Many taxpayers often turn to refund anticipation loans as a way to get an advance on their expected IRS income tax refund from year to year, but recent changes may limit the options of taxpayers when it comes to receiving refund anticipation loans in 2011 on their 2010 income tax returns. However, there are many who feel that changes in refund anticipation loan availability may not be such a bad turn of events as there are mixed feelings on this issue.
Refund anticipation loans are usually sought out by individuals who, for one reason or another, need their income tax refund quickly. Yet, recent news that stated H&R Block will no longer be able to offer refund anticipation loans through their former backer, HSBC Bank, has many taxpayers either concerned over how they can quickly access funds from their income tax refund, while others are applauding the move by the Office of Comptroller of the Currency, who reportedly set these events in motion.
There are some banking regulators who feel that refund anticipation loans are predatory in their nature due to the fact that they typically target low-income customers and can be quite costly thanks to interest rates. Also, sources from the IRS have argued that consumers who file their taxes electronically can receive their income tax returns in a much shorter timeframe, which is an option taxpayers can use and avoid paying any costs associated with a loan.
While this recent revelation has only affected H&R Block, as again, regulators ordered HSBC Bank to stop funding high interest loans which were used to make these refund anticipation loans, there is still a chance that H&R Block may find another partner to fund these loans before the tax season begins.
However, for consumers who are considering refund anticipation loans, many financial advisers often suggest seeking out other options rather than these loans which may cause excessive costs related to interest rates. While there are refund anticipation loans available from different tax preparation organizations, there are, again, options for taxpayers to file electronically which may offer them their refund faster and with no interest charges which may cause problems in the personal financial lives of many taxpayers.