Tax Refund Anticipation Loans

The Treasury Department has recently ruled that H&R Block, the Kansas City based tax preparation giant, can no longer use HSBC Bank to make Tax Refund Anticipation Loans. The feds are quiet about the reasons. The action is a blow to Block. Here are a few clips from a KC Star article titled H&R Block’s refund loans cut off:
Block collects the cost of the loan and its tax preparation fee out of the refund, another popular feature of the loans, which are mostly used by lower-income filers who want their refunds as soon as possible.

Block is not expected to find another lender soon, certainly not in time for customers who seek the refund loans starting next month.

Rival tax services, however, will still be able to offer the loans through their banking partners, putting Block at a competitive disadvantage.
I have a mixed reaction to the ruling. Firstly, I think these types of loans prey on people who are either in crisis or are simply ignorant of the way that IRS returns work - refunds are usually delivered within a month.. sometimes in a few weeks. Secondly, I feel bad for Block because their competition is still able to offer these types of loans.

I have never acquired one of these loans but know of people who have. How about you?


  1. It's all about picking winners and losers

  2. Haven't had to do that type of loan. Seems strange that Block has been blocked and not the competition.

  3. Bob, I used to work for a small scale competitor of H&R block. I left in Fall of 2009, after our first season without HSBC who had basically dropped anyone providing tax returns loans - other than H&R Block. They had quite a few legal challenges in the way they had organizaed fees, and as the largest supplier of tax return loans, they were heavily pressed by the government. I wonder if they dropped the tax return loans altogether? I have to say I was impressed with the changes many of the lenders made in 2009 (including HSBC) with much lower fees and disclosures.

    BUT, it makes no sense to do it for most people. You can get your return in less than 10 days for free. Unfortunately, what I saw was the bank's fees go down and the preparer's fees go up. No change for the consumer. There's a lot of changes in the air for these preparers. I hope H&R Block gets in the game, they have the best prepared agents out of any of the chain preparers.

  4. Good feedback Missy! Thanks for filling in the blanks. I think that folks who get these loans are either desperate and unaware of the 10 day return period.

  5. Bob, one of the best changes was that laws now require the preparers to disclose to the client that they can get the return for free in 10 days. However, I could tell when I presented it in my training that some preparers were anxious to keep that information to themselves. Why? No telling - they made no extra money from it.

  6. Missy, now that is disclosure we can all agree on! :)


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