As April 15 approaches, advertisements for tax refund anticipation loans (RALs) are ramping up. RALs are high-interest loans that must be repaid by the actual tax return proceeds, essentially borrowing your own money, according to a news release from Attorney General Leslie Rutledge.


Car dealerships and other businesses selling high priced items often offer to use RALs as down payments. While offers of immediate cash are often attractive, the products could ultimately reduce the total amount of your refund and may even cost you extra money, according to the release.


“Reading the fine print is critical to not fall victim to a scam or be deceived by a promotion for a refund anticipation loan,” Rutledge said. “If you estimate your tax refund incorrectly when using the RAL as a down money for a large purchase, you are still responsible to pay the difference that your tax refund does not cover.”


These loans are regulated by the Arkansas Refund Anticipation Loan Act of 2009.


Rutledge released the following options for Arkansans to consider before agreeing to have your taxes prepared as part of a RAL:


• Consider the free or low-cost options such as the online Internal Revenue Service (IRS) Free File program or the Volunteer Income Tax Assistance.


• Remember that 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 an agreement or having any tax preparation services performed.


• Many tax preparers like to offer these loans because it attracts new business, but if the tax refund isn’t enough to cover the loan, it can create a headache for consumers.


• Insist on getting any RAL in writing before buying any products or services.


• RALs may seem attractive because tax preparations fees can also be covered. But many Arkansans can get free tax preparation services and can therefore save money and keep their entire refund.


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 IRS.gov 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 ArkansasAG.gov or Facebook.com/AGLeslieRutledge.