By Marcia E. ParkerJanuary 30, 2009
FORT MCPHERSON, Ga. -- How would you like to pay a super-high price to borrow money that already belongs to you' Sounds ridiculous, right' That's what happens to many people at tax time when they choose to take out refund anticipation loans (RALs).
You may be tempted by tax-time advertisements for "fast cash refunds," "express money" or "instant refunds."
These ads offer patrons their refund in just a day or two, or even on the spot.
Beware! Many of these "fast refunds" are actually RALs.
Volunteers at the Tax Center on Fort McPherson can help you avoid paying any fees on your refund by providing free tax preparation and electronic filing.
When you get a RAL, you're borrowing against your own tax refund. RALs are often marketed to people who need money quickly - the low- to moderate-income workers who receive the earned income tax credit.
RALs are extremely expensive. Loan fees range from $30 to $90, which translates into annual percentage rates from about 60 percent to more than 700 percent.
That's a lot of money owed just to get a tax refund a few days earlier than you would be able to get free by using the services at the Volunteer Income Tax Assistance (VITA) site, located in the Tax Center, Bldg. 52, Fort McPherson, Ga.
RALs fees, combined with tax preparation, electronic filing and other fees, can end up eating away a big portion of the refund. Additionally, RALs are risky. Since a RAL is a loan from a bank in partnership with a tax preparer, it must be repaid even if the Internal Revenue Service denies or delays the refund, or if the refund is smaller than expected. If patrons default on the loan, the lender could take action to hurt their credit rating and may send the account to a debt collector.
By electronically filing, tax payers can receive the refund in about 10 days.
The center is open Monday through Friday from 8:30 a.m. until 3:30 p.m. by appointment, with walk-ins daily from 1 until 3:30 p.m.