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Links of the Day:

– Customers are storming Instant Tax Service offices around the country and in Rochester. There are several issues provoking the outrage:

1. Instant Tax issued checks with bad routing numbers, It has acknowledged the problem and has issued new checks to those affected.

2. There are delays in getting people refund checks. Some customers who called the IRS discovered their refunds had been processed and deposited in mysterious accounts they did not authorize. Customers who are being told by Instant Tax they can’t have a check yet got seriously upset and suspicious.

When you do your taxes through Instant Tax, the IRS doesn’t send a check to you. It goes to a third-party bank account. Instant Tax acknowledged delays in issuing checks, caused by the same internal problems that created the bad checks. The IRS also delayed returns for some early filers.

3. People go to services like Instant Tax because of the prospect of getting an upfront loan on their refund check. They don’t always realize the service charges $600. After Instant Tax processes their returns, they find out the amount of the loan they can get. One man told me he got a $100 loan, meaning he paid $600 for a $100 loan. An accountant told me a woman came to him hoping he would redo her taxes, but Instant Tax had already filed her return. This woman’s loan? Five dollars.

A tax professional explained many customers don’t have checking accounts, so the IRS can’t direct deposit the refund. They’re uncomfortable having the IRS mail a check to their homes. They’re often claiming the Earned Income Tax Credit for the working poor, which can refund substantial amounts of money. The business model of services like Instant Tax relies on these customers.

It was sad talking to people who were confused, upset and desperate for money to pay their bills. I hope to do a follow-up story tomorrow giving information on how to avoid tax service problems.

– Check-cashing businesses would be allowed to charge more than 25 percent interest under a bill being considered in the New York State legislature.

– Pregnant? You could be fired in New York State.

Other news:

– A state assemblyman wants to pass a law that allows you to delete your Facebook and Twitter pages after you die. This law actually exists in a couple other states.

– A former Women’s Professional Soccer MagicJack player describes a horrific experience on her blog, including the team owner who wouldn’t let her get surgery on her collapsed left nostril.

– Do you miss “The Wire?” The Washington Post looks back at our favorite characters. (Mine is Bodie Broadus. He’s a minor character, but reminds me of so many friends of my youth.)

– President Obama says he’s fought for equal pay for women, but that’s proven very difficult to achieve.

 

One Response to Preying on the Poor

  1. I worked as a software engineer back in the early 90’s at a local tax business, just when the “instant refund”/RAL craze started. It amazed me that anyone in their right mind would get one. If I recall correctly, the effective interest rates were somewhere north of 400%, and the recipients would get their checks only two weeks or so before the IRS would disburse the funds. In many cases, these were low-income people who did have bank accounts, which made it all the more incredible.

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