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BBB Trends: Read, understand tax-refund loans — Is it worth it? What if your tax filing is wrong?


If you are one of the few who hasn’t filed your taxes yet, be on the watch for advertisements with a tempting offer: “file your taxes with us, and we’ll give you an advance on your return.”

Some ads target consumers in need of loans to buy a car or pay off debt.

BBB received more than 3,550 against tax return preparation businesses across the United States and Canada in 2018. Common complaints state that the tax preparer made errors in their return which resulted in fines and fees. Other complaints allege customer service, billing, and contract issues. To avoid issues like these, educate yourself about the concept of a refund advance loan.

A tax refund advance works like a loan, except it’s secured by the expected tax refund when your taxes are filed. The loan amount is deducted from the refund after it’s issued. In order to be eligible for the loan, the taxes must be filed by the company offering the loan. For example, if a car dealership is offering lower financing on a newer vehicle, or a higher down payment for lower monthly payments, then the dealership would have to file the tax return. Keep in mind, having your taxes prepared by someone other than a certified accountant or tax preparer may also mean additional tax preparation fees. Plus, there is a risk the person filing the return may not have been properly certified to file on your behalf.

Understand the Terms

More than 70 percent of Americans receive money back from the IRS during tax season.

Americans rely on that traditional refund to pay off debt or had other plans for that much-needed cash. While the upside of getting a tax refund advance means receiving the cash in hand the same day as the taxes are filed, remember, it’s a loan against the anticipated refund—eventually, it will have to be paid back even after the filing fees plus any other charges that were assessed in the first place.

Before considering having a car dealership or someone other than a certified preparer filing taxes on your behalf be certain the terms and conditions are fully explained, and that all of the fees associated with the filing are understood. Be wary if the preparer is asking you to sign a blank or incomplete return. And if they offer to deposit the advance into their personal account instead of yours, discontinue the conversation.

Ask Yourself: Is It Worth It?

Industry experts encourage taxpayers to remember that, if you file electronically, it takes on average less than three weeks to receive a refund. Three weeks is all it takes for the peace of mind in knowing your taxes are prepared correctly; and once your refund is received, you and you alone get to decide how to spend it.

Find out more about fiscal responsibility and consumer protection on irs.gov, and research a tax preparer you’re considering using bbb.org.

Sandra Guile is the Public Relations Specialist for BBB. She promotes BBB’s message of marketplace ethics through public speaking engagements, presentations, media relations, press releases, web content, and other written materials. Your BBB is located at 1 East 4th Street Suite 600 Cincinnati, Ohio 45202—to reach the office, call (513) 421-3015.


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