thirtyoneblog

In addition to new gym members out the wazoo, January also brings the delightful season of the Walmart-esque tax preparers and their maddening TV commercials:

“Honey, I’m stuck.” “Well, ask for help.” “Can’t. We used a box. Box? Can you help me?”

H&R Block. We got people.

My personal opinion is, if someone’s taxes are simple enough that H&R Block can handle them, they are simple enough for even the village idiot to handle using TurboTax. Places like this drive me crazy because they fill their offices with employees who don’t know the first thing about taxes. I know this because I have known people who worked there, part time, who didn’t know any more about taxes than my dog knows. Not that those people weren’t intelligent. They were smart cookies. But they weren’t tax professionals. It was strictly a seasonal, hourly gig because they needed to pay the rent.

In addition to deceiving people into thinking they had real tax professionals preparing their taxes, these tax places also shop delightful extras like refund anticipation loans, which of course carry an interest rate akin to what you might find at a payday loan shop, or perhaps from a back-alley loan shark. Who in their right mind would do this? Of course, it’s my professional opinion that tax refund ought to be near zero, because why would anyone let the IRS borrow their money interest-free for a year when they could be getting it at the time it was earned via a larger paycheck? Why do people set their W-4′s to ensure they get thousands back in April, a year late? You don’t want to get me started on this, because it would be a whole post unto itself.

The point of this post is that apparently the IRS is trying to crack down on these practices which IMO border on unethical. The Washington Post had an interesting article on this today.

The Internal Revenue Service said it may try to prevent tax preparers such as Jackson Hewitt Tax Service and H&R Block from offering customers refund loans and audit insurance because those products can encourage fraud.

You think? I shudder to think how much of the government’s money (ahem, MY money) is lost to people who get instant refunds or, worse, loans against refunds which turn out to be bogus. And that’s just the consumer fraud. How much potential fraud is there in the companies that do this? According to the article, it’s estimated that last year taxpayers paid over $1 billion in RAL fees to tax prep services. In some cases the interest rate is upwards of 100 percent. That is just unconscionable.

I love the quote from Jackson Hewitt’s CEO: “Jackson Hewitt firmly believes in the taxpayer’s right to control their tax return information through a written consent process” Translation: We’re abdicating all responsibility.

And from H&R Block, whose spokesman said that employees don’t get commission on RALs, therefore “there is no incentive for them other than serving taxpayers’ best interests.”

Uh-huh. Because paying triple digit interest rates to borrow money that would be yours in as little as 10 days is definitely in a person’s best interest.

I’m interested to see how this plays out. These tax shops have a lot of lobbyists out there, but in the end, the IRS tends to do what it darn well pleases.