John Gear Law Office & Salem Consumer Law    503-569-7777
  • Welcome
  • Services Offered
  • Finding My Office
  • Law for Real People blog
  • Useful links

"Refund Anticipation Loans" -- the new Highway Robbery

3/23/2011

0 Comments

 
Picture
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

   
Enter your Email:
Preview | Powered by FeedBlitz
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    RSS Feed

    Author

    John Gear Law Office -
    Since 2010, a values-based Oregon law practice serving Oregon consumers, elders, employees, and nonprofits.

    Categories

    All
    Advertising
    All
    Arbitration
    Autofraud
    Bankruptcy
    Borrowing
    Class Actions
    Consumer Law
    Consumer Protection
    Consumer Protection Class Actions
    Credit
    Credit Reports
    Debt
    Debt Collection
    Elder Abuse
    Elders
    Employment
    End Of Life
    Fairness
    Fdcpa
    Foreclosures
    Fundraising
    Funeral
    Games Car Dealers Play
    Garnishments
    Great Stuff
    Health Care/Insurance
    Identity Theft
    I (heart) Liz Warren
    Insurance
    Lawyer Referral Service
    Legal Resources
    Lemon Law
    Life Planning
    Long-term Care Facilities
    Media
    Military
    Military Assistance Panel
    Modifications
    Mortgages
    N.A.O.
    Nonprofits
    Oregonadminrules
    OregonLaws.org
    Plain English
    Preparing For Departure
    Privacy
    Pro Bono
    Regulation
    Resources
    Right To Repair
    Safety
    Scam
    Scams
    Strategic Planning
    Student Loans
    Tort Reform
    Training
    Used Cars
    Veterans
    Wage Garnishment
    Wage Theft
    Warnings
    Warranties
    Watchdogs
    Workplace

    Archives

    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    April 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2020
    March 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011

    RSS Feed

Picture

LAWYERLY FINE PRINT:

John Gear Law Office LLC and Salem Consumer Law.  John Gear Law Office is in Suite 208B of the Security Building in downtown Salem at 161 High St. SE, across from the Elsinore Theater, a half-block south of Marion County Courthouse, just south of State Street. There is abundant, free 3-hour on-street parking throughout downtown Salem, and three multi-story parking ramps that offer free customer parking in downtown Salem too.

Our attorneys are only licensed to practice law in Oregon. This site may be considered advertising under Oregon State Bar rules. There is no legal advice on this site so you should not interpret anything you read here as intended for your particular situation. Besides, we are not representing you and we are not your attorneys unless you have hired us by entering into a representation agreement with me. While we do want you to consider us when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials.  All original content on this site is Copyright John Gear, 2010-2022.

Photos used under Creative Commons from Tony Webster, brand0con, eirikso, Fibonacci Blue, Jirka Matousek, Rd. Vortex, rcbrazier - Brazier Creative, cogdogblog, marfis75, marcoverch, GWP Photography, byzantiumbooks, Mic V., notacrime, emrank, Family Art Studio, dotpolka, respres, Mark Cummins, a little tune, Insulinde, Bill Wards Brickpile, Roger Chang, AnthonyMendezVO, jonrawlinson, Andres Rueda, Franco Folini, inman news, Pictures by Ann, ph-stop, crabchick, Jilligan86, Elvert Barnes, p.Gordon, CarbonNYC, Digital Sextant, darkpatator, Neil T, rictic, Mr. Mystery, SeanC90, richardmasoner, www.metaphoricalplatypus.com, lindsayloveshermac, Santacreu, =Nahemoth=, ReinventedWheel, LadyDragonflyCC - On Vacation, See you all soon!, Mr. T in DC, Nisha A, markcbrennan, Celestine Chua, Furryscaly, smkybear, CarbonNYC, radioedit, Don Hankins, Henrik Hovhannisyan, CoreBurn, Mike Licht, NotionsCapital.com, David Masters, SeeMidTN.com (aka Brent), SoulRider.222, amboo who?, robwest, Rob Ellis', floeschie, Key Foster, TechCocktail, That Other Paper, marcoverch, oskay, Muffet, rodaniel, Alan Cleaver, Mike Licht, NotionsCapital.com, Horia Varlan, xJasonRogersx, billaday, BasicGov, One Way Stock, mikebaird, Nevado, shalf