By John Lyon
Arkansas News Bureau

LITTLE ROCK — With the arrival of tax season, a state lawmaker is urging Arkansans not to accept offers of cash “advances” on their tax refunds.

Rep. Darrin Williams, D-Little Rock, sponsored legislation last year to place restrictions on businesses that offer refund anticipation loans. Act 1402 of 2009 requires the businesses to disclose to customers how much they will have to pay for short terms loans against their expected refunds.

“You’re going to be hit with a substantial interest rate, often a triple-digit interest rate,” Williams said Tuesday. “Also, you may be charged fees that you don’t have to be charged.”

The IRS’ Volunteer Income Tax Assistance Program offers free tax help for low-to-moderate-income taxpayers at locations across the state.

A study by Arkansas Advocates for Children and Families found the loans appeal most to the poor, and four of the top five Arkansas counties where such loans are made are in the Delta. Phillips County tops the list, with 42 percent of tax filers getting the loans in 2006.

Statewide, 22 percent of tax filers in 2006 used instant loans for their refunds at a cost of nearly $100 million.

“You can get your taxes done their for free by a well-trained volunteer, get them filed electronically, have that deposited into your bank account and get that money back in 8-15 days,” Williams said. “If you don’t have a bank account, you can get it in about three weeks.”

Williams said his advice is, “Don’t get it fast, get all of it.”

More information is available on the IRS’ Web site or by calling 1-800-829-1040.

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The Associated Press contributed to this report