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Jan 10, 2009 (The Citizens' Voice - McClatchy-Tribune Information Services via COMTEX) --
Tax season is right around the corner.
That's right, taxes must once again be filed by April 15. And, while such generic phrases reiterating common knowledge used to litter this space in your copy of The Citizens' Voice before, there might be a point to the vagueness this week -- might.
That's because even more of your federal tax dollars -- or in this case tax refunds -- will likely end up in the hands of the same banks that taxpayers bailed out with that $700 billion bill Congress passed in the fall.
The issue comes down to "Refund Anticipation Loans." Those are the high-priced loans offered this time of year that promise money now in exchange for turning over tax refunds to banks later. If you see someone on a street corner wearing a sandwich board or costume hocking free money, chances are it relates to these types of loans.
Although the loans might sound like a quick fix, taxpayers are often charged huge fees and incredibly high-interest Annual Percentage Rates ranging from 50 percent to 500 percent. That's on top of loan fees that can be higher than $100.
By signing away one's tax return to these loan agencies, whenever it finally processes, taxpayers agree to pay the interest rates. That translates into big money for the banks. A news release by a group of consumer advocate groups said that in 2006, about $1 billion in loan fees was generated through refund anticipation loans as nearly 9 million taxpayers signed up. That is $1 billion in refunds earned through tax breaks such as the Earned Income Tax Credit, or other breaks designed to spur economic growth, not fill the coffers of banks. (Congress and President-elect Barack Obama are discussing numerous tax breaks as part of stimulus plans in 2009.)
While having tax refund money in hand immediately sounds beneficial, regardless of the rates, taxpayers who file online get refunds direct deposited into bank accounts on average of about 11 days, according to information from the Internal Revenue Service.
But the idea of the refund anticipation loans isn't the biggest gripe for the consumer advocacy groups. The Consumer Federation of America and the National Consumer Law Center were among the groups that issued a news release earlier this week about at least one company that received bailout money and will now use the money to fund these "predatory loans."
California Santa Barbara Bank & Trust, which loans money to tax preparer Jackson Hewitt for Refund Anticipation Loans, was granted $180 million from that $700 billion bailout money.
"What was Treasury thinking in injecting hundreds of millions of taxpayer dollars to support a loan product criticized not only by consumer groups, but an IRS Commissioner and the National Taxpayer Advocate?" Jean Ann Fox said in the news release. "The bare minimum that Treasury should do is to ensure that (bailout) funds are not used for predatory loans."
Fox, a director with Consumer Federation of America, might have a point. It is taxpayers' money after all. Just as troubling are the loans themselves. It might be better to just file online or look at other short-term loans rather than giving up hundreds of dollars to businesses that employee lackeys wearing sandwich boards.
City Crime Watch meetings
Wilkes-Barre's Crime Watch announced its meetings this week. For information, visit the group's Web site at wbcrimewatch.org or call 208-8900.
n East End -- 7 p.m. Monday at Holy Saviour Church, 54 Hillard St.
n Parsons -- 7 p.m. Thursday at Primitive Methodist Church , 193 Austin Ave.
n South View High Rise -- 2 p.m. Thursday at South View Manor, 60 Monroe St.
Very few people responded to last week's query: "What will be the biggest problems in your community in 2009?" Come on, people, share your gripes. Tell Coulter Jones, staff writer by e-mail at cjones@citizensvoice.com or phone at 570-821-2110.
To see more of The Citizens' Voice or to subscribe to the newspaper, visit
http://www.citizensvoice.com/. Copyright (c) 2009, The Citizens' Voice,
Wilkes-Barre, Pa. Distributed by McClatchy-Tribune Information Services. For
reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or
847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group
Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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