Oh, I see your and their point now. I remain doubtful that
> this leger-de-main of wording that HR Block uses does not
> violate the IRS rule.
I take the above back. I think you all are right. Blocks' wording is a statement of fact (unfortunately) as much as anything else. Namely, people do get the RAL sooner than they get the IRS refund, even if, realistically, often it is only a few days sooner (from what I am hearing about when those who file online see the money deposited into their accounts; roughly five business days).
I think it boils down to, you can call a refund a refund, you can call a loan a loan, but you can't call a loan a refund and say it's a "faster" refund.
Mark Bole wrote in news:rrKKj.580$%41.139 @nlpi064.nbdc.sbc.com:
That's the essence of it. Calling a loan a refund should (is?) against the law, at least in NY. So HRB calls it a RAL. But it is still a loan, at excessive interest rates, and with the refund as collateral. What does SOOL mean again?
I always try to see who will make me a CBAL: Christmas Bonus Anticipation Loan, or a BPAL: Birthday Present Anticipation Loan, or the ever so popular LWAL: Lottery Winnings Anticipation Loan. For some strange reason, there's not anyone willing to fund those.
If the robo-moderator (or the live guy) doesn't bleep this: Shit Out Of Luck.
But the poor saps who fall for this don't really care what it's called, it's just money, and they're getting it a few weeks earlier than they would otherwise.
So it seems like this IRS rule doesn't really protect anyone. Most people who understand the difference between a loan and a refund would proably notice the fine print about the interest rate even if HRB used the wrong term.
In hindsight, I think what may have happened with the woman I know who used H&R Block is that it was January 11 and she needed her roughly $3000 refund (largely EITC money) a.s.a.p. She would have had to wait until at least February
1 to use VITA in my city. Plus she technically should not have been able to use my city's VITA because she has a small business with depreciation (so Schedule C, which where I am VITA does not do routinely).
As probably nearly every regular who posts here knows, folks like this are typically scared of the complexity of taxes. At best, they may know something about audits: Those who take the EITC are more likely than those who do not (all other things equal) to be audited. I would think these folks feel using a professional tax preparer gives them some protection.
The occasional fraudulent taxpayer aside, I think these people are not "saps." They are in a desperate situation without the education to cope. I think the IRS does "get it," hence all the discussion at the IRS site and others about RALs. Those more in-the-know should get it, too, because H&R Block et al. are pocketing a sizable chunk of EITC money (= public welfare money) every year that is supposed to be going to the more immediate needs of the families receiving it.
I found it interesting that Block presents the interest rate and other fees very clearly. They are in large type, put on a page with just these items, and followed by a signature page. I think this method of presentation is likely a result of the IRS and various state attorneys coming down on Block.
Blah blah I know: Life is lousy for lots of folks.
Does VITA *anywhere* routinely do Schedule C, which would apply to a small business even without depreciation? A person who taught me much about taxes once opined that if you claim EIC based primarily or solely on self-employment income, you are almost guaranteed to be audited.
Don't forget bartering (non-cash) income as a basis for claiming EIC, folks in Humboldt County used to be fond of that... ;-)
I wonder if this has anythinig to do with the statistic I heard that the IRS is more likely to audit the poor than the rich. After all, the rich would never cheat on their taxes, right?
Or maybe because the rich have considerable more resources to fight an audit. Or maybe because they don't want to piss off the people that provide most of their revenue AND have the means to lobby for tax law changes???
No, it's just basic statistics. If you randomly audit returns, and 80% of the returns are from "poor" (in this context, equals "not rich") people, then 80% of the audits will be of same poor people.
With most tax tussles, it is your own money that is potentially being refunded to you... you can't get back more than you put in (once your tax is down to zero, additional deductions will gain you nothing).
With credits such as EIC, we're talking welfare -- it is someone else's tax money that you are going to get back. The incentive to game the system is much higher.
But audits aren't done at random, they supposedly look for triggers.
Poor people may be more inclined to cheat on their taxes simply because they NEED whatever they can save more than rich people. Rich people don't need to cheat as much, they have lots of legitimate tax loopholes available to them.
On the other hand, when rich people DO cheat, they get much more out of it.
As I learned once in this group, a certain number of audits must always be conducted at random, else how to establish a baseline?
The funny thing is, ordinary deductions are limited or disappear altogether for so-called "rich people".
(I'm using the term "rich" to describe people under $1.5M AGI and over $150K -- your definition may vary depending on local conditions).
Making up deductions really doesn't help the rich that much. Limitations and phase-outs and progressive brackets eliminate many tax benefits. My experience is that our current federal income tax system is progressive by design (and not flat), within this income range.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.