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State consumer affairs office: Steer clear of refund anticipation loans
The state Office of Consumer Affairs and Business Regulation (OCABR) and Department of Revenue (DOR) issued a warning to Massachusetts consumers Tuesday to be wary of refund anticipation loans (RALs).
“These short-term loans are backed by an individual’s tax refund and come loaded with fees and high interest rates,” the state offices said in a statement. “Advertised as a quick and easy cash infusion and targeted toward the lowest wage earners, RALs essentially encourage the people who can least afford it to borrow their own money.”
OCABR Undersecretary Daniel C. Crane called the RAL warning “a classic example of buyer beware,” noting that customers “should not be lured into paying a hefty price” — anywhere between $30 and $130 for the typical taxpayer — “to gain access to their own money.”
“The Office of Consumer Affairs advises Massachusetts consumers to steer clear of these loans in order to avoid burdening themselves with such an unnecessary expense,” said Crane.
The effective annual interest rates for RALs can range from about 50 percent to nearly 500 percent, the offices said, and the loans must be paid back even if a consumer’s tax refund is denied, less than expected or frozen. If a taxpayer is unable to repay the RAL, the lender may send the account to a debt collector.
The expedition of tax-paying by electronic filing methods and of the refund process through direct deposit options that can lead to taxpayers receiving refunds in 10 days or less should make RALs even less appealing, said DOR Senior Deputy Commissioner Navjeet Bal.
“Given the speedy nature of processing electronically filed returns with refunds, there is little cause to take out a refund anticipation loan … Taxpayers should think twice before agreeing to accept them,” Bal added.
Rather than resorting to RALs, the state agencies recommend tax-payers use the following filing strategies:
• If you don’t already have one, open a bank account and take advantage of direct deposit for your tax refund;
• File your tax return electronically with the refund deposited directly into your bank account, which you should receive in three to four business days;
• When you receive your tax refund, avoid check cashers, as they charge fees to cash RALs and tax refund checks;
• Reduce your income tax withholding so that you won’t have to wait for a refund next year;
• For free tax preparation, low- to moderate-income tax payers can take part in the Volunteer Income Tax Assistance (VITA) program coordinated by the IRS. VITA sites can be found in libraries, community centers, local governmental offices, nonprofit organizations and other locations during tax season;
• If you earned $54,000 or less in 2007, you can use the IRS Free File program to prepare your taxes online at www.irs.gov/efile;
• The AARP Tax-Aide program at www.aarp.org/money/taxaide provides free tax preparation and assistance services to millions of low- and middle-income taxpayers, with special attention to those ages 60 and older.
New Mass. campaign calls on adults to get involved with youth
A new community engagement campaign unveiled Tuesday aims to encourage parents, neighbors, after-school providers, policy makers and everyone else in the Bay State to look at how they can “be there” for youth and inspire them to reach for success.
City and state officials, nonprofit youth workers and more than 600 community and corporate leaders joined the United Way of Massachusetts Bay and Merrimack Valley to kick off “inspire 4 life,” a new multi-year campaign intended to excite and engage Massachusetts youth and provide them with opportunities not only to express themselves and develop leadership skills, but also to build positive relationships with supportive adults.
The initiative was announced during a day-long youth summit held at the World Trade Center on the Waterfront. First lady Diane Patrick, state Secretary of Health and Human Services Dr. JudyAnn Bigby, Department of Social Services Commissioner Angelo McLain, Department of Youth Services Commissioner Jane E. Tewksbury and Larry Mayes, chief of human services for the City of Boston, were among those in attendance for the launch.
“The investment we make in our young citizens today will reap innumerable benefits for them, and for the Commonwealth, tomorrow,” said Patrick.
A United Way statement cited research showing that youth who have positive adult relationships are more motivated to succeed in school and take responsibility for their actions, and are less likely to engage in risky behavior.
“Youth and more likely to stay in school and graduate when they have a solid relationship with a caring adult, attend school regularly and don’t repeat grades, are protected from harm and participate in high quality enrichment opportunities,” the statement said.
At the initiative’s Web site, adults can sign up to coach, mentor or tutor youth, get information abut how to become active in school groups or committees, and learn how to advocate for youth-focused policies through public actions like attending town meetings or writing a letter to the editor of a local newspaper.
For more information, visit www.inspire4life.com.
Essence, Berklee announce teen hip-hop songwriting contest
Essence magazine and Berklee College of Music are again looking for the next generation of hip-hop stars, opening their third annual joint Take Back the Music Hip-Hop Songwriting Contest to find young artists whose work promotes balance in the messages of mainstream hip-hop.
Three contest winners will receive scholarships to attend a high school music program at Berklee this summer, and will perform at the 2008 Peace Hip-Hop Festival at Boston’s City Hall Plaza. Last year’s festival featured performances by rap legends Slick Rick and De La Soul.
Two runners-up will study online at www.berkleemusic.com at no charge.
The contest is open to students ages 15-19 who are unsigned songwriters and/or producers. Entrants have until March 10, 2008, to submit their original songs, which will be judged by a panel of hip-hop celebrity judges and Berklee music scholars based on the innovative and positive quality of their lyrics, as well as melody and composition.
Additional information, contest details and entry forms are available at www.essence.com/take
backthemusic and www.berklee.edu.
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