Are Refund Anticipation Checks (RAC) any different from the outlawed Refund Anticipation Loans (RAL)?

Did anything change? What's in a name anyway? 

The federal government outlawed RALs and so now we have RACs. Refund Anticipation Loans became Refund Anticipation Checks. If you remember from years past, Refund Anticipation Loans came under fire from the Federal Trade Commission as predatory. There is minimal difference in the effect of a RAL or RAC. Both of them trigger fees The following is reprinted from Yahoo, Finance:

"Who Needs an Income Tax Refund Anticipation Loan or Check? Absolutely Nobody  ResponsibleLending.com
Yahoo! Finance 20 Dec 2012
Refund anticipation loans, considered a form of predatory lending, essentially ended in 2012; but a banking product known as a refund anticipation check (RAC) is set to take their place in 2013. The Department of Treasury explains that RACs are temporary bank accounts, established on behalf of a taxpayer, that can receive a direct deposit refund. This is a bank deposit, not a loan, and is limited to the size of the refund, minus any applicable fees. For taxpayers without a bank account, RACs may expedite refunds by up to six weeks, and they also let filers pay for tax preparation fees out of the expected refund. The National Consumer Law Center says that the average cost of RACs is about $30 to $32; but tax preparers may charge their own "add-on" fees, ranging from $25 to hundreds of dollars. However, many low-income taxpayers can e-file for free, saving on both tax preparation fees and RAC fees. “

There seems to be very little difference between RACs and RALs. RACs like RALs are marketed towards the least sophisticated (read low income) taxpayers. The filer does not have to pay anything out of pocket, and all the fees for filing and tax preparation are deducted from the filer's refund which, in this case, is funded through a special bank account set up specifically for the tax refund. Fees apply. Even though RACs may not be as expensive and predatory as RALs they are also to be avoided. Federal tax refunds are much faster nowadays than in years past, and a filer is quite likely to have their refund in 21 days anyway without a RAC. The IRS site,  states: “If you e-file, you can generally expect your refund in less than 21 days.”

One of the other supposed benefits of a Refund Anticipation Check is that people with no bank account can have use them. No need to open a bank account. My suggestion – then open one!

Many low income filers may not realize that free tax preparation assistance is available.

Heart of Florida United Way  – posts on their site:
"Free tax assistance is available by IRS-certified volunteers to people who make $50,000 or less and would like assistance in preparing their tax returns.
Tax sites are available throughout Orange, Osceola, and Seminole Counties and offer free electronic filing so you can hold on to all of your refund."


Pinellas County:

A list of free tax preparation sites through VITA – VolunteerIncome Tax Assistance


Statewide:
AARP -
And more information about free tax assistance for low income seniors. There is also information about how you can help. We're all in this together.


I'm sure there are many more places low income Floridians can go to get help with their taxes. There is no need to be subjected to expensive fees. One of the problems with Refund Anticipation Loans was that sometimes a filer would file, and the IRS would deny the anticipated refund. The filer would have spent the money before he found out, and wind up owing money to the income tax preparation company. I'm not sure that the scenario would be any different if the same thing happened with a Refund Anticipation Check.