Attorney General warns IL taxpayers of possible refund delay - KFVS12 News & Weather Cape Girardeau, Carbondale, Poplar Bluff

Attorney General warns IL taxpayers of possible refund delay

(Source: KFVS) (Source: KFVS)
ILLINOIS (KFVS) -

"It's going to cause refund delays for approximately 30 million taxpayers who file early."

That's according to Illinois Attorney General Lisa Madigan.

W2's are in the mail and people have already started to file early. So, in efforts to crack down on fraud, the IRS will delay tax refunds for taxpayers claiming earned income tax credits or the additional child tax credit until February 15. 

According the State Attorney's website:

"When you take out a tax refund loan, your tax preparer (working in partnership with a bank) lends you the amount of the tax refund that you expect to get back, but may charge you a significant amount in interest and fees. Then, when the government sends your actual refund check, it is direct-deposited into the bank that made the loan. Because the loan is paid back when you receive your tax refund, the term of a tax refund loan is short—usually seven to 14 days."

“If she made it this far…she can hold on for a few more weeks," Marion resident Kimmie Acree said referring to a family member. 

Certain taxpayers are going to have to wait a few more weeks for their money, or consider other alternatives.

One option is the a refund anticipation loan. However, Illinois Attorney General is warning consumers that they may want to be wary of these instant tax refund options.

Rob Manis, owner of a tax company in Carbondale, is skeptical himself.

“On TV they can get this credit card, a prepaid card," Manis said. "It’s not free money, it’s a loan against your anticipated tax refund. I haven’t read the fine print but there’s no such thing as a free lunch. So somewhere along the line, they have to make money too."

According to Madigan, loan providers tempt you with checks, temporary debit cards, instant cash deposit or even “no-fee refund advances.”  But they can also come with a high cost.

Madigan released the following statement on these alternatives:

"When tax preparers promise an instant refund, they are really giving you an expensive, short-term loan that will reduce the amount of your eventual tax refund by as much as a thousand dollars. Be skeptical of these high-priced, short term loans.” 

According to the Attorney General’s office,  these options target low income families who can't afford to pay these costs, fees and interest rates for these tax refund loans, which can be more than 100 percent.

Acree said her family member was counting on that money to pay bills, but even then she doesn't’ support this type of quick fix.

“She might as well just wait because it’s not worth it," Acree said. "And by the time she pays it back, that’s a big chunk out of her income tax.”

However, Manis understands every circumstance is different.

“It’s going to be a person by person decision, but if it’s going to save you late fees, bounce check fees, then you’re not worst off getting it.”

To report a complaint about your tax refund anticipation loans, you can contact Madigan's consumer fraud hotline at 1-800-243-0607.

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