ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

IRS Ruling means Fewer Tax Refund Anticipation Loans in 2011!

Updated on December 23, 2012
Fewer Refund Anticipation Loans in 2011!
Fewer Refund Anticipation Loans in 2011!

IRS Ruling on Refund Anticipation Loans will impact tax filers in 2011!

H&R Block customers who relied on short-term loans backed by their expected tax refunds will not have that option this year, since Block’s banking partner was forced by federal regulators to stop offering the loans.

The nation’s largest tax preparation company, H&R Block could lose customers to competitors still offering the loans because it has virtually no time to find a new funding partner before tax season starts in January.

RAL (refund anticipation loans) costs can amount to as much as a 500 percent interest rate. “The truth is that RALs are such a bad idea that tax preparers and lenders generally need to lie about them in order to sell them. H&R Block extended 2.1 million RALs in 2010, each with at an average amount of $3,000 issued for 10 to 11 days.

Through the end of June, 82 percent of RAL recipients in 2010 -- based on 2009 tax returns -- had adjusted gross incomes of $35,000 or less, according to the IRS. Tax filers paid $738 million from 8.4 million American taxpayers in 2008 plus $68 million more in add-on fees, from $34 to $130, according to a report by the Consumer Federation of America and the National Consumer Law Center.

People who seek such advances are often the "working poor the unemployed, or others who experienced changes to their marital, financial or parental status and who are strapped for cash.

Consumer groups hailed the IRS move in August 2010, as a step toward ending a predatory-lending practice, national chains such as H&R Block and Jackson Hewitt won't easily exit the lucrative business and say the effort may even backfire with higher fees, hurting consumers.

In the past tax preparers claimed they could set up the bank accounts for tax filers, if the IRS would give them debt indicators. However, with more than 70 percent (95 million) of all returns being filed electronically there is no longer the need to provide debt information to tax preparers.

John Hewitt of Jackson Hewitt Tax Service Inc. said that a portion of the 8 million to 9 million RAL customers will no longer qualify for loans without the government data available. Without the so-called "debt indications" from government data, tax preparers and banks will find it more difficult to front controversial loans known as refund-anticipation loans, or RALs, which are secured by a filer's expected tax refund.Filers who do qualify will face steeper fees; some tax preparers will charge $100 to $110 more, or about a 60% jump, in RAL prices. It will likely become harder for tax filers to receive credit approval and it will cost more. The amount of credit available may be limited according to some national tax preparers.

Earned Income Tax Credit

Tax filers can get their direct deposit returns from the IRS within 10 business days. But forty percent of RAL recipients don't have bank accounts, which further complicates Consumer Advocate complaints against RAL providers.The IRS estimates that 20 to 25 percent of qualifying workers miss out on thousands of dollars every year because they fail to claim their EITC. The IRS is trying to reach potentially qualifying taxpayers to educate them about the credit and motivate them to file and claim it. This includes workers who are:

  • living in rural areas,

  • self-employed,

  • receiving certain disability pensions or have children with disabilities,

  • without a qualifying child

IRS Free Tax Preparation: Volunteer Income Tax Assistance (VITA)

The VITA program offers free tax help to individuals who cannot afford professional assistance. Volunteers help prepare basic tax returns for taxpayers with special needs, including individuals with disabilities, non-English speaking persons and elderly taxpayers.


    0 of 8192 characters used
    Post Comment

    • taxnetfinencial profile image

      Mark John 

      4 years ago from Chicago, IL

      Great information, I am looking for refund anticipation loan, after reading your articles I have get detail knowledge regarding this topic. Thanks buddy.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)