Tax Refunds Quick Charges Are Obscure GAO Charges
The fees for getting tax refunds quickly are obscure, the Government Accountability Office, the Congressional watchdog, said in a report released today.
The level of transparency about tax refund fees varies, and fees and product information are not always clearly disclosed, GAO said.
Banks and tax preparation services generally follow government guidelines for revealing costs, the agency said.
However, the GAO has given banks higher marks for disclosing information about the fees and conditions of financial products during tax periods.
“(Tax preparers) do not systematically explain products or disclose fees to taxpayers,” the report’s authors said,
During secret visits to nine tax preparers, GAO said its investigators had been rebuffed in their requests to see documentation on the fees for tax refund products.
Consumer advocates say disclosures given to taxpayers by product tax preparers to expedite refunds are inadequate, unnecessary or timed to prevent meaningful comparison purchases, according to GAO.
The obscurity of tax refund fees is common in the online worlds and in stores, according to investigators.
“A taxpayer trying to determine the cost of using a tax refund to pay for online tax preparation services alone would be able to compare prices from two of the eight online providers we looked at,” the GAO said.
Price comparisons are also difficult for taxpayers who choose between tax refund products from traditional tax preparers, the report adds.
Last year, fees increased for refund transfers, according to the report.
The fees ranged from $ 39.95 to $ 49.95 for faster tax refunds from tax preparers paid last year and from $ 12 to $ 39.99 from online software providers for people who prepare their own taxes.
More than 20 million taxpayers have used prepayment loans and other financial products to quickly access that money, according to the report.
Workers earning less than $ 40,000 and African Americans were the main users.
For lower incomes, tax refund products can generally provide cheaper and easier money than payday loans, pawn shops or car title loans, according to the report.
In recent years, the use of repayment transfers (temporary bank accounts for repayments) has increased while the popularity of prepayment loans (short-term loans subject to finance charges) has declined.
To view the full GAO report, click on: http://bit.ly/2VE4kqo