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Office of Consumer Protection

Tax Refunds

During tax time do you hope for a refund to pay off those holiday bills?Are you thinking of going to a tax preparation company that offers "Instant Refunds?"      Why wait to get your tax refund when you can get it now?
Unnecessary Fees  While it sounds good to get your tax refund instantly, consumers need to be aware of the fees involved. Basically, the company is issuing a loan for the amount of your anticipated refund and your refund goes to them to pay off this loan. Not only will you pay the fee for doing your taxes but if you sign up to receive your money instantly, you will generally pay $100 or more for this convenience.
For example, on a typical $1,500 tax refund, one tax preparation firm charged $60 to file the federal form, $15 to file the state form, $64 loan fee and $24 for getting your money now. This means you will be paying $75 for them to fill out the forms that are fairly easy and you could do on your own. It also means that you pay $88 for the convenience of having your money now -- that's 6% of your refund. If you waited the usual 8-10 days that $88 would be in your pocket.
Higher Costs  Also, many of the tax preparation companies are partnering with other businesses, such as car dealers, rent to own centers, even mortgage companies. Before agreeing to have your refund used to buy a car or other products, be sure you find out how much that privilege is going to cost you -- it makes better financial sense to get your refund on your own and negotiate for whatever product you want without the issue of your refund muddying the waters.
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