Monday, January 28

Canceled: No More Refund Anticipation Loans?

This comment on the heels of the IRS saying that it may restrict the tax preparer from sharing the tax payers information with lenders.

Sen. Charles Schumer, a New York Democrat and member of the Senate Banking Committee, said in a statement "people all over the country are getting ripped off by these so-called refund loans, and it's time to stop them dead in their tracks." He called the loans "usurious."

I found this article from March of 2006 on that talks about the very high price for a RAL-

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.

The IRS and Treasury announced an Advanced Notice of Proposed Rulemaking (ANPR)regarding the marketing of RAL's. Read the entire notice here Following is a summary:

SUMMARY: This document describes rules that the
Treasury Department and the IRS are considering proposing, in
a notice of proposed rulemaking,regarding the disclosure and
use of tax return information by tax return preparers. The
rules would apply to the marketing of refund anticipation loans
RALs) and certain other products in connection with the
preparation of a tax return and, as an exception to the general
principle that taxpayers should have control over their tax
return information that is reflected in final regulations
published in T.D. 9375, which is published elsewhere in this
issue of the Federal Register, provide that a tax return preparer
may not obtain a taxpayer's consent to disclose or use tax return
information for the purpose of soliciting taxpayers to purchase
such products. This document invites comments from the public
regarding these contemplated rules. All materials submitted will
be available for public inspection and copying.
DATES: Written or electronic comments must be received by April 7,

Stock prices for H&R Block and Jackson Hewitt took a nose dive on this news...