Anxious to get your hands on your tax refund? So are some other people.
Most taxpayers are expecting refunds this year. The Internal Revenue Service predicts more than 70 percent of taxpayers will get money back. It issued 111 million refunds last year, at an average amount of $2,860.
That’s prompting efforts among some to get a chunk of your windfall, according to Tom Bartholomy, president and CEO of the Better Business Bureau of Southern Piedmont.
Bartholomy points out three ways people are trying to get at your tax refund:
Loans from tax preparers
Some tax-preparation chains are offering loans ahead of your anticipated refund. There’s a catch: these loans come with fees and interest that take an immediate bite out of your money.
It’s a legitimate move among preparers that have a lending license to offer these types of loans, Bartholomy said.
He said there’s still a demand for such loans, even though electronically filing tax returns has significantly cut down on wait times for refunds. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days.
“For some people, it’s a real need, if you have bills to pay, collectors pounding at your door,” he said. “The tax preparer...will be more than happy to take a piece out of that refund.”
Phony debt collectors
In these cases, a person calls regarding a loan or credit card debt from years ago that has since been paid off. These aggressive callers claim there’s no record of your last payment being received – and now you owe up to thousands because of penalties and interest. Callers will even say there’s a warrant out for your arrest.
What’s disturbing is that these scammers are calling about former debts these consumers once had. Bartholomy said the BBB is working with the Federal Trade Commission to find out callers’ source for this information, which perhaps comes from payday lenders or title loan companies that did not take care of records properly, or sold them to individuals and companies.
“That’s the real key with this one, at one point it was a legitimate debt,” Bartholomy said. “It has been paid, it has been satisfied. But you’re being put on the defensive.”
“..The key (is) stand strong, and tell the caller that unless they can provide documented proof that this debt is owed, this conversation is over.” Collectors must provide such documentation under the federal Fair Debt Collection Practices Act, he said.
‘Buy now’ offers
It’s easy to get caught up in offers from legitimate used car dealerships or appliance and electronic stores to spend your refund immediately on goods.
“The caution for consumers there is to not get swept up in that,” Bartholomy said. “Still do your comparison shopping.” And check the BBB’s website (www.bbb.org/charlotte/) for the store’s ratings.
At used car dealerships, shoppers can get started by showing their tax return and expected refund. Dealerships then lend the money for a car, and put buyers on a weekly payment plan.
The catch: They'll put tracking devices on the car. So if you miss a payment, they'll take the car.