RALs & Other Designs to Get your Money

[Chief]

Why does the government not crack down on RAL's and various designs to separate the taxpayer from HIS money. Even the software companites are part of the problem. They push and promote this theft. Large tax return firms are most responsible in promoting this thivery. You might say if I dont offer RALs and the mix the client will go where they can have their money stolen from them. YOU ARE CONTRIBUTING TO THIS PROBLEM OF THEFT!!!!!!

I do not offer the ways to obtain my clients money. This is not government money, it is your money, paid by you to help people.

I refer you to an Old Testament book AMOS. I believe this problem on RAL's and other clever ly designed loans is addressed by this OT prophet. It is a short book, but if you are offering RALs and other cleverly designed loans read it. Amos has a message just for you.

[veritas]

You are going to get some heat

on this one. I don't like RAL either and don't offer them.

But ask yourself this, Why does the governement take billions in state run Lottery/Gambling revenue and who can least afford it?

[Bird Legs]

Why doesn't the gov't do

something about the highway robbery called RALs?
The reason being is that too many people in congress are being paid off by the industries involved.
Remember back in the late 1980s, I believe, a congressman from Louisiana got a law
passed through congress allowing anyone making a contribution to a certain athletic fund at a certain university in LA. could deduct this as a charitable contribution.
Until the public speaks out about this and let the legislators know how strongly their
feelings are about this matter, it will continue, probably get worse.
Question re laws, tax laws. How did the one get passed that offered a $5000. tax credit
for any first time home buyer in Washington DC? With the definition of a first time
home buyer being the "first home bought by that individual within DC, regardless of
how many other homes that person may own or bought outside DC."

[jainen]

I'll have to check

>>Amos has a message<<

I'll have to check out Amos when I get home tonight, but I'm pretty sure he wasn't an authorized e-file provider.

Still, the answer to your question is in the historical record. The IRS endorsed RAL's because it was the only way to get the big tax firms to sign on to the extra expense and work of electronic filing. This was a super major goal of the IRS in the late eighties, and the government has profited greatly from it.

[veritas]

When I get asked about

a RAL I ask the client this. "You waited 365 days can you wait 10 more?".

Of course some can't.

[Jiggers]

RAL's &amp; early refunds on last check stub.

I wonder if those that keep track of such stuff are considering that all of this money for these loans in advance of W-2's that is being pumped into the economy in early January and that it won't be there in February when it normally hits.

Maybe Pelosi will report that the economy looks good with the big jump in spending in January when the Democrats took over! Wonder what she will say after the February results?

[Snaggletooth]

Kinder, Gentler IRS

Chief, I wish large institutions like the IRS were rewarded for morality, but you probably have been around long enough to have experienced some of the things Jainen has talked about.

Initially, the only players interested in E-file was the IRS itself. IRS had to fork out millions every year to pay keypunch operators, and to make bad matters worse, the operators knew virtually nothing about taxes. More big money was having to be spent on mainframe systems and programming in those days. E-file was going to transfer the input responsibility from these keypunch operators to tax practitioners.

To sweeten the pie for big outfits like HRB, IRS even offered to guarantee the loans. They were not called Refund Anticipation Loans back then, they were absolutely guaranteed. So Block decided to jump on board, and in the process began the robbery of taxpayers. Clearly, the IRS was looking out for itself and not the public. Block was "opportunistic." That's the politically correct terminology when we want to be too nice to accuse them of being robbing their customers blind.

Having hooked practitioners and the public on this idea, IRS withdrew their refund guarantees about ten years ago and replaced them with acknowledgements. Banks screamed and hollered but the acknowledgement still provided them with a virtually risk-free customer, and they compensated for this lack of guarantee by raising their already-ridiculous interest rates to the stratosphere.

I know some tax preparers who, like yourself, disagree with the very concept of these practices, but who have been forced into RALs because of competition. I don't do them, but I have sat across from people who wanted instant checks, and after I tell them I can get it in 10 days, they get up and walk out. You just can't legislate against stupidity.

Like O'Reilly says, "Who's looking out for you?" Certainly not the government, or the IRS, or banks or corporations. The public's only real defense is to become more savvy to how the world operates and cling to solid values.

[veritas]

Many asking for a RAL

are deriving their refunds from EITC. It's free money to them so they could care less the annual percentage rate is 699%.

[Joe Btfsplk]

There oughta be a law

There should be a law similar to the ones that keep tax preparers from receiving clients' refunds that prevent them from going to anyone other than the taxpayer.

If they want to allow banks to receive the loan repayments, why not let tax preparers,pawn shops, the Marfia, Joe's Bar and Grill, et al have the same rights?

Before electronic filing there was no RALs. The RALs were the biggest driver of the "wave of the future" for the IRS.

I saw a web site that listed statistics regarding filing. I checked a low-income zip code and a high-income zip code. The high-income zip code had a very low percentage of electronically filed returns. I guess they weren't as eager for that RAL as the lower income group..

Maybe the IRS should develop some sort of quick refund loan and cash in on the RAL business by discounting refunds for quicker refunds.

Most of those so-called refunds are EIC "refunds" of money the rest of up pay, to people who pay no tax.

[jainen]

sort it out

>>IRS should develop some sort of quick refund loan and cash in on the RAL business by discounting refunds for quicker refunds<<

RAL's as a government handout! Hmm, interesting concept. Then people would complain that the rich get preferential treatment.

I do find it curious that so many are more concerned with how quickly they get money than with how much money they get, but really I think the free market can sort it out just fine.

[geekgirldany]

I tell them about having it in ten days also and they walk out or hang up on me.

A former customer called me today that owns a carlot. He wanted to know how he can offer RALs (or whatever the car biz calls them) to get downpayment on cars. I guess they open their own mini tax biz huh? I politely told him to ask his new accountant.

[fliszt]

I agree

with you. I do not and will not offer RALs and I don't think I've lost any client due to this position. I efile 100% of my clients. Here in MN if you prepare over 100 returns, efiling is required or they will penalize you $5 per paper return. So, I simply explain the IRS direct deposit schedule (10 - 15 days) and explain the RAL cost and I don't have 1 client say go ahead and do the RAL.

[Joe Btfsplk]

JUst say no.....to RALs

If anyone asks me about an RAL, I don't want them as a client. When I first tried efiling some people thought the RAL was part of the deal or that I got paid from the refund. One girl wouldn't come to pick up her return when she found she had to pay for it--so I finally told her to pick it up and I would not charge her. I had not yet efiled it. In those days I had to pay Nelco a fee for each efiling.

[ChEAr$]

Long time ago

say about 30 years ago, there were local preparers offering loans on tax refunds.
A wealthy individual put up a bunch of money to loan out and did, putting his own
in care of address on the return of course.

And you know what? The IRS eventually, after several years, closed them (there
were quite a few by then) down since there was a regulation, or law, that said that
one could NOT assign a government claim to another.

Now, I ask you, what changed?

[thomtax]

Reason for some RALs

Judging from the tone of the replies, I realize that I will probably take some flack for this reply.

I do a very small number of RALs each year. I always explain, in detail, all the options and how much the loan will cost them. One year I had a lady file and wanted to get the loan. I told her "Do you realize that this will cost you around $100?" She said "Yes, but the plant that I work for has been shut down for two weeks because of weather. I did not get paid. The penalties on my house payment and credit cards will exceed $100 and my credit rating will be ruined."

So, in this case, and a couple of others in the same situation, it was the smarter business decision.