ATTORNEY GENERAL ALERT: Be wary of Tax Refund Anticipation Loans

LITTLE ROCK – As April 15 approaches, advertisements for tax refund anticipation loans (RALs) are ramping up. RALs are high-interest loans that must be repaid by the actual tax return proceeds, essentially borrowing your own money. Car dealerships and other businesses selling high priced items often offer to use RALs as down payments. While offers of immediate cash are often attractive, the products could ultimately reduce the total amount of your refund and may even cost you extra money.

“Reading the fine print is critical to not fall victim to a scam or be deceived by a promotion for a refund anticipation loan,” said Attorney General Rutledge. “If you estimate your tax refund incorrectly when using the RAL as a down money for a large purchase, you are still responsible to pay the difference that your tax refund does not cover.”

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These loans are regulated by the Arkansas Refund Anticipation Loan Act of 2009.

Arkansas Attorney General Leslie Rutledge released the following options for Arkansans to consider before agreeing to have your taxes prepared as part of a RAL.

  • Consider the free or low-cost options such as the online Internal Revenue Service (IRS) Free File program or the Volunteer Income Tax Assistance.
  • Remember that electronically-filed returns can be deposited in bank accounts in as few as eight days.
  • The IRS can also provide refunds by check or prepaid debit card.
  • Always get a written list of fees before entering into an agreement or having any tax preparation services performed.
  • Many tax preparers like to offer these loans because it attracts new business, but if the tax refund isn’t enough to cover the loan, it can create a headache for consumers.
  • Insist on getting any RAL in writing before buying any products or services.

RALs may seem attractive because tax preparations fees can also be covered. But many Arkansans can get free tax preparation services and can therefore save money and keep their entire refund.

The IRS provides a Free File program online that is a federal tax preparation and electronic filing program for approximately 70 percent of taxpayers who earn less than $62,000 in annual adjusted gross income. Eligible consumers can go to IRS.gov and choose from multiple private companies that will file federal returns at no charge.

Some Arkansans may also be eligible to receive free help through the Volunteer Income Tax Assistance program. Meanwhile, seniors can contact AARP to learn more about the tax preparation services they provide.

For more information about refund anticipation loans and checks, tax preparation and other consumer-related issues, call the Arkansas Attorney General’s Office at (800) 482-8982 or visit ArkansasAG.gov or Facebook.com/AGLeslieRutledge.

About Attorney General Leslie Rutledge

Leslie Carol Rutledge is the 56th Attorney General of Arkansas. Elected on November 4, 2014, and sworn in on January 13, 2015, she is the first woman and first Republican in Arkansas history to be elected as Attorney General. She was resoundingly re-elected on November 6, 2018. Since taking office, she has significantly increased the number of arrests and convictions against online predators who exploit children and con artists who steal taxpayer money through Social Security Disability and Medicaid fraud. Further, she has held Rutledge Roundtable meetings and Mobile Office hours in every county of the State each year, and launched a Military and Veterans Initiative. She has led efforts to roll back government regulations that hurt job creators, fight the opioid epidemic, teach internet safety, combat domestic violence and make the office the top law firm for Arkansans. Rutledge serves as Chairwoman of the National Association of Attorneys General Southern Region and re-established and co-chairs the National Association of Attorneys General Committee on Agriculture. As the former Chairwoman of the Republican Attorneys General Association, she remains active on the Executive Board.

A native of Batesville, she is a graduate of the University of Arkansas at Fayetteville and the University of Arkansas at Little Rock William H. Bowen School of Law. Rutledge clerked for the Arkansas Court of Appeals, was Deputy Counsel for former Governor Mike Huckabee, served as a Deputy Prosecuting Attorney in Lonoke County and was an Attorney at the Department of Human Services before serving as Counsel at the Republican National Committee. Rutledge and her husband, Boyce, have one daughter. The family has a home in Pulaski County and a farm in Crittenden County.

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