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The Shocking Truth about Refund Advances

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As we enter the final part of tax season, it’s no surprise that we reflect on what worked and what didn’t. “We could’ve implemented this” or “next year we shouldn’t do that” or even “glad that’s over” are typical expressions. Sighs of relief smack us right in the face because god knows we’ll get it right next year. In other words hindsight is 20-20. Right?

Let me share something with you. Have you ever met someone who is constantly trying to be silly?

He walks into your bedroom, only to sit at the edge of your bed and shift his gaze once he realizes you’ve slightly opened your eyes. It makes you feel uncomfortable and uneasy, thus not letting you sleep. 

Or maybe he introduces himself to your date with the familiar Joey phrase of “How you doin?” to make it extremely awkward.

Allow me to introduce my father...

But how much does his silly demeanor change when unfortunate circumstances happen? In my father’s case, it has to do with money. I’m sure many people can relate to someone’s momentary money lapse. It makes you feel uncomfortable. Dinners are more silent. Conversations are short. At that point, believe it or not, I start to miss the awkward Joey phrase. We hate to think money or bills have that influence, but they do.

How do you prevent this from happening? In my case, I have to be subtle. Come up with creative  ways for him to “find” money. But this can only go so far. My father is a very proud man and he relies on his ability to provide for his family, regardless of having three children who already graduated college and have jobs. With that said, I think anyone in this situation, whether they admit it or not, appreciates any opportunity that provides options. A backup plan in case everything else fails.

When thinking of back up plans and options during tax season, I won’t judge if your mind doesn’t immediately go to refund advances. It’s actually pretty interesting to discuss. Interesting in the sense that I’ve heard more backlash from the idea of providing low-income individuals refund advances than when I inadvertently left the toilet seat up. Seriously. All I hear is my mother’s echoing yells as I begin to use the restroom to this day. I’ll refrain from the ridiculous Spanish idioms for your sake. 

The public perception claims refund advances hurt the consumer. For years, refund advances (aka “refund anticipation loans”) have had a terrible stigma. Let’s be serious for a second. Whenever you hear taxpayer’s stories, it truly makes you question why refund advances even exist. These are people who desperately rely on refunds to help their families; whether it’s paying rent, buying groceries, or even buying your child that video game they’ve been raving about. Instead, hidden fees and a lack of transparency cripple them.

My point is very simple. If Refundo were trying to provide an opportunity for families to receive an advance, why would anyone in their right mind try to take advantage of it? I’ll be very clear. It doesn’t have to be Refundo. It can be you, the tax professional. It can be any company trying to serve their community. You know, often times we justify Robin Hood’s actions with the familiar, “he stole from the rich to give to the needy”. I’m more curious to see how you can justify “he stole from the needy to….” Don’t worry…I’ll wait.

I’ll take it a step further. Even if the taxpayer agreed to pay these unnecessary fees, why are they upset or complain about the end result?

Simple...lack of transparency.

It’s no surprise that the US government is planning to regulate refund advances and perhaps ban them. It makes sense to protect the rights of consumers who are victims in this situation. These are individuals who are unaware of their options. Perhaps unfamiliar, adapting to mainstream America isn’t the easiest task. In this case, it implies that people are less savvy about banking principles or maybe even cautious of being misled.

But here is the thing. A refund advance can be someone’s backup plan or even rescue, when those unwelcomed money lapses come their way. As long as all fees, big or small, are disclosed upfront. We should take pride in our ability to empower people’s choices, not remove them. So for those who feel otherwise, I’ll leave you with the memorable “shaking my head” emoji.  

Sometimes I’m frightened by how innovative human beings can be. Looking back on history, it’s pretty crazy to imagine the things we’ve been able to come up with. Unfortunately, I still find myself more frightened with the people that figure out ways to take advantage of it. It’s truly hard to comprehend. I only urge that the next time we discuss refund advances we think about my dad. If you relate to his dilemma, I am sure you absorb the frustration, anxiety, and tension your loved one feels. It literally pains you to see them change. I’m not saying that refund advances are the solution to our money problems, but its a step in the right direction. It helps the individual become self-sufficient, even if for that time period. 

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Topics: EROs,, Tax, RALs, refund advances

     

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