Home Education and Learning Refund Anticipation Loans Ethical Analysis

Refund Anticipation Loans Ethical Analysis

by admin
29 views

Introduction

At this moment in time, individuals who require capital will be searching at options to get the sum they need at the shortest possible time. Today, businesses will take this as an incentive to provide resources such as short-term loans. One of them is what we term the “Refund Anticipation Loan” (RAL). This form of short-term lending is now becoming a choice for certain Americans who are facing monetary difficulties. While this has been provided by several firms for years now, there are many worried customer activists who prevent consumers from patronising it, accusing tax services companies of excessive charging of fees. Despite the high fees associated with RAL, the bulk of those originating from impoverished backgrounds are those who typically apply for RAL. There is a continuing struggle between the administration, customer groups and tax preparers to avoid providing Refund Anticipation Loans.

Part I

Refund Anticipation Loans (RAL’s) Defined

A refund acceleration loan is a type of short-term loan used by a taxpayer who wants an early claim for his tax refund. The balance of the loan would be refunded by the tax refund required by the taxpayer. It can also be referred to as ‘Rapid Refund’ or ‘Instant Capital.’ A contract is created by a financial institution to be signed by a taxpayer which promises that the loan would be refunded by a taxpayer’s tax refund (‘Refund Anticipation Loan Fraud’).

According to the Center for Responsible Loan, common interest rates for RALs vary from 50% to more than 500 percent, depending on the amount of time needed to process the Internal Revenue Services (IRS) tax forms. While this type of loan has been claimed as a way for taxpayers to get their tax refunds early in their wallets, more often than not, it is just a few days or less in advance of the actual date on which the IRS issues the tax refund (“Tax Refund Resources for Consumers”).

RAL helps taxpayers to get their tax refund quicker and to be able to invest the money earlier than to wait a couple more days. Even so, problems occur anytime someone wants to utilise a prepayment loan. Basically, the lender assumes that the money borrowed will be repaid no matter what, so the guarantee is the taxpayer’s tax refund; thus, it is considered to be a stronger type of loan than the other types, yet risking something to get the money quicker seems not to sound nice at all (Pritchard). Refund Anticipation Loans reflect a refund of the taxpayer’s income tax. Many who want to take advantage of this can submit to banks or bonds, unless they may wait for the IRS to administer the tax refunds (“Advantages of Refund Anticipation Loan”).

Refund Anticipation Loans Ethical Analysis

Some Advantages of Refund Anticipation Loan

  • Speed

It would only take a few days for the lent money to enter the creditors’ hands. So for anyone who face some sort of disaster and are in urgent need, a refund anticipation loan is an effective remedy to their issues, instead of applying for weeks or months from the government (‘Advantages of a Refund Anticipation Loan’).

