Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman today said he is glad that the IRS has taken a step to protect taxpayers who have become subject to predatory Refund Anticipation Loans.

IRS Commissioner Doug Shulman said today the IRS would no longer share "debt indicator" information with tax preparers and associated financial institutions.  The "debt indicator" is personal information that tax preparers received from the IRS that could be used to facilitate refund anticipation loans.

Shulman said that when tax returns are filed online, the turnaround for refund has been reduced to a matter of days.  This reduces the need for RALs.

"Too many hard working New Mexicans have lost sizeable portions of their tax refunds to RALs.  I applaud Commissioner Shulman for this critical step towards dramatically reducing RALs, and I echo his call encouraging taxpayers to use electronic filing so that they can receive their refunds quickly," Bingaman said.

Bingaman pointed out that a 2009 National Consumer Law Center report showed a typical Refund Anticipation Loan of about $3,000 carries an annual percentage rate from 77 percent to 140 percent.  Unfortunately, vulnerable communities are particularly susceptible to RALs.  For example, RALs drained over $9.1 million from Native American communities in 2005.

"I will continue my work with the National Taxpayer Advocate to support volunteer income tax assistance programs, like Tax Help New Mexico, a nationally acclaimed program that helps low-income people across our state prepare and file their tax returns," Bingaman said.

Bingaman is a senior member of the Senate Finance Committee and longtime leader on issues affecting low-income taxpayers.  On April 15, he introduced the Taxpayer Bill of Rights Act (S. 3215), which includes comprehensive reforms to tax preparation, including initiatives directed at low-income taxpayers.