Can anyone point me to the thread on tax shops? I thought I saw one here a while back. Thanks.

I'm not sure we have a thread but rather that they have been discussed occasionally in other threads. The one version I have seen this year requires that you have at least one W-2, have all your ducks in a row and be expecting a refund of at least $1000. They are being offered through SG Marketing (now a MarketForce company) with some of them appearing on the Blue Portal of Market Force. Some of these have also been showing up being done by scheduling companies.

The deal as I understand it is that you must apply for a 'Refund Anticipation Loan'. I.e., the preparer will file your return for you and you would undergo the normal credit check for loan worthiness. This of course would become part of your credit record. The shops generally pay reasonably well ($70) and you are reimbursed the cost of return preparation and loan costs. The question becomes whether it is worth the hit to your credit report?

Thanks Flash. If you're expecting a decent refund and your fico score is up there why question the hit?

Because you only get a certain number of hits in a 12 month period before that score starts going down. Want a mortgage or a refi? A personal or car loan? A new credit card? A cell phone? To change your home or auto insurance? I understand that 5 hits is the 'magic number' before your score starts going down. Each one of those activities would be a hit to your credit report. Since I don't know what the future holds, I am not willing to sell my 'hits' for even a good paying shop because my credit score is excellent and I plan to keep it that way in case I DO need to consider credit requests for my own use. A lowered score could mean a percent or two difference in the interest you pay over 30 years on a mortgage. Insurance companies don't reveal what your premium difference might be if you have a lowered score.

I did get an email from SG Marketing today that they have lowered the required refund to $500 and upped the fee to $80.

> consider credit requests for my own use. A
> lowered score could mean a percent or two
> difference in the interest you pay over 30 years
> on a mortgage. Insurance companies don't reveal
> what your premium difference might be if you have
> a lowered score.
>
> I did get an email from SG Marketing today that
> they have lowered the required refund to $500 and
> upped the fee to $80.


I wasn't aware of the "Magic #5". I don't make it a habit to apply for any credit when offered or even thought that every credit check was considered a "hard" hit. I know that you can have many soft hits without it effecting your FICO score but don't know what these tax shops are considered. Yes, they say it's a loan but repayment, I believe, is made to an account they have set up to receive the refund you are supposed to get. Well, now I have to "Google" this one.
Thanks.

SG was specific in their comments about the job that there would be a credit report check. Because this is a loan and its repayment is based purely on your representations to the tax preparer that led to the loan, that repayment with an IRS refund is not guaranteed. SG also mentions if there is some slip up that your refund doesn't cover the loan you are personally responsible for repaying the loan. For me, there is just too much not to like about this to tackle it.

On the other hand, I noted the other day when I was in the credit union that they have times posted when the volunteers (I believe IRS trained) will be in to assist anyone with their tax returns for free if their income is under $42,000. Usually this cadre of volunteers is at libraries and senior centers and available on a regular schedule up until April 15th.

I think the key here is:

IF you are going to do a refund anticipation loan anyway, as a growing percentage of the population seems to be doing,

Or,

IF you would do a refund anticipation loan, but have decided not to, sbased solely on the fact that you don't want to pay a percentage of your refund as fees to G.I. Luvmoney & Associates,

Then,

These shops are an excellent opportunity for you to get your refund anticipation loan for free, and make a dollar or two for the time involved in filling out the report. (Note, the time involved in actually doing the shop would be no more, or no less than the time that would be involved if you got a refund anticipation loan without performing the shop.)

But if you had no interest, or desire, to get a refund anticipation loan, and wanted to do this shop primarily for what seems like a really nice incentive, then you should consider what the potential impact to your credit is worth.

Correct, JayTee. And with the possibility of on-line filing of your own tax return and the direct deposit option, refunds come pretty fast these days anyway.

Well, I decided to check this one out. If I feel the location is underhanded in any way I simply will end the interaction before anything transpires. Otherwise, as Jaytee pointed out, I think a RAL for FREE plus a shop fee sounds good. I'll have to feel out the individual when I get there. I have used TurboTax in the past and it always works out quite well for me but this year has some twists and I could use some real good guidance which remains to be seen.

