Many Taxpayers Who Obtain Refund Anticipation Loans Could Benefit from Free Tax Preparation Services

摘要

This report presents the results of our review to determine the impact Refund Anticipation Loans (RAL or Loan) have on taxpayers and tax administration. This audit was conducted as part of our Fiscal Year 2008 Annual Audit Plan. Millions of taxpayers borrow against all or part of their expected tax refunds to receive their money more quickly. This is accomplished through short-term loans that cost taxpayers fees and interest payments. Many of these taxpayers are eligible for free tax preparation services offered by the Internal Revenue Service (IRS) and its partners. During the 2008 Filing Season, almost 10 million taxpayers borrowed against all or part of their expected tax refunds using RALs. A RAL is a short-term loan based on a taxpayers expected income tax refund and is a contract between the taxpayer and a lender. The IRS is not involved in this contract, cannot grant or deny the Loan, and cannot answer any questions about it. The loans last from 5 to 14 days.