Tax season sees dollars flowing by the millions to the many hardworking individuals reaping the rewards of a year's worth of toil and trouble. Many "tax preparation" companies exist to capitalize on the tax refunds of these individuals, both in person and online, but my personal experience is with www.rapidtax.com, so that is the entity I will refer to. However, I strongly advise anyone reading this that all "tax preparation" firms are essentially, a rip-off.
I was in a bit of a financial bind, so it occurred to me that I may be able to get a refund anticipation loan in a couple days and ease my worries. I logged on to www.rapidtax.com, completed the tax forms, and submitted my 1040 and Refund Anticipation Loan (RAL) application. To credit RapidTax, they did disclose that the RAL was in fact a loan that would require bank approval, and in the event that the RAL application was denied, the application would become that of a Refund Transfer (RT). All fees associated with these bank products would be deducted from the refund.
I was willing to pay 150 dollars to get my money in a couple days' time. However, when I was denied the RAL, my account was converted to a RT, which is essentially the IRS direct depositing the funds into the tax preparation firm's bank of choice, which is in this case (and in the case of many other tax prep firms) Santa Barbara Bank and Trust (SBBT). SBBT then deducts the fees of the tax preparation firm, and disburses the remainder of the refund to the taxpayer via direct deposit or a check. Refund Transfer may be useful and a bit faster for individuals who do not have personal bank accounts, but for those like me who do have a personal bank accounts, it is best to e-file for FREE and have the IRS direct deposit the funds directly into your bank account, forgoing the unnecessary involvement of third parties.
So how is this a rip-off? I applied for a RAL because I wanted money in two days, not two weeks. The IRS is scheduled to direct deposit my refund on January 30, but I have been told by SBBT representatives that it will take 1-2 business days to process this and have it availablie in my bank account. RapidTax should have given the option to turn down their tax preparation services if the refund was not, in fact, rapid. I feel I should have had the option to forgo paying tax preparation fees and bank fees if I wasn't going to get a quick refund, because I could have e-filed for free, and had my ENTIRE tax refund direct deposited into my account in less time than it is taking for this "Refund Transfer."
In essence, my experience with RapidTax will cost me an extra 1-2 "business days" in waiting plus about $70 in fees, where e-filing for free would have cost me nothing and my money would have been direct deposited in my account by the IRS without interference.
I have learned my lesson and will never fool with this, or any other "tax preparation" firm ever, ever, ever agian
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