If you are expecting an income tax refund and in a hurry to get the money, some tax preparers offer tax Refund Anticipation Loans, (RAL) or “Rapid Refunds.” Connecticut Better Business Bureau, however, cautions RALs may not be a good deal, only an unnecessary and expensive loan.

Refund anticipation loans are similar to payday loans: short term with high interest rates of 50 percent to a whopping 500 percent. You may get your refund faster, but you will not be getting as much money as if you wait for a government refund check.

Connecticut Better Business Bureau President, Paulette Scarpetti, cautions consumers not to expect too much from a RAL.

“Refund anticipation loans or rapid refunds can help pay down the cash quickly when the money arrives. The problem arises when a refund is less than anticipated and the consumer has to pay fees and high interest rates.”

Taxpayers considering a RAL should keep in mind that the Internal Revenue Service (IRS) delivers refunds in as few as ten days after electronic filing of a tax return, and if the taxpayer arranges to have refunds deposited directly into their accounts.

As many Americans gather documents they will need for their 2010 income tax returns, BBB advises consumers to be wary of two common tax-time schemes:

1.Tax reduction schemes are promoted by companies that claim they can help consumers reduce what they owe the IRS by working on their behalf with the IRS. BBBs however, have received complaints from consumers who paid thousands of dollars to such companies only to find out that the companies didn’t reduce the amount they owed, and in some cases, never even contacted the IRS.
BBB advice: If you have a debt with the IRS, consult an IRS enrolled agent, a certified public accountant or a tax attorney to determine whether you qualify to file for anything other than paying your taxes, fines and penalties in full.

2.Phishing e-mails may say that there’s an issue with taxpayers’ refunds, that they are being audited or that a problem is delaying processing of their taxes. Many include a link to a website set up by scammers, where victims are asked for Social Security numbers, bank account or credit card information. Some sites are designed to automatically install viruses or other malicious software on the victims’ computers.
BBB advice: The IRS doesn’t e-mail people about their taxes. The agency typically contacts taxpayers by mail. Tip-offs that an e-mail is fraudulent may include spelling or grammatical mistakes. BBB advises consumers not to open any attachments or click on links in the e-mails.

If you decide to hire a tax preparer, BBB advises:

•Ask for referrals - from friends, but also check the preparer with BBB before you hire anyone at http://www.ct.bbb.org/ or by calling 203-269-2700.
•Check credentials - Is the preparer a certified public accountant (CPA), a tax lawyer or an enrolled agent? Will the preparer sign your return and provide you with a copy? Does the preparer belong to a professional organization that requires members to adhere to a code of ethics?
•Be wary of promises - Until the preparer knows your situation, there is no way to know whether you’ll get a refund or how big it will be.
•Check accessibility – If you need to contact your preparer after tax season is over, will he or she be available?
•Read the contract - Know what the service will cost, what it covers and whether the cost changes if you have a complicated return. Will the preparer represent you in case of an audit?
•Check your return - Before you sign the return, read it over to check for mistakes. Ask the preparer to explain anything you don’t understand.
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Founded in 1928, Connecticut BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. For more advice on finding companies and businesses, start your search with trust at www.bbb.org.