SMB Economy

Tax Refund Loans May Be Restricted by the IRS

Loans based on tax refunds are all the rage, but fraud worries have the IRS moving to restrict H&R Block and Jackson Hewitt Tax service.  You can’t walk down the street without seeing the ads for these, but many experts warn against them.

Tax preparers charge huge interest rates for the privilege of getting money a few days earlier. The IRS further mitigates the risk to lenders with its Debt Indicator, alerting them to claims (child support, unpaid federal student loan) against loan applicants’ refunds.

A report, written by Chi Chi Wu of the National Consumer Law Center discusses the high price of these loans.