SSgt Shantay Aldrich, tax center volunteer, assists 2nd Lt. Christopher Coleman with his tax return (U.S. Air Force photo by Melissa Peterson
RANDOLPH AIR FORCE BASE, Texas —
Several commercial tax preparers offer customers an immediate tax refund. What the businesses might not say is that the refund is actually a loan for money that one would receive in just 7-10 business days if they filed their paperwork electronically.
In August 2006, a federal judge approved a $39 million settlement in a class-action lawsuit against a well known tax refund agency and its bank by customers who claimed they paid too much for refund anticipation loans. This has been an on-going problem. During the 1990s, several state consumer protection agencies and attorney generals instituted proceedings against the agency for failing to clearly distinguish between its refund anticipation loan and "Rapid Refund" products.
For example, in 1993, Texas Attorney General Dan Morales settled a similar case, forcing the company to advertise that its "Rapid Refund" program is actually a loan that costs borrowers up to 150% interest.
Most state attorney generals urge consumers to be extremely cautious if they must sign up for "rapid" or "instant" tax refunds, which are being aggressively marketed across the country, often to low- and moderate-income taxpayers - and especially to military members.
"These financial products are not rapid refunds, they are actually high-priced, short-term loans that carry interest rates as high as 700 percent and bleed hundreds of dollars away from our military members who select this option," said Capt. Deric Prescott, assistant staff judge advocate. "While most tax preparers operate honest, professional businesses, an increasing number are disregarding consumers' interests in selling these loans. All military members should be aware they can receive their tax refunds just a week later without paying an exorbitant fee."
Most businesses that market refund loans charge other fees for their services, including "tax preparation" fees, "e-filing" fees or "document" fees. These charges can total $200 or more, even for simple tax forms, according to Marti Myers-Garver, Director of the Armed Forces Tax Assistance Center.
For those who are willing to wait just a few more days for a full refund, the Base Tax Center offers tax preparation free.
"Free tax assistance from trained volunteers is widely available either through a person's unit tax advisor or at the Base Tax Center," said Chris Hull, Randolph's Tax Center director. "I encourage all men and women of Team Randolph - active duty, reservists, dependents and retirees to utilize the base tax center. With our electronic filing and a client's routing and bank account numbers, the IRS will usually send electronic payment directly into a person's bank account within 7-10 days after the return is filed. "I don't know why anyone would throw away their hard earned money by not using the free resources at the tax center," she said.
If you have any questions about the Base Tax Program, call 652-1040.