Message to Tax Preparers
I'm not a tax guy -- that means I don't give tax advice to anyone, and I definitely don't give tax advice for money. But, there's one thing you don't have to be a tax guy to know: NEVER LET ANYONE TALK YOU INTO TAKING A HIGH-INTEREST LOAN AS PART OF DOING YOUR TAXES. The "refund anticipation loan" scam has proved to be one of the most profitable parts of the tax prep industry, because it's nothing but legal loansharking, disguised as a convenience.
To tell you the truth, most of the people who pay a storefront tax preparation service could do their own taxes with a simple, plain-English (or Spanish!) tax-prep handbook borrowed from the library or one of the many volunteer-based tax assistance programs around town (like this one. Or this one.) But if you don't want to deal with the forms, and you want to pay to have someone else do it for you, fine. But never, ever mix doing your taxes with borrowing money. If you don't have the money to pay the tax preparer, go to your credit union (you do belong to a credit union, right? No? Why not!?) and get a small loan to cover the tax preparation fee. Do not borrow from your tax preparer, any more than you would borrow from The Mob.
More on this from Economic Fairness Oregon:
A Terrible Deal
With just a few weeks left until tax day, thousands of Oregonians are getting ready to file their taxes. Unfortunately, many of them will be taken for a ride. The tax preparation industry’s latest “innovation” is the Refund Anticipation Check. RACs are essentially a loan on the cost of a tax preparation fee. Workers who can’t afford the upfront cost of paying a preparer to file their taxes will spend even more, just to defer the payment. Here’s how it works – the tax preparer sets up an account to receive the taxpayer’s return. When it arrives, the tax preparer deducts the filing fees, plus several other add-on costs that are often masked in fine print. Whatever is left is then returned to the taxpayer.
Just how bad a deal is a RAC? To illustrate, EFO calculated the cost of a RAC versus a payday loan (for those who need a refresher, the Oregon legislature recently cracked down on payday loans because of their abusive fees). The cost of a RAC, including the fees to receive a check or use a prepaid debit card, ranges from $50-$60, while the amount a taxpayer would pay to borrow the average preparation fee of $187 from a payday lender is around $25. That means a RAC is at least twice as much as a payday loan! Does this mean we should encourage payday loans for tax prep? Absolutely not. It means we need sensible rules to curb the excessive fees taxpayers are charged just to get their refunds. That’s why EFO supports the Tax Preparation Transparency Act (SB 778), legislation that would end the add-on fees for RACs and require tax brokers to disclose the bank fees associated with RACs upfront, so taxpayers can make informed decisions. You can learn more about the bill here.
Urge your elected leaders to support the measure here. . . .
Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them. Know someone who would like this message? Share it:
On the web: www.economicfairnessoregon.org
Contact: info@economicfairnessoregon.org
Phone: 503.236.6088
Address: 1638 NE Davis St. Portland, OR 97232
Twitter: @EconFairnessOR Facebook: Economic Fairness Oregon
To tell you the truth, most of the people who pay a storefront tax preparation service could do their own taxes with a simple, plain-English (or Spanish!) tax-prep handbook borrowed from the library or one of the many volunteer-based tax assistance programs around town (like this one. Or this one.) But if you don't want to deal with the forms, and you want to pay to have someone else do it for you, fine. But never, ever mix doing your taxes with borrowing money. If you don't have the money to pay the tax preparer, go to your credit union (you do belong to a credit union, right? No? Why not!?) and get a small loan to cover the tax preparation fee. Do not borrow from your tax preparer, any more than you would borrow from The Mob.
More on this from Economic Fairness Oregon:
A Terrible Deal
With just a few weeks left until tax day, thousands of Oregonians are getting ready to file their taxes. Unfortunately, many of them will be taken for a ride. The tax preparation industry’s latest “innovation” is the Refund Anticipation Check. RACs are essentially a loan on the cost of a tax preparation fee. Workers who can’t afford the upfront cost of paying a preparer to file their taxes will spend even more, just to defer the payment. Here’s how it works – the tax preparer sets up an account to receive the taxpayer’s return. When it arrives, the tax preparer deducts the filing fees, plus several other add-on costs that are often masked in fine print. Whatever is left is then returned to the taxpayer.
Just how bad a deal is a RAC? To illustrate, EFO calculated the cost of a RAC versus a payday loan (for those who need a refresher, the Oregon legislature recently cracked down on payday loans because of their abusive fees). The cost of a RAC, including the fees to receive a check or use a prepaid debit card, ranges from $50-$60, while the amount a taxpayer would pay to borrow the average preparation fee of $187 from a payday lender is around $25. That means a RAC is at least twice as much as a payday loan! Does this mean we should encourage payday loans for tax prep? Absolutely not. It means we need sensible rules to curb the excessive fees taxpayers are charged just to get their refunds. That’s why EFO supports the Tax Preparation Transparency Act (SB 778), legislation that would end the add-on fees for RACs and require tax brokers to disclose the bank fees associated with RACs upfront, so taxpayers can make informed decisions. You can learn more about the bill here.
Urge your elected leaders to support the measure here. . . .
Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them. Know someone who would like this message? Share it:
On the web: www.economicfairnessoregon.org
Contact: info@economicfairnessoregon.org
Phone: 503.236.6088
Address: 1638 NE Davis St. Portland, OR 97232
Twitter: @EconFairnessOR Facebook: Economic Fairness Oregon
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