Jan 25, 2009

Refund Anticipation Loans- The IRS really hates this program

The Refund Anticipation Loan or "RAL" is advertised as a quick way to get some money in your pocket in "anticipation" of your federal tax refund. However, the IRS hates these programs, and it appears rightfully so.

It appears the IRS has been able to make some "end-around" progress to the RALs by limiting tax preparers and those utilizing tax return information for uses other then what is directly authorized by tax clients. Normally, when you go to a tax preparer to file your tax return, you do not expect them to utiize your information for means other than the preparation of your tax return. In the past, transfer of tax return information to a third party processor of the RAL was done transparent to the taxpayer. No more- section 7216 requires that the preparer obtain consent of the use of tax return information (i.e. the tax refund for a RAL).

More to come on this new provision. Clearly, it will be thorn in the side of RAL providers and for anyone who can use this information for other then its intended uses.

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