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.
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.
- When real life mees tax refund loans
- IRS debt indicator decision could doom
tax refund anticipation loans
- RAL realities
- Refund loans and the once-a-year 'rich'
- Anti-RAL efforts continue
- Refund anticipation loans under the IRS gun again
- Refund loans on the ropes?
Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!