I'll let you know whether or not I actually go through with this one.

OK. This was a total disaster. The agent had no CLUE what he was doing. He had to ask the other associate in the office for guidance nearly every step of the way. Once he made his "lack of" presentation of the RAL I just asked to review the papers at home for accuracy. There were soooooo many errors it just gave me the hee-bee gee-bees. The kicker is that I have contacted the MS company three times since yesterday and no one has returned my call as of yet.

Why would the banks want to advocate taking this loan out if the preparer has no clue as to what they are doing? Actually, I just answered my own question. They are "banking" on you/me being just as clueless. UNBELIEVEABLE!! Isn't how this whole mess of an economy started??

I have used Turbo Tax in the past and I guess I have to do it again myself!

Edited 1 time(s). Last edit at 03/11/2009 12:59AM by modario.

They have no training but a few weeks. I would never trust someone at one of those places with my taxes, no matter what my filing status. :-)

The banks are the paying client. They have reason to be concerned that eyes are dotted and tees are crossed, or they would not be shopping tax prep franchises. RALs are under fire because of their very steep interest charges among other things, which can be as much as 1000%. Not all RALs, this year, will result in a credit check, they're random, due to pressure by the IRS. The banks are at risk that this business will become a thing of the past.

But there are two different things going on here. The bank business-RALs, and tax preparation. The shops don't address the competency of the tax preparation. You're on your own there; fallout belongs solely to the shopper.

It's true that some tax prep offices are pitifully trained. I would dread the thought of going through the process of finding someone competent and knowledgeable among the major players - HRB, Liberty, Jackson-Hewitt. It would take legwork and research. There are experienced, conscientious prep offices. Ask questions - what's their retention rate, do they guarantee accuracy, how long have the preparers worked there, do they train/certify annually. When you find an office who gives the right answers to those questions, then test them further with questions specific to your situation.

I remain of the opinion that these are shops to be avoided. Too much to risk, which could result in years of grief and aggravation.

I just did one of these and had a good experience. I had a good preparer who asked all the right questions and made my job easy. I got my check the next day which was AWESOME. The preparer even found something that I had missed from last year and I will be getting that back this year when I amend it. Everything was reimbursed in less than a month, plus the $70 fee for doing the report.

I don't know how much of a hit my credit score took from doing this. My credit score is very high so I figured I had wiggle room. I guess I will find out when we try to shorten our home loan term.

I will say though, that if you have any inkling that you may screw something up with one of these shops, do not do them! When I had my taxes done, there were over $300 worth of fees just to have my taxes prepared!!! If I had screwed something up and that hadn't gotten reimbursed, ohhhhhhhhh all "you-know-what" would have hit the fan around here.

I'm delighted to hear your experience was good poofoo80. Mostly what I have heard are horror stories of incompetent preparers.

One hit to your credit report should not mess you up. It is a bunch of hits in a year that starts to drop your score. I was talking with a banker on a shop the other day who was very savvy. My 'errand' was to find out information about auto loans. She pointed out that it was wiser to get pre-approved with the bank for a loan for a new or new-to-me vehicle to avoid a bunch of dealerships checking my credit as I was negotiating for a car. She confirmed that all dealership hits for a car loan done within a 7 day period should count as only one "hit", but that not always did the credit reporting outfits manage to count days correctly. Her suggestion was that if I was going for 0% dealer financing I try to have any/all dealerships do the check on the same day as the credit reporting folks did seem to figure that out as 1 "hit".

Another bank shop recently that sort of shocked me was about a mortgage re-fi. I have always avoided escrow for taxes and insurance because that is a non interest paying account. The bank I was talking with wants almost a full year of taxes and insurance at the inception of the re-fi in an escrow account. Their suggestion is that you just overborrow by the amount so your mortgage is bigger in order to hand them money you are paying interest on but not earning interest on. Baloney!