By Rosemary Heins, University of Minnesota Extension Service

ìQuick, rapid or fastî tax refunds are heavily advertised by various commercial tax preparers during the tax season.
However, a new report by the Childrenís Defense Fund-Minnesota says these refund anticipation loans (RALs) are not a good deal for families and individuals. Over $23 million of the $378 million paid in federal funds to low- to moderate-income working Minnesota families went to pay the fees for these RALs.

Nationwide, about two-thirds of those claiming the Earned Income Tax Credit use commercial tax preparers. The reasons: complex tax laws and the fear of not filing taxes right.

However, consumers need to realize that itís not necessary to use a RAL to get tax return money fast. Itís much less expensive to use a tax preparer who files the return electronically for deposit directly into a clientís bank account-and the money will be there in two weeks or less!

If a consumer does take out a RAL, the fees and interest for this short term loan have an average APR of 234 percent! The APR cost will be even higher if for some reason the tax refund is slowed down by an audit. These loan products are offered by out-of-state banks, so usury laws donít apply.

What are the alternatives for consumers? Here are some suggestions:
In Minnesota, free tax help is provided by partnerships of many community-based organizations. The AARP Tax Aide program and AccountAbility Minnesota VITA program coordinate many sites. These are staffed by trained volunteers who need to pass a test before helping others.

Minnesota law does not require licensing of paid preparers. However, they do need to adhere to a ìcode of conductî to inform consumers when selling loan products such as RALs.

To find a location for free tax help near you, call 2-1-1 Minnesota Information and Referral or 1-800-543-7709. The Minnesota Department of Revenue will help if you call 1-651-297-3724 or go to their Web site at www.taxes.state.mn.us.
For consumers with access to the Internet, there are free electronic tax filing services. For links to a list of free online tax preparation and electronic filing services, visit the IRSís Web site at: www.irs.gov/.

Utilize an accounting or certified public accounting firm that is in business year-round. Their fees will most likely be comparable to a commercial tax preparation firm that advertises heavily. You will more likely be working with professionals who take tax update courses to stay current. Tax laws change yearly, and a good tax professional keeps up-to-date.

Or, you can choose to utilize a commercial preparer, but turn down any offer to take out a loan. Come prepared to pay the fee (the average fee is about $120) or charge it to a credit card. Then pay off the credit card bill as soon as possible once you receive your refund.

Rosemary Heins is a family resource management educator with the University of Minnesota Extension Service Regional Center in Andover.

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