West Virginia Tax Refund Loans Called Into Question

WBOY-12
August 26, 2009
Moniot, Stacy

Filers in a big hurry to get tax refunds into their hands so that they can pay their mortgages and other bills often turn to instant refunds, which are tantamount to short-term loans. The West Virginia Center on Budget and Policy, however, says tax refund loans, which cost U.S. consumers approximately $13 million in 2006, are too expensive. Although tax-preparation services typically charge a flat fee, the cost once translated into an annual percentage rate can rise into the hundreds of percent. Moreover, many of the people who seek out instant refunds have flawed credit and may not have bank accounts, limiting their alternatives -- such as online refund deposits, which tend to arrive more quickly than mailed-out checks. The Center on Budget and Policy sees a need for greater outreach on the matter to help ensure that taxpayers across the state are well-informed of their options and able to make the best decision.

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