SitNews - Stories in the News - Ketchikan, Alaska


Open Letter: Refund anticipation loans
By David G. Hanger


April 21, 2009

Dear Senators Murkowski and Begich and Congressman Young:

On behalf of the consumers and the taxpaying citizens of the state of Alaska, first and foremost, but in this instance contributing to the enhanced well-being of the citizens of all of the states, I respectfully request the immediate outlawing of refund anticipation loans, an abomination that has brought loan sharks and incompetents into the fields of accounting and of tax preparation, thereby degrading the standards of this profession to an embarrassing degree, while bilking the consuming public for high fees and high rates of interest, constituting as much as 20% to 30% of a taxpayer's refund, for a loan that lasts no more than five to ten days.

There is absolutely no logic to this "refund anticipation loan" nonsense. Electronic filing with direct deposit now gets refunds to taxpayers within eight to 14 days, and costs -0- to $15, depending upon who does the transmission. Last year the GAO did a field study and discovered that 19 out of 20 tax preparation firms they reviewed were cheating. The incentive for loan sharks to enter this profession for no other purpose than to generate "refund anticipation loans" has degraded standards in our profession to the point the consuming public does not understand the difference between an accountant or tax accountant licensed to practice before the Internal Revenue Service and/or before the Accounting Boards of the State of Alaska and these loan sharks, whose glaring, blaring advertising of "overnight, quick, or rapid" refunds suggests they offer advanced services that we old-fashioned mainstream professionals cannot provide because we are not modern enough.

We in fact cannot provide such services because our ethics dictate that we do no harm to our client's financial condition, and clipping a taxpayer for one-fifth to one-quarter of his tax refund for an absolutely unnecessary service is doing harm to the client's financial condition. Alaska taxpayers are frequently highly skilled technical people, but they are as frequently unsophisticated about accounting and financial matters. Combined with seasonality and a dark winter with no income in many instances, that tax refund in many Alaska communities takes on greater significance, often the bridge to April or May. It belongs in the hands of the individual taxpayers, and should not be a toy for loan sharks to exploit.

These loan sharks are an embarrassment to the accounting profession and to the business of tax preparation, and the reason for their existence is "refund anticipation loans." In point of fact the situation is so rotten that the IRS is in effect shilling for these sharks. Dummy accounts are prepared by these loan sharking firms into which tax refunds are directly deposited from the U.S. Treasury. This then is used as an excuse to issue debit cards while retaining the bulk of the funds in accounts that are actually controlled by these loan sharking operations. They are setting themselves up as banks, using individual income tax refunds as the source of their funding, and they are charging fees, including monthlies, for access to funds that belong to the taxpayers. This does not begin to be what accounting is all about. Please introduce legislation to outlaw these horrid things. Alaskans need to concentrate on feeding their families, not the loan sharks.

Your consideration in this regard is appreciated. Thank-you.


David G. Hanger, EA, MBA
Ketchikan, AK


Received April 21, 2009 - Published April 21, 2009


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Ketchikan, Alaska