RAL

Refund Anticipation Loans are a big part of the tax preparation industry. So what exactly are they? Does the IRS give you your refund right there on the spot? Does your tax preparer give you your refund early because he is a nice guy?

The answer is no. A Refund Anticipation Loan (RAL) is not a refund and should not be referred to as such. A RAL is a loan and should be referred to as such. Any other representation is misleading. A RAL is a loan based on the amount of refund that a person will likely receive. However if a person does not get that much of a refund they are still liable to pay back the loan. In most cases that is not a problem and the IRS pays the loan off for you.

A RAL is usually available within 24 – 48 hours. However for various reasons this can be delayed. In addition the lender has the right to deny to lend for various reasons. RALS are not free. There are fees that have to be paid for receiving money before the refund has been released. These vary depending on the size of the refund and the RAL provider. The fees are required to be disclosed up front before applying for the loan. If there is any refund remaining after paying off the RAL the customer will receive the remainder.

The information contained on this site should in no way be considered to be professional advice in the form of either tax, accounting, or legal service or consultation. You should always consult with a professional familiar with your individual circumstances before making any specific decisions related to accounting, tax, or legal matters.