WASHINGTON — NAFCU sees more money for credit union members, and Congress' investigative arm sees a better deal for consumers.
That's why the Government Accountability Office and the trade association have expressed similar concerns about how tax preparation firms market refund anticipation loans.
The GAO and NAFCU contend the current system, under which preparers often use information they discover while preparing tax returns as a basis for encouraging customers to take out loans, has the potential for abuse.
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The GAO's recently released investigation also found that tax preparers were inconsistent in how well they gave customers verbal explanations of the loan provisions. It also concluded that those preparers didn't use a consistent methods for calculating the annual percentage rate on a loan.
NAFCU said its members express concern about the threat these loans pose to credit union members' financial well being and also because they provide competition to loans offered by credit unions.
"Credit unions offer economical small-dollar loans as alternatives to these [refund anticipation loans] products, but often their members fall victim to aggressive marketing campaigns promoting RALs and are unable to take advantage of the low-cost small-dollar alternatives," Tessema Tefferi, NAFCU's associate director of regulatory affairs wrote the IRS in April.
NAFCU favors a proposed set of IRS rules that increase the oral disclosure requirements on refund anticipation loans and ban tax preparers from soliciting and obtaining taxpayer consent to disclose or use taxpayer information for the purpose of soliciting taxpayers to purchase refund anticipation loans.
The GAO doesn't take positions on rules proposals, but at the behest of Congress undertakes investigations about issues and policies that are regulated by the government.
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