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Consumers Should Be Given More Choices, Not Less During Tax Season
NTU responds to consumer group's report on Refund Anticipation Loans
For Immediate Release February 15, 2007
Pete Sepp, (703) 683-5700
(Alexandria, VA) -- In response to the 2007 Refund Anticipation Loan (RAL) Report released last week by the National Consumer Law Center (NCLC) and the Consumer Federation of America (CFA), Pete Sepp, Vice president for Communications for the National Taxpayers Union (NTU), released the following statement:
"While the NCLC and CFA acknowledge some significant industry improvements that have been made to the Refund Anticipation Loan process, the organizations are still agitating to outlaw this perfectly legal product.
RALs are not for everyone. In fact, NTU has always encouraged taxpayers to plan their finances and keep the government from taking too much of their hard-earned money throughout the year. But sometimes this is impossible, especially for families who may not have access to credit or who are suffering immediate financial pain because of problems like medical emergencies or overdue rent. Denying RALs to these Americans can actually make it more expensive for them to get out of the hole. RALs cost less than credit card cash advances, bank overdraft fees or even what the IRS charges for some taxpayer services.
Not only does the IRS over-withhold taxes from about 80 percent of taxpayers, but their antiquated computer systems end up costing taxpayers in the amount of time it takes to get their refund -- from two weeks up to two months. Many taxpayers cannot afford to wait that long to resolve their money troubles.
Millions of taxpayers have decided that RALs are right for them. Studies have shown that consumers understand and are pleased with the product. At least ten federal laws and extensive IRS rules regulate RAL lenders and facilitators.
Until the IRS finally gets its act together and delivers refunds as quickly as we expect from the private sector, RALs should continue to be a safe, legitimate solution to many taxpayers' needs. Self-styled "legal advocates" should stop demonizing an entire industry and treating consumers like children. Further limiting choices for taxpayers who already face few financial options is unfair, uncompassionate and unwarranted."
The 350,000-member NTU is a non-profit, non-partisan citizen group working for lower taxes, accountable government, and economic freedom at all levels.