Thursday, December 30, 2010

H&R Block Announced It Will Be Unable To Offer Customers Refund Anticipation Loans

H&R Block Inc., the giant tax preparation provider, announced on Dec. 24 that, at present, it will be unable to offer customers refund anticipation loans (RALs) due to a federal regulatory decision. (Dec. 24 Press Release - HSBC Terminates Agreement to Provide RALs at Direction of OCC) HSBC, the company's banking partner, which has had a long-term contract with H&R Block to provide all of its RALs, was ordered by the Office of the Comptroller of the Currency to stop making any form of the loans, H&R Block said. According to news reports, H&R Block and HSBC have been engaged in a legal dispute over attempts by the bank since August to disengage from its agreement to make such loans. The bank's motivation was reportedly linked to an IRS decision announced on August 5 that starting with the 2011 tax filing season the agency will no longer provide tax preparers and associated financial institutions with the “debt indicator,” which is used to facilitate RALs. HSBC no longer has the exclusive right to provide RALs to H&R Block customers and the tax preparer will now be able to enter into other partnerships for financial products, the firm said. “As a result of the OCC's decision, millions of taxpayers will be deprived of credit, or they will be forced to use higher-priced alternatives, without the slightest benefit to the solvency of HSBC or the banking system in general,” said Alan Bennett, H&R Block's president and CEO. “While we are very disappointed by this decision, we have been preparing for the loss of RALs, so we have several other financial products available and under development for this tax season.”

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