Fast-cash tax returns come with price

Customers of CarBiz in Palmetto, which sells moderately priced vehicles to those with poor credit histories, can get their down payment financed on the spot with a tax return completed on-site.

Someone looking for a new bed or TV set can do the same thing at Buddy's Home Furnishings in Bradenton. The business issues customers an instant check for as much as $1,500 for their tax returns with bank approval, said Division Manager Tom Bradley. The check comes in the form of a refund-anticipation loan, which does carry fees, Bradley said, although he declined to specify the fee structure.

"The banks have to set their own fees," Bradley said. "They're fully disclosed at the time they (customers) request it."

Partly out of consumer necessity and also because of the instant gratification factor, similar tax preparation arrangements seem to be cropping up more and more.

But some consumer groups suggest these arrangements take advantage of cash-strapped individuals who may not take the time to closely examine the fees associated with the deals.

The National Consumer Law Center estimated that 9 million taxpayers in 2006 received up-front refund-anticipation loans, shelling out more than $900 million in loan fees.

Those engaged in such tax preparation arrangements, however, argue that they are the only way some individuals could afford goods and services.

"We really only began that program this year and I expect and hope that it will grow next year," said Carl Ritter, chief executive officer of Sarasota-based CarBiz. "It simply is a service that makes it easier for customers to increase the size of their down payment to help them get financed in a vehicle."

Returns at CarBiz are prepared by employees of Tampa-based Tax Refund Services Inc., which charges a flat fee of $119 for the service. The amount of a return is estimated and all or part of the proceeds are refunded to CarBiz toward a down payment, Ritter said.

Tax preparers at Buddy's Home Furnishings are trained in tax preparation and do only simple tax returns, Bradley added.

Such services may be convenient but are they a reliable way of getting one's taxes prepared?

Hard to say, said Michael Dobzinsky, IRS spokesman for southern Florida.

"There's no regulation to stop a business from having that arrangement, whether it be a car dealer or a furniture store," Dobzinsky said. "We don't regulate that. It's not an IRS issue. But if you're asking me are these people any good, I don't know."

At the very least, there are a couple of questions consumers should ask, Dobzinsky said.

"I would ask what their educational background is and how much training they get each year to keep up with the law," Dobzinsky said. "Don't sign a blank return and have a tax preparer say, 'I'll fill it in later.' You definitely don't want to do that."

Payday lender Amscot Financial caters to individuals who want their tax return money right away.

The company charges customers seeking an immediate refund-anticipation loan of up to $1,000, a flat fee of $39, said Ian A. MacKechnie, executive vice president of the company.

source:http://www.bradenton.com/business/story/369836.html