Works Cited:
  • “Advantages of a Refund Anticipation Loan.” Loan.com. Internet Brands, n.d. Web. 16 May 2011. <http://www.loan.com/personal-loans/advantages-of-a-refund-anticipation-loan.html>.
  • Loan.com: is an Internet site that provides solution to the frustrations of lenders and consumers. It gives information on the things to be expected during a loan process. It has its Truth About Loans center that provides 75 articles focusing on consumer questions on loans. Loan.com is operated by Internet Brands company that has many credentials.
  • Deutch, Roni. “The Advantages and Disadvantages of Refund Anticipation Loans.” goarticles.com. go articles.com, 2011. Web. 16 May 2011. <http://goarticles.com/article/The-Advantages-and-Disadvantages-of-Refund-Anticipation-Loans/1526878/>.
  • GoArticles.com: It is a dual layered resource offering millions of quality articles and a membership base of over a hundred thousand authors. Their mission is to provide authors, publishers and users the best article database on the Web.
  • Dreher, Darell L., Hugh M. Hayden, and Michael C. Tomkies. “Developments in the Interstate Delivery of Consumer Financial Services: Location, Fees, and Common Law.” The Business Lawyer 49 (2004): 1327. Web. 16 May 2011.  <http://www.dltlaw.com/CM/Articles/ConsumerFinancialServices.pdf>.
  • Business Lawyer: The website is operated by Darell Dreher, Hugh Hayden and Michael Tomkies who are respected lawyers in Ohio. They give advice to consumers regarding lending issues and assist clients with things that deal with financial transactions.
  • Duffy, Daniel. “Refund Anticipation Loans.” State of Connecticut. State of Connecticut, Web. 17 May 2011. <http://www.cga.ct.gov/2004/rpt/2004-R-0346.htm>.
  • State of Connecticut (cga.ct.gov): is the official website of the State of Connecticut General Assembly. The information released are based on the imposed legislations of the state so it is considered as true and credible.
  • “End Time for Tax Refund Anticipation Loans.” Consumeraffairs.com. ConsumerAffairs.com, 2011. Web. 17 May 2011. <http://www.consumeraffairs.com/news04/2011/03/end-times-for-tax-refund-anticipation-loans.html>.
  • ConsumerAffairs.com: it is a private, non-governmental entity that provides a forum for consumer complaints. It also gives expert advice from lawyers who examine if complaints have legal merit.
  • “H&R Block Incorporated.” Fundinguniverse.com. Funding Universe, n.d. Web.16 May 2011. <http://www.fundinguniverse.com/company-histories/H-amp;-R-Block-Incorporated-Company-History.html>.
  • Funding Universe: is a company that offers loans and services to entrepreneurs. Their nationwide online network for investors and entrepreneurs is one of the largest with 700 investors and over 20,000 entrepreneurs.
  • “Jackson Hewitt, Inc.” Fundinguniverse. Funding Universe, n.d. Web. 16 May 2011.<http://www.fundinguniverse.com/company-histories/Jackson-Hewitt-Inc-Company-History.html>.
  • Funding Universe: is a company that offers loans and services to entrepreneurs. Their nationwide online network for investors and entrepreneurs is one of the largest with 700 investors and over 20,000 entrepreneurs.
  • Macarelli, Sarah. “The Ethical Theory of Kantianism.” Associated Content. Yahoo! Inc, 2011. Web. 17 May 2011. <http://www.associatedcontent.com/article/20668/the_ethical_theory_of_kantianism.html?cat=72>.
  • associatedcontent.com: This site is under the copyright of Yahoo Inc. The website allows trusted contributors to publish relevant information on different topics that are useful to researchers.
  • Pritchard, Justin. “Refund Anticipation Loan.” About.com. The New York Times Company, 2011. Web. 16 May 2011. <http://banking.about.com/od/loans/g/RAL.htm>.
  • About.com: About.com has 800 topic sites (Guide sites) that provide solution to the users dilemmas, from parenting to technology to travel and many other topics. It reaches up to 40 million visitors in the United States alone. The website has been operating for over 14 years and has been providing relevant and useful topics to users every single day of the week.
  • “Refund Anticipation Loan (RAL) Fraud.” The SAR Activity Review: Trends Tips and Issues 7 (2004): 15. Web. 16 May 2011. <http://www.fincen.gov/news_room/rp/files/sar_tti_07.pdf>.
  • The SAR Activity Review: is a publication of the United States Department of Treasury. It provides information on the preparation, use and value of suspicious activity reports filed by financial institutions.
  • Spencer, Patti. “Jackson Hewitt vs. H&R Block.” Pennsylvania Fiduciary Litigation.  Spencer Law Firm, 2011. Web. 16 May 2011. <http://www.pennsylvaniafiduciarylitigation.com/2011/02/articles/taxation/jackson -hewitt-vs-hr-block/>.                
  • pennsylvaniafiduciarylitigation.com: Is a website operated by Spencer Law Firm. The law firm is headed by Patti S. Spencer, Esq. a nationally recognized Trust and Estate attorney.  
  • “Tax Refund Resources for Consumers.” Center for Responsible Lending. Center for Responsible Lending, 2010. Web. 16 May 2011. <http://www.responsiblelending.org/other-consumer-loans/tax-refund-resources-for-consumers.html>.       
  • Center for Responsible Lending (CRL): CRL has been protecting consumers from abusive financial practices. The mission of this non-profit community development lender is to establish economic opportunity in undeserved communities through responsible financial services.

Related Posts

Leave a Comment