As tax season swings into high gear, corporate scandal is building. Several major tax preparation companies are under scrutiny for their business practices.
Users of Turbo Tax software are up in arms about the arrangement for processing tax refunds through Santa Barbara Bank and Trust. Turbo Tax offers the option of paying for their services from your anticipated tax refund when it is processed by a third party, Santa Barbara Bank and Trust. What is not made clear, in the opinion of many users contributing to blogs and bulletin boards, is that both parties will bill for this service. While the Turbo Tax corporate site does indicate there is a fee for processing the funds, the amount is not easy to find.
Another common view expressed in web postings is that it was not easy for Turbo Tax users to learn that in addition to paying a fee, their refund could be delayed for up to four business days, since Santa Barbara Bank and Trust only makes transfers on Fridays. Also, users point out that the manner in which the options for payment and claiming a refund were presented to them was misleading. It appears that the only option that does not require a credit card number to be entered at the time of completing a return is the one associated with Santa Barbara Bank and Trust. Those affected seem to think that FAQ''s on both the Santa Barbara Bank and Trust website, and their e-mail communications, are, at best indirect and incomplete.
Some Turbo Tax users and Santa Barbara Bank and Trust "customers" are even speaking about a class action lawsuit, particularly given that this tactic appears to target those least able to afford it. Posts on blogs and the bulletin boards of the Turbo Tax site complain about these practices and seek to rally other users in a class action suit against the parties.
In fact, this is not the first time Santa Barbara Bank and Trust has been singled out for complaint. The Consumer Affairs site hosts user reviews of tax preparation systems. When reviewing Express Tax Refund users focused their complaints on the business practices of Santa Barbara Bank and Trust stating the bank withheld their entire refund and/or charged fees that were greatly in excess of what was expected. Sadly, many of the people posting complaints were the unemployed, the disabled and students, all on tight budgets and in need of quick cash.
In another example of tax refund controversy, H&R Block settled a class action suit in West Virginia, paying out $62.5 million to users who received their income tax refund as a loan between 1989 and 2005. Those filing the suit believe that the practice of offering refund anticipation loans and then charging high fees for processing the loan is unfair and takes advantage of those who are not tax savvy, poor households and immigrants.
In addition to the fees and refund delay issues, professional tax preparation firms are coming under consumer scrutiny for data handling and privacy matters. The Internal Revenue Service is proposing a change to the U.S. tax regulations that would make it much more clear to consumers the circumstances under which their tax information may be shared with third parties for marketing purposes. Under existing rules tax preparation firms are required to gain customer consent, however the consent request is often buried in the small print, requiring "just one more signature" when the return is finally completed.
According to IRS spokeswoman Nancy Mathis, "It requires that tax preparers must tell taxpayers that if you give consent, things can happen to your information that you may not want to happen. The tax preparer can do nothing absolutely nothing with a tax filer''s information without that consent." Under the new rules being considered, consent to share data would be required to be displayed on a single page, or screen, and in a large, 12 point, type size.
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