In a hurry to get your refund? Some tax preparers offer tax refund anticipation loans, often marketed as “rapid refunds” in the form of checks or “gift” debit cards.

The Better Business Bureau (BBB) advises consumers to be wary of these costly loans. They deliver refunds only slightly faster than the IRS.

Refund anticipation loans are similar to payday loans: They’re short-term loans with high interest rates that can range from 50 to 500 percent. In some cases, they have hidden administrative fees. If the tax preparer makes a mistake in calculating your refund, borrowers could be required to pay fines and fees, too.

“Consumers may assume that the loans will be paid off quickly when their refund arrives, but if the refund is less than the loan, consumers will have to repay the difference, plus fees and fines,” said Kim States, BBB president and CEO.

The IRS usually delivers refunds in as few as 10 days after a consumer files a tax return, if the consumer files the return electronically and takes the refund by direct deposit to a bank account. The speed makes most refund loans unnecessary.

This year, the IRS has another option for refunds if a consumer doesn’t have a bank account: a prepaid debit card. The cards, available only by invitation, can be used to get money from ATM machines or to buy goods and services from retailers. The cards arrive faster than checks, the IRS says, and may allow consumers to avoid check-cashing fees.

The BBB advises consumers to be wary of two common tax-time schemes:

Tax reduction schemes are promoted by companies that claim they can help consumers reduce what they owe the IRS by working on their behalf with the IRS. However, the BBB has taken complaints from consumers who paid thousands of dollars to such companies only to find out that the companies didn’t reduce the amount they owed and, in some cases, had never contacted the IRS.

BBB advice: If you have a debt with the IRS, consult an IRS enrolled agent, a certified public accountant or a tax attorney to determine whether you qualify to file for anything other than paying your taxes, fines and penalties in full.

Phishing e-mails may say that there’s an issue with taxpayers’ refunds, that they are being audited or that a problem is delaying processing of their taxes. Many include a link to a website set up by scammers, where victims are asked for Social Security numbers, bank account or credit card (more…)

The Associated Press put together a pretty cool auto-generated application that lets you fill in a few fields to find out where you stand amongst other tax filers. It is based on filing status, age, and income.

Click here to try it.

The deadline for filing taxes, April 15, has come and gone, but some companies are still trying to profit by taking advantage of the public’s tax-season anxiety.

Better Business Bureau of Southern Arizona is alerting consumers to mailings, closely resembling a W-2 form, being sent to Tucson consumers from a company called Travel Premium Awards Agency on behalf of local travel club, Southwest Travel.

The outside of the mailing is laid out in numbered boxes, resembling a W-2 form, with the words “personal and confidential,” in large, bold letters on the reverse side, and the words “official documents enclosed,” and “Notice Urgency: EXTREME,” on the front. In smaller print, the front of the envelope also states that, “this is not a government document.”

When opened, the letter says that enclosed is an “airline ticket voucher” good for two roundtrip airline tickets to anywhere in the continental United States, but the “voucher must be certified to be valid.”

Consumers, who have contacted BBB inquiring about the mailing, say that when they called the phone number given in the letter they’re told they must attend a sales presentation at the offices of Southwest Travel; a travel club that has garnered 7 complaints and over 700 inquires with BBB in 2010.

The return address on the Travel Premium Awards Agency mailing matches the P.O Box used by a Phoenix direct mail company that goes by several names including, Patterson Bell, Sutton Perry, Thompson Fuller, Morrison Banks, and most recently Gilbert Turner.

Since November the company, which solicits clients for Southwest Travel and other travel clubs across the nation, has changed the name under which it sends its mailings at least 12 times. In dialogue with BBB, the company has been unwilling to give a physical address or any insight into the offers in the letters being mailed to consumers, or any verification that their business is a legal entity.

BBB Tips:

• If you receive a similar form in the mail it is in no way tax related, it’s just a solicitation to attend a sales presentation.
• Sales presentations conclude with attempts to enroll consumers in travel clubs, to sell exclusive software, to sell access to a special web site, or to train consumers to become travel agents. Customers are told they can expect elaborate and extensive discounts on their travel purchases.
• In BBB experience, the upfront costs of enrollment or purchase in these programs are never recouped. Promised travel discounts rarely materialize and legitimate travel consolidators, lodgings, airlines and rental car agencies generally do not recognize credentials issued by these companies and groups.

For more information on Southwest Travel, Travel Premium Awards or another company, call (520)888-5353 or visit www.tucson.bbb.org.

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