much B of A and all the other banks generate by exploiting the poor?

I'm sorry but further

How are the poor shut out of banking?

Banks now require credit checks to open accounts ... even pass book savings accounts. I have yet to meet a poor person who did not have a poor credit rating.

This is the primary reason that poor folks don't have bank accounts and have to go to check cashing centers.

When banks run credit checks or chexsystems verifications they are not looking at poor credit ratings.

They are verifiying whether or not people have hot/unpaid checks from previous checking accounts that are open or closed.

In addition, if you have an overdraft on a closed account, it must be brought current for a period of one year before you can open an account at another bank.

quote:

Originally posted by Kweli4Real:
This is a little off-topic, but ...

When we talk about RALs and Check Cashing Centers being a rip off for the poor, I think the real travesty is that the poor are/have been shut out of legitimate banking. So, when they resist the immediate gratification of the RAL, they receive a check from the US Treasury that they are charged a fee [between $5 and $15] to cash. I wonder how much B of A and all the other banks generate by exploiting the poor?

what about people who are told they can't have a bank account? What's that all about?

quote:

Originally posted by Kweli4Real:
Banks now require credit checks to open accounts ... even pass book savings accounts. I have yet to meet a poor person who did not have a poor credit rating.

This is the primary reason that poor folks don't have bank accounts and have to go to check cashing centers.

my bad Kweli, i must have scanned over this too quickly. YES, there are indeed people who walk into a bank expecting to open an account and are told they cannot due to their credit history.

quote:

Originally posted by I_am_Mahogany:

quote:

Refund Anticipation Loans

This is a little off topic but between these high interest RALs (sorry buddy) and cash advance centers located on every corner, more and more people are becoming trapped in a vicious cycle of circumstances that make it so that they have to resort to such desperate acts. I would love to see the government offer FREE money management courses to the working poor so that they can make better decisions and improve their financial situation.

Not to mention places like RENT A CENTER and BUDDY BUYRIGHT charge "rents" equal to 3 or 4 times what electronics and "living room suits" are actually worth. If people knew the value of a good flea market or saturday morning yard sale, they would stay away from these places and save thousands IMHO

quote:

Originally posted by Kweli4Real:
Banks now require credit checks to open accounts ... even pass book savings accounts. I have yet to meet a poor person who did not have a poor credit rating.

This is the primary reason that poor folks don't have bank accounts and have to go to check cashing centers.

Thanks K4R, I did not know that.

quote:

Originally posted by negrospiritual:
Not to mention places like RENT A CENTER and BUDDY BUYRIGHT charge "rents" equal to 3 or 4 times what electronics and "living room suits" are actually worth. If people knew the value of a good flea market or saturday morning yard sale, they would stay away from these places and save thousands IMHO

Don't forget thrift stores in general and pawn shops(particularly for buying overpriced sometimes brand new electronics on the cheap)...

The consumer culture is a mess... Instant gratification and living beyond our means is a major problem.

This message has been edited. Last edited by: Oshun Auset,

Egungun, Egungun ni t'aiye ati jo!
Ancestos, Ancestors come to earth and dance!

"I'm sick of the war and the civilization that created it. Let's look to our dreams, and the magical; to the creations of the so-called primitive peoples for new inspirations."
- Jaques Vache and Andre Breton

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."
-John Maynard

"You know that in our country there were even matriarchal societies where women were the most important element. On the Bijagos islands they had queens. They were not queens because they were the daughters of kings. They had queens succeeding queens. The religious leaders were women too..."
-- Amilcar Cabral, Return to the Source, 1973

quote:

Originally posted by I_am_Mahogany:

quote:

Refund Anticipation Loans

This is a little off topic but between these high interest RALs (sorry buddy) and cash advance centers located on every corner, more and more people are becoming trapped in a vicious cycle of circumstances that make it so that they have to resort to such desperate acts. I would love to see the government offer FREE money management courses to the working poor so that they can make better decisions and improve their financial situation.

Well, here in Houston, financial education is already free.

http://www.crediteducation.org/region.php?regionid=11

How do you get folks to participate?
How do you make them understand that a Ford works just as well as a Mercedes?
How do you impress upon them that all the rooms of their place don't HAVE to contain furnishings right away?
How does Rent-A-Center stay in business when simple math lets you know it's not in the consumer's best interest? Simple math . . . not intricate money math.

quote:

Originally posted by ATPWordPro:

How do you make them understand that a Ford works just as well as a Mercedes?

Which is why I drive a Toyota.

quote:

Originally posted by Sandye:
RALS (Refund Anticipation Loans) have been problematic for years. IRS attempts to alert tax professionals, banks, and other interested parties as to whether a taxpayer has an outstanding IRS debt, student loan, child support or other issue that may cause the refund to be partially offset or not issued at all thereby minimizing risk in some instances.

Banks issuing the loans are left holding the bag if the IRS does not issue a refund to pay off the loan. Taxpayers do not generally reimburse the bank or the tax professional. The interest rates on these loans amount to usury. It is a sticky situation for many preparers as the loans are not a good deal for the taxpayer, but the public demands them.

There must be a better way ...

Last night the House and the Senate finally, bridged their differences to the point that an economic stimulus package acceptable to both chambers could be passed and sent to President Bush for signing. Most U.S. households would see those with a check of $3,000 minimum per year qualifying for a rebate. The IRS is charged with processing these payments automatically, based on the 2007 tax return due April 15, 2008.

Even though the taxpreparer (and banks) will be by-passed in this undertaking, I would like to share some initial observations. Comments to help me and others sort through this 151 billion dollar task are welcomed. Here's why?

What rebate amount(s) was agreed to? Individuals with incomes annually to $75,000 would receive $600. Partial rebates would be allowed to those individuals with incomes above and up to 87,000. Couples with annual income up to $150,000 would get rebates of $1200. They would phase out for couples with income above and up to $174,000. In addition, families with children under age 18 would be entitled to $300 per child.

Not having read the final version of this bill , was there a limit to the number of kids who could qualify?. As under regular tax exemption rules, I am assuming that a child would qualify then, even though it deceased in 2007!! It could be claimed under regular filing rules in that case.

And then, our 20 million beleaguered senior citizens on Social Security and 250,000 disabled veterans and widows(ers) received justice by finally being granted a rebate of $300, even if no taxes were paid for 2007 and provided proof of receipt of $3000 can be established. Rebates will be mailed separately from tax refunds or other recurring payments.

Under the above scenario as to how and when the rebates will be received, as well as by whom, what are the likelihood for omissions? How many otherwise eligible recipients would miss out, as in the case of blended families with the varying tax liabilities that exist in that living arrangement? Does our government really know that much information in such detail that each family can be identified as to the exact number of children contained in it? In other words could some family compositions be inaccurately assessed as to the number of qualified persons within it and be omitted erroneously as to whether or not a rebate is received?

In the interest of fairness to all deserving Americans with respect to eligibility for a rebate, I have suggested to IRS that an alternate method be put in place to remedy the shortcomings that may be inherent in the "automatic" system. A mechanism to make a direct request to the IRS should be made available to request the rebate, such as online, submittal of a prescribed form, phone, etc. Please share your thoughts with me.
Bill C