Just in case you don’t know what RAL’s are, here’s the dealio;
Refund Anticipation Loans are one to two week loans made by banks and offered by tax preparers, secured by a taxpayer’s anticipated tax refund.
These types of loans and checks are usually targeted to lower-income people, and often consumers who don’t have formal banking relationship, as a way for them to pay for tax-preparation services without any out-of-pocket expense — and to get their refunds faster.
Tax preparers (and the banks that fund such loans) charge high up-front fees for the loans, which have long drawn consumer advocates’ ire. Negative publicity is one of several factors that have led to a decline in demand for the loans; another is improvements in tax-refund delivery technology. Read more at Wikipedia
Ever since the Internal Revenue Service announced that it will no longer provide tax preparers and associated financial institutions with the so called, “debt indicator, which is used to facilitate refund anticipation loans, tax preparation firms like H & R Block have been scrambling to find ways to fund these types of loans.
From a recent H & R Block Press Release;
“H&R Block announced today that it will not offer refund anticipation loans (RAL) during the 2012 tax season. However, the company will continue providing low-cost financial solutions next year.”
Interesting. It goes on;
“We evaluated our options to determine what was best for our clients, the business and our shareholders,” said Bill Cobb, H&R Block president and CEO. “Knowing we had a strong 2011 tax season without RALs, our analysis did not present a compelling reason to bring back the product in 2012.”
Chi Chi Wu, a staff attorney at the National Consumer Law Center said that, “We have criticized these loans as high cost and risky for over a decade, and we are pleased that H & R Block has actively decided not to offer them.”
So far, none of the other Tax Preparation Franchises have followed suit.
Speaking of loans, there’s one thing that’s crucial these days, if you’re going to be applying for a small business loan. (Besides good credit.)