The Latest Scams Circulating the Consumer World. Be warned. Be informed.
March 2008
Tax Refund Loans
The Pitch
"Get your tax refund NOW by taking out one of our easy tax refund loans. Do you really want to WAIT for the government to issue you a refund?"
The Scam
 Tax-preparation chains like H&R Block and Jackson Hewitt heavily push the tax refund loans because they charge and earn 100s of percents of interest on the refund loans. A tax refund loan is a great product for H&R Block or Jackson Hewitt and a horrible choice for the consumer. Surprisingly, approximately 12 million Americans buy a tax refund loan each year.
The people that buy a tax refund loan are missing the basic concept that they withheld too many tax dollars from their 2007 paychecks. Any tax refund is merely a repayment to the consumer on the money the government borrowed interest-free. A refund loan only makes the situation worse because now you are paying EXTRA to get your own money back that you shouldn't have given to the government in the first place!
As a side note, the IRS is considering banning tax refund loans because they discovered that tax-preparation chains like H&R Block and Jackson Hewitt have been falsifying taxes to generate larger returns and gain more profit for themselves on tax refund loans.
Play it Safe
- Avoid the high-pressure sales of tax preparation chains.
- Stay away from tax refund loans. Don't use your tax refund as a way to force yourself into saving money.
- Reduce your tax withholdings, and save the taxes you will owe in an interest-bearing savings account.
|
