The season for electronic return originators to sign up for bank products is here. And it's the first year without the availability of Refund Anticipation Loans, which have been driven from the market by federal regulators. But while RALs have gone, the need for bank products has not.
The opposition to RALs was based on the belief that they were loans with usurious interest rates. But as proponents had argued, think about them as fees, such as those charged for obtaining home mortgages, instead of as interest and there was not much difference. Or think about the interest rates on credit card balances, which are generally applied to much higher amounts, and which can be set to nearly 30 percent for late payers.
The argument against RALs has always seemed more a matter of middle class values interpreting the world for those who are not in the middle class than it has a matter of a noble campaign to help the poor. Those without middle class values are those without bank accounts, easy access to credit and who cannot afford tax preparation fees without some way of taking the cash from a refund. It's much the same argument that goes on about voter ID laws- those in the middle class who think that anyone should be able to have the time to get an ID - middle class values being applied to those not in that category.
And so, we are left with companies offering refund tranfers to taxpayers and with those who are looking for some way to provide loans, probably through lenders that are not federally regulated on a state-by-state basis.
I don't see that we are better off, unless perhaps, regulators can start applying that same enforcement fervor against the credit card companies.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
