The era of the tax advance is over, the final chapter in a case study of how businesses can reap billions of dollars from the unintended consequences of government policies.
These high-cost, short-term loans were designed to take advantage of the inefficiency of the Internal Revenue Service, plugging the gap between when taxpayers filed returns and when their refunds came through — very much like a payday loan. An overhaul of the federal tax code intended to put more money in the hands of low-income families sent demand for the advances skyrocketing. At the industry’s peak in the 2000s, more than 12 million people a year took out refund anticipation loans — and paid more than $1 billion in fees.
For full article see: Instant tax refunds on their way out – The Washington Post.
- ‘Taxmageddon’ Looms at End of Payroll Tax Holiday | The Washington Post | Lori Montgomery | 2/18/12 (vinhsulaw.wordpress.com)
- Why You Should Avoid Tax Refund Anticipation Loans (financialplan.about.com)
- When Tax Refunds Arrive, We’ll Celebrate By Not Spending Them (dailyfinance.com)