Every year, American taxpayers spend more than $1 billion just for the privilege of receiving their tax refund a week or two early. But this year, many taxpayers are learning their refund anticipation loans will be delayed -- or not available at all.
Needed Cash Fast...ButKaytie Zellers is a hard working administrative assistant. But with bills piling up at home, she needed her tax refund as soon as possible.
"I'm a single mom, and with the economy, I've been struggling this year, " she told me. "So I wanted the money quickly."
So, she says she went to the chain
"Instant Tax Service" for an instant refund, officially known as a "refund anticipation loan" or RAL. She paid several hundred dollars so that, "the bank would process it and I would have my cash in 12 to 48 hours."
But a few days later, she says Instant Tax called to say her loan was turned down.
She says, "They told me I was rejected simply because I was high risk, because my refund was too large."
Not Just KaytieIt's happening to more and more people this year, as banks tighten the screws on all sorts of loans.
Instant Tax and
Jackson Hewitt have been especially hard hit, because one of their main lenders --
Santa Barbara Bank -- is getting out of the RAL business, franchise owners tell us.
So the tax preparers have less money to loan to clients like Kaytie, and published reports across the country report similar cases, where clients with a "substantial" refund are turned down.
A Blessing in DisguiseConsumer groups, however, say this is really a good thing. That's because if Kaytie had
e-filed, and skipped the expensive loan, she would have received her refund from the IRS in less than 2 weeks, with no fees.
I contacted the owner of the Instant Tax franchise Kaytie used. He told me he would try to return most of the fees she paid for her anticipation loan.
Consumer groups say her experience is yet another reason to avoid the loans if you can. And that way you dont waste your money. I'm John Matarese.
