Washington, D.C. - Senator Daniel K. Akaka (D-Hawaii) today introduced, along with a bipartisan coalition of Senators, a bill to protect and prevent low-income taxpayers from marketers of so-called Refund Anticipation Loans (RALs), or "instant tax refunds."

The Taxpayer Protection and Assistance Act of 2005 will provide the Department of the Treasury with the authority to regulate individuals preparing federal income tax returns and other documents for submission to the Internal Revenue Service. This Act requires examinations, education, and oversight of paid preparers and urges citizens to utilize the services of an accredited or licensed tax preparer.

In addition, the Act will require RAL facilitators to register with the Department of the Treasury, and comply with minimum disclosure requirements intended to improve the understanding of consumers about the costs associated with RALs. The Act also requires that the Department of the Treasury conduct a public awareness campaign intended to improve the knowledge of consumers about the costs associated with RALs.

Senator Akaka stated, "This legislation is a good start towards improving the quality of tax preparation services, providing relevant and useful disclosures about the use of RALs, and expanding access to low- and moderate-income families to mainstream financial services."

The bill included a program authored by Senator Akaka that would authorize a grant program to link tax preparation services for working families with the opening of a bank or credit union account. Having a bank account allows individuals to take advantage of electronic filing, thus eliminating the excessive fees that check cashing services and refund anticipation loan providers assess. An account at a bank or credit union provides consumers alternatives to rapid refund loans, check cashing services, and lower cost remittances.

In addition, bank and credit union accounts provide access to products and services found at mainstream financial institutions, such as savings accounts and reasonably priced loans. Joining Senator Akaka in unveiling this measure were Senators Max Baucus (D-MT), Gordon Smith (R-OR), Charles Grassley (R-IA), and Mark Pryor (D-AR).