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H&R Block ends tax refund loan program

America's biggest tax preparation firm is out of the tax refund loan business, but it wasn't by choice.

H&R Block will no longer offer refund anticipation loans, usually referred to as RALs. The move came after HSBC Holdings PLC, the bank Block used in connection with the controversial financial products, said it would stop underwriting the loans.

Actually, HSBC was told to quit issuing RALs by its banking supervisory agency, the Office of the Comptroller of the Currency.

CHICAGO, IL - DECEMBER 28: A sign marks the location of an H&R Block office on December 28, 2010 in Chicago, Illinois. The banking partner of H&R Block Inc. has been ordered to stop making refund anticipation loans used by millions of Block s customers. Some analysts believe the move could cost the tax preparer as much as seven percent of its business this tax season. (Photo by Scott Olson/Getty Images)

While the immediate cessation of refund loans came as surprise, especially with the start of the 2011 tax filing season just days away, HSBC had been easing its way out of the refund loan market for years. Block was the bank's only RAL client.

Other options: H&R Block said it would continue to offer taxpayers refund anticipation checks, or RACs, though that program is expected to be scaled back.

Unlike a RAL, a RAC doesn't require out-of-pocket costs be paid by a taxpayer. Rather, a RAC is based on a taxpayer's actual tax refund, which is loaded onto a payment card after the IRS processes the taxpayer's return.

Alan Bennett, H&R Block's president and CEO, said in a statement that in addition to its RAC program, the tax prep firm has "several other financial products available and under development for this tax season."

Still, you can be sure that Block's competitors will be ramping up their marketing efforts to capture the Kansas City, Mo.-based tax prep firm's former RAL customers.

If, however, you can wait just a bit longer for your tax refund, there are some viable alternatives to these costly short-term loans. I discuss some of these other options, and other Block/HSBC issues, in Tax refund loans face another hurdle for Bankrate Taxes Blog.

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Robert Jenner

People who think they've been victimized by H&R Block's Refund Anticipation Loans should check out my blog by clicking on my name.

Concerned About My Tax Return

Just because you get a RAL doesn't mean all clients qualify for earned income credit. Even if the majority of people do receive EIC, so what! What makes it your business? Why would it matter if they get the money in a few days or a few weeks? It's that persons money and how soon they get it and what they pay is none of your business. If you were owed money you would want it ASAP so don't worry about the world until the situation affects you


There are no reasons that a taxpayer needs to waste hundreds of $ on a RAL. Most people who use a RAL do so because they have a large Earned Income Credit refund, sometimes these can amount many thousands of $. If they went to an IRS office they will help them fill out a form where they will have this money added to their paycheck weekly or however they get their pay and not have to wait a year to get it.


I can see why refund anticipation loans are so popular, but it isn't just a tax time thing. My wife manages a call center and is often approached by employees who tell her if she can't give them a pay advance they will not come in the following day because they can not afford enough gas for the commute to work. She is confronted with requests and even demands every week. People who have worked for her specifically use tax preparers that offer immediate cash. These people need help not just with managing money, but many of the events that are going on in their lives.

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