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: It's (Barely) Legal

H&R Block taxpayer ripoff banned

By Glen Ashman

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Great news - HR Block won't be able to ripoff its customers anymore (too bad its competition still can):

H&R Block's refund loans hit regulatory hurdle

BANGALORE (Reuters) December 28, 2010 ? H&R Block Inc, the largest U.S. tax preparer, said it will not be able to help customers borrow money against their tax refunds in the coming months, as the bank that was supposed to provide the loans is under a regulatory directive not to. An inability to offer refund anticipation loans is a big blow to H&R Block, which relies on such loans to attract clients...Banking regulators at the Office of the Comptroller of Currency (OCC) told an HSBC Holdings unit not to offer refund anticipation loans to H&R Block customers...But some competitors still offer the loans. Jackson Hewitt Tax Service Inc, the second largest U.S. tax preparer, said earlier this month it could fund 80 percent of its refund anticipation loan program... Refund anticipation loans usually last one to two weeks, until taxpayers get their refunds from the U.S. Internal Revenue Service. They are popular among lower income taxpayers. But the effective annual percentage rate for such loans can range from about 50 percent to 500 percent, depending on the size of the loan...

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Earlier related story:

IRS Says It Won't Help HSBC, Banks Underwrite Tax Refund Loans

Aug. 5 (Bloomberg) -- The U.S. Internal Revenue Service said it will stop electronically underwriting tax refund loans made by banks including HSBC Holdings Plc and Republic Bancorp Inc. that lawmakers and consumer groups say carry unfairly high interest rates. The agency said it will withhold a digital indicator that tells banks when taxpayers qualify for refunds claimed on their tax forms and that a deposit is imminent. Tax preparation firms such as Jackson Hewitt Tax Service Inc., H&R Block Inc. and Liberty Tax Service advertise the loans as a way to get immediate cash. The IRS?s move is part of a larger initiative announced this year to regulate the tax preparation industry for the first time in order to stop unscrupulous and untrained preparers from scamming taxpayers and the government. The agency has been concerned that refund loans encourage fraud, and the announcement today would force banks to assume more risk when making the loans.

Full post as published by It's (Barely) Legal on December 28, 2010 (boomark / email).