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 Posted: Thu Jan 03, 2008 5:29 am Subject: Predatory lending in the tax world |
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Okay so I had my problems with IPDL last year and cleared those up thanks to this site. Anyhow I decided to take a second job this year and was hired by a company called Instatax, they do RAL's (financed loans based upon anticipated tax refunds).
I have been trying to decide if I really want to take the tax preparer job, my bank book says I should but my gut says I shouldn’t. It is not in the greatest part of town and the owners have never been really clear about their security plans. I can just see some stupid person coming in thinking we have cash because they somehow associate tax refund with actual cash transactions. Also this type of instant tax refund is a predatory lending practice under a veil. They offer interest loans on anticipated tax refunds for people who are desperate for money. I just in good conscious cannot rip people off no matter if they know or not. It is just one human being taking advantage of another.
What do you all think of these types of loans and do you think I should stick with my gut or what my bank book says?
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Stuck in the gut
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| Posted: Thu Jan 03, 2008 9:53 am Subject: |
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Always stick with your gut feelings. It is better never to know if you were wrong than to know well that you were!
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frogpatch
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cajunbulldog
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| Posted: Thu Jan 03, 2008 10:53 am Subject: |
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RAL's are a BAD idea. Especially the one H&R
Block(head) was promoting last year - "just bring your last paystub of the year to us, and we'll do a tax refund loan based on that". Riiiiight. How many of you have ever LOOKED at your year-end paystub and compared it to your actual W-2? The amounts can be drastically different. From personal experience, the difference can mean more of a refund. But what if it ended up being less of a refund? Then you're on the hook for the difference to H&R Block(head).
I've never used one of those RAL's using a year-end paystub, and would never advise anyone to. They're simply a thinly-veiled PDL.
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SUEBEEHONEY70
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| Posted: Fri Jan 04, 2008 8:39 am Subject: |
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Here you go - It's back.
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goudah2424
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| Posted: Fri Jan 04, 2008 10:32 am Subject: |
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Sorry - To further explain this thread was moved to another forum, and the OP was looking for it. Hence - It's back.
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goudah2424
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| Posted: Fri Jan 04, 2008 10:46 am Subject: |
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Huh? Anyway, i agree. Trust your gut. I know that it probably says in little letters on the back of the check that if you sign this and cash it, or deposit it in your bank, you agree to all the terms of the loan. People don't read that, and if they did, they probably wouldn't sign it. Trust your gut and don't do it if you feel morally and ethically uncomfortable.
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swedishgirl
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| Posted: Fri Jan 04, 2008 4:58 pm Subject: |
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I agree with sweedish...I'd rather sling hash...
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Morningstarr430
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| Posted: Sat Jan 05, 2008 10:50 am Subject: |
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Go with your gut feelings on this! You can always find another second job, but this doesn't sound like a good thing at all.
On top of that, refund anticipation loans really are the biggest scam since the invention of the PDL. The interest rates amount to vigorish, and the fees are ridiculous. To top it off, the RAL companies prey on predominantly lower-income folks who are usually desperate for the cash. Yes, I'm talking about H&R Block, here.
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unclewulf
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| Posted: Sat Jan 05, 2008 6:40 pm Subject: |
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well, if it is any consolation, it sounds like the IRS is gonna shut downthose Refund Anticipation Loans, they violate a confidentiality section of the IRS code. That ethical question asside, your safety is the most important consideration. Do they have an office in a safer part of town? does a competitor (h&r block, Jackson Hewiitt, etc ) have an office thats is in a safer part of town? Chances are they are all hiring right now.
| Quote: | The Internal Revenue Service is seeking input on whether it should consider banning tax return preparers from offering refund anticipation loans.
The IRS did not enact restrictions on the loans but said it will accept public comments on the issue until April 7.
"The Treasury Department and the IRS are concerned that RALs and certain other products may provide tax preparers with a financial incentive to take improper tax return positions in order to inappropriately inflate refund claims," the IRS and Treasury Department said in a guidance statement.
David Williams, IRS director of electronic tax administration and refundable credits, said in an interview that the IRS wants to know whether it should propose new tax regulations prohibiting tax preparers from sending client information to banks that provide the loans. He said this wouldn't prevent clients from taking their information directly to a bank or other entity that could grant a refund anticipation loan.
If enacted, the restriction on RALs could have a significant effect on the bottom line of tax preparers such as Kansas City-based H&R Block Inc. (NYSE: HRB). According to a filing with the Securities & Exchange Commission, Block recorded $193.5 million in revenue related to its refund anticipation loan program for its fiscal year that ended April 30.
Block issued a statement Thursday saying it looks forward to working with the IRS on continuing to develop best practices for refund anticipation loans. The company said RALs are already regulated by 10 federal laws and IRS rules.
Richard Koskey, principal emeritus at Pattison Koskey Howe & Bucci CPAs P.C. in Hudson, doesn't like the idea of tax preparers providing refund anticipation loans.
Here is a similar article to the one I was reading. This one was at bizjournals.com, but if you go to Google news and search "refund Anticipation Loans" there are several stories about this topic there.
"We do not that," he said. "It's almost, to me, unethical and we've never done that and I think it's inappropriate for tax preparers to do that."
Pattison Koskey Howe & Bucci were the No. 1 ranked tax preparer in The Business Review last year. The company processed 5,967 tax returns in 2006.
Koskey said the practice is unethical because "there's a tendency to increase the funds illegally by some deductions that may or may not be taken. It makes tax preparers more aggressive."
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The above quoted from bizjournals.com/albany/stories/2007/12/31/daily32.html
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LCW
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| Posted: Sat Jan 05, 2008 10:42 pm Subject: H & R Block |
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Believe it or not H & R Block is right next door to these yahoos. Anyhow I am sticking with my full time job and God will provide a second income when the time is needed, he always provides for me. Thanks for "finding" my thread, I had no clue where it ran off to. I think it is kind of ironic that these news articles about the IRS clamping down on R.A.L came about the time my gut was in a knot, the news articles are just the icing on the cake I needed to make my final decision... HOWIE NO DEAL!
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Stuck in the gut
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| Posted: Sun Jan 06, 2008 5:09 am Subject: |
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probably off subject of real topic here..
anyways my sister-in-law has very successful business involving tax returns,payroll, etc..
she actually has to send her prospective employees to a course from H R Block
not sure about specifics only found it strange that this company was providing required training for employees of individual companies..(of course HR tries to hire them)
tax preparers are getting extremely aggressive these days another industry where greed is paramount
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| Posted: Sun Jan 06, 2008 7:18 am Subject: Training |
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This company Instatax hired people through ads on Craigslist at $8hr. The "big whigs" came in and trained the owners in one day how to use their software. I went in for 4 hours one day to train and ended up "training" others including the owners how to use the software. They did not know what schedules to use for things like medical expenses deductions, mortgage interest etc... I only knew this stuff from preparing my own taxes for years. Anyhow that day was the beginnning of my gut feeling about this company. Would I want someone who walked in off the street for $8 hr to prepare my taxes???
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Stuck in the gut
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Morningstarr430
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| Posted: Sun Jan 06, 2008 8:43 am Subject: |
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Boy, that's a scary thought. I think you're better off making the decision that you did - stay away from those companies.
I've done my own taxes for years - first by hand, then purchasing the standalone software from Turbotax, and then on the web using Turbotax's website. I've never been audited, questioned, or otherwise troubled by the IRS regarding my returns. I've even had to amend them once or twice when I found an error that I made (Turbotax is great, but it won't stop you from entering the wrong dollar amount from a W-2...duhhhh did I feel dumb!), and I've still never had a problem.
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