Each tax season, millions of folks get a large chunk of money. For many, this refund money is the largest lump sum they'll see all year.
A lot of those folks, however, don't have bank accounts. So they either get their Internal Revenue Service refunds in check form or they have the money loaded onto a prepaid card.
Reloadable prepaid cards are available from many tax preparation software programs. Or from tax preparation firms. Or from major retailers such as grocery, drug and big box stores. Just Google the term for myriad options.
But there's one big problem with these cards. Tax crooks absolutely love them
The cards essentially provide instantaneous monetization of the tax identity theft fraud, Scott Waddell, chief technology officer at iovation, told me for a post I wrote last week at my other tax blog.
Prepaid card refunds frozen: So the IRS and its private industry partners are taking increased steps to stop all types of tax identity theft and refund fraud. Earlier this filing season, those efforts led to thousands of prepaid card holders finding their cards frozen while tax and company officials confirmed that the card owners are the rightful refund recipients.
The intentions were good. Nobody wants crooks getting their or honest taxpayers' refunds on a prepaid card or any other way.
But the delay in loading tax refunds onto the prepaid cards caused problems for many of the cash-strapped taxpayers.
The card holders aren't alone. Waddell said that some clients of iovation, a Portland, Oregon-based firm that provides device intelligence for authentication and fraud prevention, are reporting that IRS security is slowing down their tax refunds.
It's not by much. But again, when you're waiting on tax money to cover car repairs or make rent, any delay is problematic.
More Trump tax trouble: Speaking of problems, also over at Bankrate Taxes Blog last week I looked at some legal and tax questions that Donald J. Trump is facing.
Citizens for Responsibility and Ethics in Washington (CREW) has asked the IRS to investigate an allegedly illegal donation made by the Trump Foundation.
CREW's complaint filed March 21 said that Trump's nonprofit gave $25,000 to And Justice For All, a Florida political organization, and did not report it on the information return it filed with the IRS.
A spokesperson for the front-runner for the Republican presidential nomination admitted that the money was donated in error, but CREW still wants the IRS to look into the matter.
Admitting that you made a mistake doesn't negate the fact that an illegal donation was made, nor does it negate the fact that incorrect information was filed on their [Form 990-PF]," CREW spokesperson Jordan Libowitz told Tax Analysts. "It's really best for the IRS to investigate this matter to get to the bottom of what happened and to decide what comes next."
We're still waiting on the IRS decision and whether the mistake will have any effect on Trump's candidacy. I suspect in both cases, nothing will happen.
I usually post my additional tax thoughts over at Bankrate on Tuesdays and Thursdays and then highlight those items here at the ol' blog the following weekend. Cutting it close this holiday weekend, but I made it!
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