As I have mentioned before, the IRS offers taxpayers with an income of less than $50,000 (increasing to $52,000 for 2007) the option to file their taxes online for free.

The tax services offered through Free File are provided by third party tax preparers such as H&R Block. These tax preparers have offered refund anticipation loans along with the tax filing but the IRS says it will prohibit those loans in the future.

Refund Anticipation Loans, or RALs, offer taxpayers a way to get their refund money faster but there are high interest charges and fees that are deducted from the refund, thus lowering the final refund the taxpayer receives. The attraction of getting that refund in a few days has cost low-income taxpayers millions of dollars in fees and the IRS wants to put an end to it.

The IRS says it is going to ban the marketing of refund anticipation loans to taxpayers who use the “Free File” online filing system.