ACORN takes on Tax Preparation Chains

by Allison M. Conyers on April 14, 2004

Huge profits being reaped from processing Earned
Income Tax Credit, as millions are being stripped from working families and low-income communities.

Over twelve million Americans paid a total of $1.14 billion to get money that already belongs to them last year. This money was paid to tax preparation chains for Refund Anticipation Loans or RALs. These companies have managed to identify exactly when working families, who usually have little resources to spare, have a small influx of money. They then devised a plan to siphon said money with little effort.

RALs are temporary loans given to people in anticipation of their income tax refund. The low-income families and individuals who qualify for the EITC often are lured by the promise of fast money and often go to large tax preparation chains for a RAL. Typical interest rates for RALs range upwards from a whopping 245%.

Sometimes tax payers are sold another high-cost bank product called a refund anticipation check or RAC. With RACs a dummy bank account is set up and then a taxpayers refund check is deposited into that account. This process gets taxpayers their refund no faster than electronic filing – an option where the IRS will deposit your refund directly into your bank account for you in as little as ten days.

Promises of fast money have become omnipresent in low income communities for the first few months of every year. Commercials and advertisements overrun radio and television stations and streets are lined with brightly colored posters and temporary offices. Last year, according to the Consumer Federation of America, tax preparation chains made $1.75 billion just from families who filed for the Earned Income Tax Credit. This money, set aside to help low-income families, goes directly into the pocket of big businesses.

This Tax Day, April 15, 2004, ACORN members in more than thirty states will protest Jackson-Hewitt for its aggressive and deceptive sales of rip off refund loans and other overpriced bank products. Last year, Jackson-Hewitt generated revenues of $48 million from their RALs and other abusive bank products. They generated fully 28% of their revenue from these sources and almost two-thirds of Jackson Hewitt customers were sold one bank product or another.

“This is the end of the years tax season, but just the beginning of ACORNs plans to demand an end to rip off refund anticipation loans,” said ACORN National President Maude Hurd. “We want to make sure that it is out in the open that Jackson Hewitt is making millions by siphoning the hard earned tax refunds of low income working families, and we can’t just sit on the sidelines and let this happen.”

Susan Curry of Jersey City, NJ said of her experience “they charged me over three hundred dollars and my total refund was about $4500. When I went in there, all they said was, ‘Sign here, sign here, sign here!’ they didn’t tell me anything else.”

What many people don’t know is that there are choices. “There is always e-filing where you can get your refund deposited directly into your bank account, and get your money back in less than 2 weeks. If you don’t have an account you can still get it in about three weeks, all without paying anything extra for a loan. Low income working families can also get your taxes filed absolutely for free at VITA sites in the community ,” said San Francisco ACORN member Betty Edwards.

“Our San Francisco VITA sites are free for anyone who makes less than $35,000 a year,” Edwards continued. Volunteer Income Tax Assistance sites are actually staffed by tax preparers who are trained by the IRS and offer several locations in the San Francisco area. For more information on VITA Sites or ACORN you can contact San Francisco ACORN at 415-359-9160 or visit

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