HARRISBURG, DAUPHIN COUNTY (WBRE/WYOU) – This tax season, advertisers will entice taxpayers with promises of fast, easy or free anticipation loans. Before giving in to these advertisements, the Pennsylvania Department of Revenue advises taxpayers to read the fine print.
A refund anticipation loan (RAL) is made by a lender in anticipation of a taxpayer’s state or federal income tax refund. However, the Department of Revenue says this loan will not get the refund to taxpayers any faster.
RALs can in fact reduce refunds because of interest rates and fees the lender charges. These rates and fees are what taxpayers must be cautious of when considering an anticipation loan.
The Department of Revenue urges taxpayers to make sure the lenders meet the RAL requirements. These include advising loan applicants of all fees and interest, and making clear the amount they will actually receive.
Lenders are also required to secure written consent before disclosing the applicant’s tax information to his or her financial institution.
Revenue Secretary Dan Hassell said taxpayers should consider electronically filing their tax returns and requesting a direct deposit.
“[This] is an option that will help you obtain your refund without paying interest or fees,” Hassell said. The costs associated with a refund anticipation loan can be substantial. Taxpayers should take time to think the situation through before moving forward with a loan.”
For more information, visit the Department of Revenue website: www.revenue.pa.gov.