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January 24, 2007 by Jim Reitnour.
I can speak from experience on this topic. Everyone knows that it’s time to get the taxes done, and I’m sure many of you will use a “professional” service (I’ll explain why I placed the quotes around it later on).
No doubt that those of you who go to these place are going to take advantage of the so-called “Rapid Refund” service that is available. Part of this posting is an explanation of what you are really doing & why you shouldn’t.
First off, the explanation of the quotes around professional. For those who may not know, I am an Enrolled Agent, which means I have the ability to represent taxpayers in front of the IRS, even if I was not the person preparing the return. I have proven my technical knowledge to the IRS via a specialized test (when I took the test it was 4 parts over 2 days, and a passing grade on each part was 60% - with having to pass all 4 parts).
Those persons who prepare returns & do not have this designation (or do not happen to be a CPA or Attorney) are limited as to what they can do before the IRS, & they must be the preparer of record.
The quotes are meant for any of the chain operations - H&R Block, Jackson Hewitt, Liberty (at least the ones around here anyway). Most operations hire people that just took a short tax course at the location, which really just covers the basics (not to mention 90% of their customer base - 1040A with a large EIC amount & maybe additional child tax credits, state return with some kind of “EIC” - in PA they call it Tax Forgiveness, and a local return if needed).
Now, I’m not throwing a blanket statement over them, but I must question the quality of the work done. Last year, there was a study done by GAO, involving just 2 different returns totaling 19 cases:
In all cases, all 19 of them, there were errors, 2 of which did have the correct end result, but:
Under normal circumstances, the preparers would be subject to fines & penalties for negligence & willful disregard of the tax laws.
Now to the other part of the post - those lovely refund anticipation loans (henceforth referred to as RAL).
What the RAL, in short, is a loan based on your projected federal tax refund. Most tax prep services do offer them, but for some reason, the chain outfits seem to push them. Here’s why you shouldn’t use them or any of their variants, which I will explain later.
The first big reason is cost - Not only are you paying for the tax prep, but now you are paying extra for them to create the loan paperwork, transmit the return (not just to the government either), and any other nice little fees they want to charge you.
The next one is the interest rate you would be charges for what amounts to a very short term loan (14 days tops). These rates make a loan shark look like a bargain. What happens is the banks generate a table based on the amount of the refund + an account “setup fee”. Now, there is a maximum amount that would be loaned (I think the most I’ve seen is $10000, but $7000 seems like a more common number). for example:
And don’t even mention those instant loans (I-RAL), there an additional fee on top of the other stuff, so it can be downright expensive.
Now if you figure it as an interest rate, it would start at insane (55% or so at the top of a given range) to downright obscene (275% or more at some of the lower amounts). In addition, what happens if you get the loan & the government keeps the refund? That’s right, they (the bank) can come after you & snatch up every refund from here on out until the loan (+ any interest) is paid.
In short, go with an independent outfit if possible. The fees just for preparation could be lower, and a few of them will not push the RAL (In fact, I know of one place that absolutely tries to prevent them, although they offer them).
If I were to open a private tax practice, and I’m considering it down the road (in 2009 perhaps), I would allow them, but not push them. They are strictly a bad deal.
Posted in Misc | Print | No Comments »
January 10, 2007 by Jim Reitnour.
You know, I’m going to have the popcorn ready for his little speech tonight. It’s amateur hour. Our commander-in-chef is going to say he’s planning to send 20,000 additional troops to Iraq & that would make the situation better.
I see two major issues:
- The number of troops is not nearly enough - 200,000 seems more like it.
- Their hands are tied by the rules of engagement here. They can’t shoot first.
If you want to win in Iraq - you have to allow the military to do its job. Some tactical suggestions:
After all is said & done, then we can sit on the border with Iran & let’s see who blinks first.
Posted in National Politics | Print | 4 Comments »
January 8, 2007 by Jim Reitnour.
This is just more proof that most sheeple in Reading vote for the letter underneath the name rather than for the person.
This past week a firestorm started when 127th district rep. Tom Caltagirone told his own party that he would vote to Philadelphia Republican John Prezel for speaker. This was met with outrage by the local Ds, and it sparked a protest outside his office, and numerous calls & petitions for him to resign. I found this completely laughable. First off, he shouldn’t resign. Second point, he won’t resign.
Now, I’ve taken plenty of opportunities to rip Tom on various subjects (pay raise, slots, pork spending, etc.), but here I do have to applaud him for having the brass to break from the party to vote for whom he thought was the best candidate, albeit the wrong candidate. I must admit that the current house speaker will be no better as he is also a Philadelphia Republican.
This brings me to my main point, and this is true on both sides of the aisle. Most voters will vote for a particular candidate based on the party he or she is in, and not what the candidate stands for. You could put anyone on the ballot (ex. Che Guerva, Lindon LaRouche, Son of Sam, Lassie, Ted Bundy…you get the picture), and the sheeple will vote for that candidate because he/she is a democrat/republican. For once, I would like to hear from people that vote for the person (or ideas) rather than the party.
Remember - Politicians love an uneducated electorate.
Posted in State Politics | Print | 1 Comment »