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Fees For getting tax refunds quickly aren’t often clearly disclosed, the Government Accountability Office warns Photo credit: Getty
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Fees to get tax refunds quick are murky, the Government Accountability Office, the watchdog of Congress, charged in a report today.
The leveThe level of transparency on tax refund product fees varies and product fees and information are not always clearly disclosed, GAO asserted.l of transparency on tax refund product fees varies and product fees and information are not always clearly disclosed, GAO asserted.
Banks and tax preparation services generally follow government guidance for revealing the costs, the agency said.
However, GAO gave banks higher marks for providing disclosures on fees and terms of tax-time financial products.
“(Tax preparers) do not consistently explain products or disclose fees to taxpayers,” the authors of the report said,
On undercover visits to nine tax preparers, GAO said its investigators were rebuffed in their requests to see literature on tax refund product fees.
Consumer advocates claim disclosures given to taxpayers by tax preparers on products to speed refunds are were inadequate, unhelpful, or timed into prevent meaningful comparison shopping, according to GAO.
The murkiness of tax refund product fees is common in both the online and store-front worlds, according to the investigators.
“A taxpayer trying to determine the cost of using a tax refund to pay for online tax preparation services only would be able to compare the prices of two of the eight online providers we reviewed, GAO said.
Price comparisons are also difficult for taxpayers choosing between tax refund products at brick-and mortar tax preparers, the report added.
Last year, fees increased for refund transfers, according to the report.
Fees ranged from $39.95 to $49.95 for faster tax refunds from paid tax preparers last year and from $12 to $39.99 from online providers of software for people who prepare their own taxes.
More than 20 million taxpayers used refund advance loans and other financial products to get quick access to this cash, the report said.
Workers making less than $40,000 and African Americans were the predominant users.
For low earners, tax refund products generally can provide cash cheaper and easier than payday, pawnshop or car title loans, according to the report.
In recent years, the use of refund transfers (temporary bank accounts for refunds) has risen while the popularity of refund anticipation loans (short-term loans subject to finance charges and fees) has declined.
To see the full GAO report, click on: http://bit.ly/2VE4kqo