Advanced refund could be rip-off

GREENFIELD, Mass. (WWLP) - Governor Patrick's office is speaking out against tax preparation practices that give you your refund on the spot.

They're called RAL's or Refund Anticipation Loans.

It's a loan that is borrowed against the amount of the a consumer's anticipated income tax refund.

The Governor's office, in a news release, said that most of these loans are high-interest, paid in the form of an up-front fee.

"The people of Massachusetts are entitled to receive their tax refunds in full," said the Governor. "This is why my administration has come out in opposition to this predatory behavior, primarily targeted to those in need."

Local Certified Public Accountant Bill Reichelt says his firm doesn't use the loans, because he sees little benefit to his customers.

"In this age of electronic filing you can get your refund, in five to ten days when you electronic file, so you're paying a fee of say $39 to get it five days faster than you can normally get it," said Reichelt who's practice is in Greenfield.

Local H&R Block franchises wouldn't respond to 22NEWS, but their corporate communications department sent this release to 22NEWS:

It's important your viewers know that not all refund loans are the same. H&R Block differs from other refund anticipation loan facilitators in a few ways:
1. Price
The average refund loan of $3,000 costs $62.14 at H&R Block or about 2 percent of the loan. Withdrawing $100 at the ATM can cost $3 - or 3 percent of the total amount - to access your own money. (In short, it's a convenience fee. How many of us have paid expedited shipping fees to get something faster we ordered online?)
2. Disclosures
H&R Block's refund loan application says the word "loan" more than 10 times. We advise clients of no-fee filing options first. Our tax professionals are trained to repeat this information if a client selects a RAL, to remind them of the no-fee options.
3. Emerald Card
H&R Block clients can load their refund loans to an Emerald Card, which provides them with year-round banking options. The Emerald Card has helped H&R Block clients save nearly $76 million in refund check cashing fees.

Taxpayers like Michael Musack agree.

"If people are willing to enter into an agreement like that, then that's their decision. Its not the role of the Government to step in," said Michael Musack, who does his taxes online.

Though others agree with the Governor, they wouldn't pay to get money that is already theirs.

"We can do it, we know how to do it, we have been doing that way, not having to pay someone to do it for us," said Janice Kilmer of Sunderland.

She says she doesn't mind waiting a few extra days.

The Governor's office's warning is not a matter of law. They say they're just trying to warn consumers that they don't need to pay a fee to get their tax return.