Earlier this summer the IRS announced the removal of the debt indicator, translating to the lending institutions that fund Refund Anticipation Loans no longer know with reasonable confidence that their loans will get paid back. This has forced the remaining banks in the industry to change their programs considerably, and have instigated other banks to pull out of the tax preparation industry entirely.
Current available products have been announced from 2 participating banks Republic Bank and River City Bank. Their products are limited in amount this year to $1,500 and $750, respectively. This is a dramatic change in comparison to prior season Refund Anticipation Loans being issued up to $10,000. The Tax Franchises operating with Republic Bank this season are Liberty Tax and 50% of the Jackson Hewitt Franchises. These offices will be able to offer the $1,500 loan products through Republic Bank. A few smaller, non franchised offices will be using River City to offer a $750 refund loan product. Other smaller local lenders are being utilized to fill the void left when Chase, HSBC, and Santa Barbra pulled back from the RAL business.
The Current Suit between H&R Block and their loan provider, HSBC, has yet to be resolved leaving the countries largest tax franchise with only a preseason personal loan product of $1,000 through their own prepaid debit card, called the Emerald Card, and also a 7-14 day Refund Transfer option for their clients. The significance of HSBC wanting to pull early from their multiple year contract with this retail giant can only suggest that the profits in the RAL market no longer justify the associated risks of lending without the availability of the debt indicator from the IRS.
Many independent tax offices and tax preparers look to the support of a service bureau to help them navigate through the tax preparation and bank product industry. Service Bureaus provide tax businesses with discounted tax software, IRS registration, Preparer Training, PC support, and Marketing. If you still need loan and refund check options, this option could be the option for your tax office.