February 3, 2005
ALERT: DON’T PAY TO BORROW YOUR OWN
MONEY–RAPID TAX LOANS EXPENSIVE, UNNECESSARY
Attorney General J. Joseph Curran, Jr. warned consumers that “rapid
refunds” offered by tax preparation services are really loans
that consume an exorbitant amount of the consumer’s refund.
Getting an instant income tax refund sounds good, but not when
it costs you part of your hard-earned money,” Curran said. “Why
pay some company to get your refund a few days sooner, when there
are alternatives that won’t cost you anything?”
The National Consumer Law Center reports that “refund anticipation
loans” are often marketed to low- and moderate-income workers
who receive the Earned Income Tax Credit. These are people who
are cash-strapped and find the offer of getting an instant refund
hard to resist, but are the very people who can least afford to
lose some of their money.
Curran said that taxpayers should check out these low-cost or
free ways to file their taxes and get their refunds:
• File income taxes electronically and use direct deposit. You will
get your refund in about 10 days.
If you don’t have a bank or credit union account, open one.
You can use it to have your refund direct-deposited, and that also
eliminates the expense of having to pay a check cashing fee.
• See if you qualify to have your taxes prepared for free by volunteer
tax preparation services. The Volunteer Income Tax Assistance (VITA)
Program offers free tax help to low- to moderate-income ($36,000
and below) people who cannot prepare their own tax returns. Most
locations also offer free electronic filing. To locate the nearest
VITA site, call 1-800-829-1040. The Tax Counseling for the Elderly
(TCE) Program provides free tax help to people age 60 and older.
For more information on TCE call 1-800-829-1040. The Maryland Volunteer
Lawyer Service offers free tax preparation service to low- and
moderate income taxpayers. Call 410-547-5637 or 800-510-0050.
• Fill out your tax forms yourself. It may not be as difficult as
you think. Get help from the VITA program or from knowledgeable
friends or family. Tax forms and publications are available at
public libraries and from the IRS for free.
File electronically for free by using an IRS “Free File” software
provider. Go to the IRS website at www.irs.gov to see the list
of tax preparation providers that have teamed up with the IRS this
year to let many taxpayers file electronically for free. Some of
those companies also allow Marylanders to file their Maryland state
income tax returns electronically for free as well. Be aware that
some of these services, while offering their tax preparation services
free, may ask if you want a refund loan. Say no to avoid paying
• Be willing to wait. Even if you file a paper return, you should
still get your refund within 8 to 10 weeks.
says that taxpayers using a paid tax preparation service should
ask for a breakdown of
fees upfront, before the return
is prepared–what is the charge for preparing the return,
what is the charge for filing electronically, what is the
a refund loan, etc–and tell the preparer which of the
services they want and don’t want.