Cash-strapped Americans turn to Tax Refund Advances
The new federal data has been raising concerns among regulators about whether taxpayers have full knowledge about tax refunds. As per the federal data, cash-strapped Americans who are worried for tax refunds have been turning to payment advances, prepaid cards and other costly services while getting tax preparation help.
Regulators have been planning to increase oversight of preparers in the midst of rise in ‘refund anticipation checks’, which is favorite among low-income families who receive the Earned Income Tax Credit, $65 billion cash benefit program of the federal government.
The independent agency of the United States government, Consumer Financial Protection Bureau, said that some customers have problems with refund anticipation checks. According to reports, the bureau has been finalizing the first rules on prepaid debit cards.
As per IRS data provided to The Associated Press, refund anticipation checks have risen to about 21.6 million in 2014. More than 50% of the purchasers are EITC recipients, while about 84% are low-income families, the data stated.
Liberty Tax Service, which is specializing in the preparation of tax returns for individuals and small businesses, and tax preparation company H&R Block said their earnings reports stated that refund anticipation checks and prepaid cards make about 10%. Both companies said the payment advances offer added value, such as convenience.
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