Since many of you will be filing your taxes over the next few months, we want to remind you about legislation passed to help protect you from unnecessary fees and fraud.
In 2009, the General Assembly passed Act 1402 known as the Refund Anticipation Loan Act. This act requires tax preparation services to post any fees associated with a refund anticipation loan.
A refund anticipation loan is a high-interest loan provided by a third party against an expected tax refund for the duration it takes the IRS or the state to pay the refund.
The Refund Anticipation Loan Act also prohibits companies from requiring you to enter into a loan agreement in order to complete a tax return.
Offers of extra cash or immediate tax refunds are often attractive to consumers in difficult financial situations, but the use of Refund Anticipation Loans (RAL) ultimately reduce the amount of your tax refund and possibly cost you extra money. The Attorney General's office advises Arkansans not to pay to borrow their own money. If your tax return is less than estimated, you will be on the hook for the difference, usually at an exorbitant interest rate.
Before entering into an RAL Agreement:
* Consider that electronically filed returns can be deposited in your account in as few as eight days.
* If you do not have a bank account, the Internal Revenue Service (IRS) can provide your refund by check or prepaid debit card.
* Always get a written list of fees before entering into any agreement or having any tax preparation services performed.
Many Arkansans can utilize the IRS's Free File program. This web-based program is a free federal tax preparation and electronic filing program for the approximately 70% of taxpayers who earn less than $60,000 in annual gross income. Eligible consumers can go to www.irs.gov and choose from multiple private companies that will file federal returns at no charge.
For more information on ways to protect yourself against fraudulent practices during tax season visit the consumer protection section of the Arkansas Attorney General's office website at www.ag.arkansas.gov