Beginning the 2011 tax filing season, taxpayers will no longer be offered the IRS Debt Indicator Program that has allowed for excessive fees and interest on refund anticipated loans. This program has previously allowed tax preparers permission to access a client’s private tax information and offer the tax payer the option of expediting the tax refund as opposed to waiting for the IRS to process the refund. However, tax payers are often unaware that this loan can range in fees from $30 to $150 in addition to tax preparation fees. Annual interest rates of 40 percent to more than 700 percent are applied as well according to the National Consumer Law Center.
If a taxpayer agrees to this option of an instant tax refund, a request for a full, partial, or no refund is sent to the IRS, who then informs the tax payer what they are entitled. Due to the fact that many taxpayers are not aware that this alternative is in the form of a loan and entails high interest rates, U.S. Senator Charles Schumer has announced the official cut of this IRS program.