Washington, D.C. -- Senator Daniel K. Akaka (D-HI) today reiterated that the Internal Revenue Service has failed low-income taxpayers with its service of the Debt Indicator (DI) following a report by the National Consumer Law Center (NCLC). The new report finds that the DI nearly doubled the number of loans made by the refund anticipation loan (RAL) while increasing RAL profit margins.

"The IRS should not be facilitating these predatory loans that allow tax preparers to reap outrageous profits by exploiting working families. The IRS must stop providing the Debt Indicator service that helps unscrupulous prepares to exploit low-income taxpayers," stated Senator Akaka. "A provision in my bill, S.324, the Taxpayer Abuse Prevention Act, would terminate the Debt Indicator service."

Tax preparers and lenders use the DI as a form of a credit check, to determine whether they should issue a RAL. The NCLC report raises privacy issues concerning the DI, noting that it may skirt tough IRS privacy rules. The report also discusses the impact of the DI on tax fraud, noting that the IRS terminated the program in 1994 due to fraud involving RALs.

The NCLC report on the DI is available at www.consumerlaw.org. Senator Akaka introduced S.324 in February and it was referred to the Senate Committee on Finance. Senator Akaka's statements regarding Taxpayer Abuse Prevention are available under the Newsroom section of this Web site.