It’s that time again…..that’s right tax time. I for one will be glad when this mess is OVA. If you are still going over to H&R (Ova Charge) Block, Jackson (making money off yo azz) Hewitt or any other instant tax refund place you are already screwed.
You see these people job is to sell you everything but the kitchen sink. I feel that these places exploit people that make low wages. Truthfully, how many instant tax places do you see in the nice part of your city? Noooooooooooo they make their money in the hood. I know that it has been a hard you so to get an “instant” refund sounds very tempting. But honestly folks, you are giving away a percentage of your tax return. You deserve every penny of that return so why give it away to some vulture? Then they are willing to give you $25.00 if you refer friends that will give his/her money away too.
If you ask me these refund loans is nothing more but predatory lending practices. Tax preparers, both independent operations and major chains, charge interest rates that can run on an annualized basis well into triple figures, all for the privilege of getting money a few days earlier. The IRS further mitigates the risk to lenders with its Debt Indicator service, alerting them to any claims (child support, unpaid federal student loan) against refund-loan applicants' refunds. I am sure the tax preparers pay the IRS for the information they provide, making it even more ridiculous to even consider taking out an instant refund loan.
Consumer Federation of America released their first major report on refund loans and customers in 2002. The organizations' 2006 report, based on data complete through 2004, shows that 12.38 million taxpayers got refund loans during that filing season, a slight increase from the 12.15 million such loans in 2003. To obtain the loans, the report says, consumers paid almost $1.24 billion in loan fees, "essentially borrowing their own money at extremely high interest rates." They paid another $360 million in administrative, electronic filing and application fees. Based on national averages, an Eared Income Tax Credit ( EIC) borrower could expect to pay $900 in fees for refund loan, electronic filing, check cashing and tax preparation fees to obtain a $2,150 refund. This is the only federal poverty program where the cost of distribution is imposed on the recipients," says Jean Ann Fox, CFA director of consumer protection. "It's very cheap for the government to distribute the EITC because they have put the applicants in the position of having to pay a commercial entity to help them apply for it."
Refund Anticipation Loans (RAL) are big business and everybody wants in. Tax prepares have formed “partnerships” with car dealerships, rent-to-own stores, and furniture stores to offer programs that allow you to use your tax refund as a payment toward high end products.
Some tax prepares have stooped to a new low, preying on the those with little to no patience. Pay-stub or "holiday" RAL's, offered before the taxpayer receives a W-2, are based on the latest pay. Yes some people are foolish enough to take their last pay check stub and get a “instant refund”.
The estimated amount, however, may not reflect pre-tax retirement deductions, or money withheld for child support or taxes and the taxpayer will have to pay the full amount estimated on the pay stub whether or not the refund is large enough to cover the cost of the loan and fees.
What really piss me off is once they get people to sign up for the instant loan, they try to sell them more crap. “Ms. Single Mom, for another 100.00 we can offer you platinum protection on your tax return” or “Would you like to place your refund into a IRA account with us for 70.00 more” .
I know times are extremely hard and many people are without jobs, but unless it is a dire unavoidable emergency I would urge you to file online and get your money in 10-14 days. And people please get a savings or checking account, paying someone to cash your income tax check is stupid.
Businesses are out to get every dime they can during tax season. Everything is on sale and they are counting on you and me to be reckless spenders. Don’t fall for it, get what you need and put that money up for a rainy day. Most of those businesses mean the consumer no good and sells inferior products specifically for tax season.
Don’t get played this year.
No comments:
Post a Comment