Press Release

For Immediate Release
Contact: Melissa Merz
877-844-5461 (TTY)
March 31, 2006


Chicago – With April Fool’s Day and this year’s tax deadline fast approaching, Attorney General Lisa Madigan urged Illinoisans to remember the high costs and fees associated with Refund Anticipation Loans (RALs) and not to be fooled by the appeal of seemingly fast cash.

Saturday is April Fool’s Day and two weeks before taxes are due.

According to a report by the Consumer Federation of America (CFA) and the National Consumer Law Center (NCLC), 12.38 million taxpayers paid a total of $1.6 billion dollars in loan fees and administrative fees for RALs received in the 2004 tax filing season.

“This April Fool’s Day, don’t be tricked by the lure of a refund anticipation loan,” Madigan said. “With tax season nearing its end, consumers may rush to file their returns and want their tax refunds to arrive quickly. But if consumers opt for refund anticipation loans, they will foolishly be throwing away a large chunk of their tax refunds.”

RALs, also known as “instant tax refund loans,” are loans consumers can obtain based upon their expected tax return. Madigan said that consumers shouldn’t be fooled into believing that a RAL is simply an “advance” on their expected tax refund; it is actually a high-cost, short-term loan. The RALs are arranged by tax preparers and accompanied by extremely high costs and fees, which can include loan fees, electronic filing fees, document preparation fees and tax preparation fees. These fees are deducted from the consumers’ tax refunds before the checks are even issued.

With RAL providers charging between $29 and $120 in loan fees, annual interest rates for a RAL range from about 40 percent to more than 700 percent. Interest rates can skyrocket to more than 1,800 percent if additional administrative fees are charged, the CFA and NCLC report concluded.

Madigan said what most consumers may not realize is that by filing their taxes electronically and opting for direct deposit into their bank accounts, their refunds will arrive very quickly – in as few as 10 days. Most tax preparers can provide consumers with the option of receiving a refund through direct deposit. If consumers choose a RAL, they must first pay the tax preparer to help fill out their tax forms and then pay additional fees and costs to obtain the refund check just a few weeks earlier.

Madigan said that free tax preparation sites are set up throughout the state to help income-eligible taxpayers prepare their taxes and file them electronically. Consumers looking for an organization to help them prepare and file their taxes for free can contact the Center for Economic Progress at 312-252-0280 or visit



Return to March 2006 Press Releases