IRS proposes ban on Refund Anticipation Loans (RALs)
The IRS announced today that they have proposed regulation to ban RALs (refund anticipation loans). RALs are loans that are given on early tax refunds at a small fee (usually around 2%). The IRS is concerned that RALs provide incentive for tax preparers to prepare returns that will result in a refund. They feel that this is a dangerous practice and could lead to abuses of the system.