TAP 05-038

Requiring Display of RAL Information

Statement of Issue:

Many taxpayers, especially low-income and taxpayers with limited English proficiency who are applying for the Earned Income Tax Credit (EITC), are not aware that refund anticipation loans (RALs) are not actually a refund but loans that carry substantial risks for taxpayers if they do not receive the refund they had anticipated and against which they have borrowed

Proposal:

TAP made the following recommendations:

1. Develop a large-size poster displaying basic information about RALs for taxpayers, stating: “A RAL or ‘Refund Anticipation Loan’ is a loan that carries an interest charge. It is not the taxpayer’s actual refund, but is less than the actual refund. Furthermore, taxpayers who fail to receive their full anticipated refund must still pay back the entire RAL with interest.”
2. Require that Electronic Return Originators (EROs) prominently display this RAL information poster in a prominent location at their business site, and add this to the list of requirements in Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns.

Response Notes: