Search
 

Michigan OFIS Commissioner Urges Consumers to Avoid Tax Refund Loans

LANSING, Mich. - Calling Refund Anticipation Loans "one of the most avoidable tax-season expenses," Commissioner Linda Watters of the Michigan Office of Financial and Insurance Services is advising consumers to "steer clear" of RALs. By refusing to take the bait offered by those pushing RAL, taxpayers across the country can...

By Staff Writer | Updated on March 02, 2004

LANSING, Mich. – Calling Refund Anticipation Loans “one of the most avoidable tax-season expenses,” Commissioner Linda Watters of the Michigan Office of Financial and Insurance Services is advising consumers to “steer clear” of RALs. By refusing to take the bait offered by those pushing RAL, taxpayers across the country can avoid paying more than $1 billion in fees, Watters stated in a release. “With the advent of electronic filing – which allows for state tax refunds in as little as seven business days – the need for Refund Anticipation Loans is questionable at best. Taxpayers should think twice before they hand over a portion of their refund to a tax preparer in return for the privilege of getting their money a few days quicker,” said Watters. According to the OFIS, the National Consumer Law Center has found that the effective Annual Percentage Rates for interest on these loans can range from 70% to rates of more than 700%. Most consumers don’t need RALS since they could have their refund, in its entirety, in seven business days, if they choose to e-file, said the OFIS. Taxpayers are typically offered “Instant Refunds” or “Quick Cash” infusions from their tax preparation service “that in actuality are an advance loan on their anticipated tax refunds. RALs can cost the average taxpayer from $34.95 to $104.95 in fees, plus an additional $30-$40 in “administrative” fees for a “quick cash fix.” “The worst irony is that those who qualify for the government’s Earned Income Tax Credit – the lowest wage earners – are disproportionately RAL customers. They’re often the most cash-strapped and the most anxious to see the midwinter ` bonus’ of their tax refunds quickly, when they’re trying to pay off holiday bills,” said the OFIS.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2024 ALM Global, LLC. All Rights Reserved.