Today's Sunbeam

Groups Want Halt To Rapid Tax Rebate Programs

Today's Sunbeam — Sunday, January 21, 2007

By TRISH G. GRABER
Trenton Bureau

TRENTON — A New Jersey consumer watchdog and advocacy groups in four other states called on tax preparers to halt rapid rebate programs they claim target low-income populations.

"Refund anticipation loans from Jackson Hewitt and other major tax preparers strip low-income taxpayers of millions of dollars annually," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action. "Their massive marketing campaign targeted at low-income individuals is accompanied with high fees and exorbitant interest rates."

Interest rates on the refund anticipation loans as well as holiday and pay-day loans can range from 40 percent to 70 percent, according to New Jersey Citizen Action.

The group noted that taxpayers are paying large sums to borrow against their own tax returns, which they could receive within just a few days by filing electronically with the Internal Revenue Service.

New Jersey Citizen Action sent a letter to the state attorney general alleging that the company intentionally targets low-income populations for the programs.

David Wald, a spokesman for the Attorney General, said that the office would look into the claims.

"After reviewing it, we do intend to look into what Citizens Action is alleging are predatory lending practices," he said.

The representatives from groups in California, Illinois, North Carolina and New York joined New Jersey Citizen Action in traveling Tuesday to Jackson Hewitt's Parsippany headquarters and calling on the company to sign a $74.5 million check to return money to people across the country the groups allege it earned through refund anticipation loans.

A spokesperson at Jackson Hewitt's Parsippany office did not return calls seeking comment.

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