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Electronic filing is on the rise. Over 13 million individual returns were filed electronically in 1993--an increase of 30% over 1992 (see "Why Electronic Tax Filing Is Hot," by James F. Petersen and Keith A. Washington, JofA, Oct. 93, page 68).
What accounts for the growth? The waiting period for refunds often shrinks from the usual 12 weeks to 3 weeks when returns are filed electronically. Also, taxpayers can borrow up to the amount of their refund (minus filing and loan fees) from many financial institutions if the Internal Revenue Service agrees to deposit the refund directly with the lender. Such loans are known as refund anticipation loans (RALs).
Problems arise, however, when the IRS discovers a taxpayer with a RAL owes money to the federal government (for example, because of tax liabilities, Social Security overpayments and delinquent child support and...