What the family might not be aware of is that a huge fee is being taken out of their refund for that service. I would never use such an expensive service again. By getting a RAL, a big chunk of my refund was taken away. The way the RALs work is that a tax preparer prepares the tax return, files it electronically with the IRS and within a few days advances the amount of the refund minus the fees to the filer. The tax preparer has an arrangement with a bank that actually provides the advance, which is technically a loan.
Many filers think they are getting a refund when in fact they are getting a very costly loan.
These charges vary based on the complexity of the return as well as the amount of the refund. The tax preparer also gets a kickback from the bank for every RAL it advances. She explained that the IRS does a quick computer scan of the application to see that the social security number and the name match, and to see whether the filer has federal judgements outstanding. The participating lender gets this information before advancing the loan to the family. Moreover, some banks will only advance half the anticipated refund to first-time RAL users, which means that they might not get the rest of their refund for a week or more.