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Sen. Charles E. Schumer is proposing a crackdown on tax preparers offering "instant refunds" that end up costing taxpayers hundreds of dollars.

And he's enlisted the leader of the Senate Finance Committee to back the proposal.

Schumer, D-N.Y., said Wednesday that 50,779 Western New Yorkers lost $5.8 million through "refund anticipation loans" in 2002. He based those figures on IRS statistics and cost estimates prepared by the National Consumer Law Center and the Consumer Federation of America.

He said the "instant refunds" touted by some tax preparers are really loans that carry interest rates as high as 700 percent -- all so the taxpayer can get his return a couple weeks early. The average taxpayer who takes out such a loan pays $130 for it.

"Paying your own money to borrow your own money is a terrible idea," Schumer said. "New Yorkers, and people all over the country, are getting ripped off by these predatory lenders."

In response, Schumer introduced a bill requiring lenders to disclose fees and interest charges connected with such loans, along with the fact that taxpayers can get their refunds earlier by filing electronically. Such loans are now unregulated.

Schumer's bill won the support of Senate Finance Committee Chairman Charles Grassley, R-Iowa. The top Democrat on that panel, Max Baucus of Montana, and Sen. Gordon Smith, R-Ore., also signed onto the bill.

As a result, Schumer predicted strong support for the measure in both houses of Congress.

Schumer said he is working on another bill to prohibit refund anticipation loans that utilize Earned Income Tax Credit benefits, which go to America's low-income workers.

The Association of Community Organizations for Reform Now has been waging a campaign against the loans for two years. Earlier this year the group persuaded H&R Block to eliminate its administrative fee for such loans, and is pressuring other tax preparers to do the same.

Schumer singled out Jackson Hewitt and Liberty Tax, the nation's second- and third-largest tax preparers, as among the firms charging the high fees and interest rates.

A spokesman for Jackson Hewitt did not return a phone call seeking comment.