Attorney General Alerts

    Refund Anticipation Loans Could Be Costly

    January 6, 2016

    As tax season looms, Arkansans will see offers for tax refund anticipation loans or checks. These offers of immediate cash are often attractive to consumers in difficult financial situations, but the products could ultimately reduce the total amount of the consumer’s refund and may even cost extra money.

    Refund anticipation loans (RALs) and refund anticipation checks (RACs) are high-interest loans that must be repaid by the actual tax return proceeds, essentially borrowing your own money. If the actual tax refund amount is less than estimated, the buyer is on the hook for the difference.

    Arkansas Attorney General Leslie Rutledge issued today’s consumer alert to warn Arkansans about these products that take advantage of vulnerable Arkansans.

    “Some businesses will encourage Arkansans to allow them to estimate a tax refund to be used as a down payment for a vehicle, furniture or other large purchase,” said Attorney General Rutledge. “But these practices are simply a loan until an official tax refund is provided by the government. Consumers must remember that the loan amount is only an estimate, so you are responsible to pay the difference.”

    Attorney General Rutledge released the following options for Arkansans to consider before agreeing to have your taxes prepared as part of a refund anticipation loan or check:

    • Consider the free or low-cost options such as the online Internal Revenue Service (IRS) Free File program or the Volunteer Income Tax Assistance.
    • Electronically filed returns can be deposited in bank accounts in as few as eight days.
    • The IRS can also provide refunds by check or prepaid debit card.
    • Always get a written list of fees before entering into any agreement or having any tax preparation services performed.

    RALs and RACs may seem attractive because tax preparation fees can also be covered, but many Arkansans can obtain free tax preparation services. The IRS provides a Free File program online that is a federal tax preparation and electronic filing program for approximately 70 percent of taxpayers who earn less than $62,000 in annual adjusted gross income. Eligible consumers can go to and choose from multiple private companies that will file federal returns at no charge.

    Some Arkansans may also be eligible to receive free help through the Volunteer Income Tax Assistance program. Meanwhile, seniors can contact AARP to learn more about the tax preparation services they provide.

    For more information about refund anticipation loans and checks, tax preparation and other consumer-related issues, call the Arkansas Attorney General’s office at (800) 482-8982 or visit or

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