HRB loses HSBC for RAL's

[BulldogTom]

H&R Block says HSBC terminates tax-refund loan funding pact

December 27, 2010 10:30 AM ET

(Reuters) - H&R Block Inc has said HSBC Holdings Plc will not provide funding for the no.1 U.S. tax preparer's refund-anticipation loans, or RALs, after U.S. regulators ordered the lender to terminate the contract.

"The OCC's (Office of the Comptroller of the Currency) 11th hour timing will make it difficult for us to put alternative products in place at all of our locations in time for the early part of the 2011 tax season," H&R Block said in a statement late on Friday.

H&R Block will continue to offer its traditional refund-anticipation checks (RACs) that do not require any out-of-pocket costs by taxpayers, it said.

In October, H&R Block filed a suit against HSBC USA, a unit of HSBC, alleging breach of contract and saying that the bank had failed to conduct preparatory actions which would have allowed it to offer RALs.

RALs, which usually last 7-14 days until taxpayers receive their refunds from the U.S. Internal Revenue Service (IRS), are highly profitable for tax preparers.

[Terry D EA]

Thanks for posting this Tom. I personally am happy to see the RAL's die. I just hope the JH and Liberty face the same dilemma. I am not proud to admit that I did at one time offer RAL's but took every step possible to talk clients out of them. I do have alot of loyal clients who no longer use them. The statement that RAL's are highly profitable to preparers misses it a bit. It is the bank that wins more than the preparer and it depends on how the preparer fees for using them are setup. Either way, I am glad to see them go. I bet alot of people won't even realize that this movement is a huge savings to them for a little bit of inconvenience.

[BulldogTom]

I don't like them either and will be glad if they die. Last year was the first year I went without them. I just felt like I had to have that product to compete with the national chains. Lost a few clients because of it, but nothing huge. Not going to have them again this year. I think in a couple of years they won't even exist anymore. Lets hope.

Tom

Lodi, CA

[Pacun]

I don't like them either and will be glad if they die. Last year was the first year I went without them. I just felt like I had to have that product to compete with the national chains. Lost a few clients because of it, but nothing huge. Not going to have them again this year. I think in a couple of years they won't even exist anymore. Lets hope.

Tom

Lodi, CA

... Lost a few clients because of it, but nothing huge. Not going to have them again this year. I think in a couple of years they won't even exist anymore. Lets hope.

Tom

Lodi, CA

For a minute, I thought you were referring to/about your clients.

I don't use RALs and I hate when people have hold their W-2s until April and they inquire about RALs. I am glad H&R Block is not goint to use RALs this year and that will make people think about the amount of money the banks make on those loans.

[ILLMAS]

RAL's are a rip-off in my book, kind of glad H&R won't be able to provide it to thier clients. E-file 100% all the way and it's free, I rather wait two weeks for direct deposit and get 100% of my refund then, getting less because of the fees and interest they charge.

[BulldogTom]

I did not notice it at first, but did you see the timing of HRB's announcement? It was late in the day on Christmas Eve. Talk about trying to keep this under the radar. With the blizzard back east dominating the news, this has not gotten a lot of attention. I wonder how this is going to play out for HRB?

Tom

Lodi, CA

[ILLMAS]

Local news said H&R stand to lose millions because of this, therefore lowering their profits by 10%. 10% of millions is nothing for them, me losing 10% is significant :(

[Pacun]

I always wondered what HSBC meant and it is interesting what I got from Wikipedia: The Hongkong and Shanghai Banking Corporation

HSBC Holdings plc is a global financial services company headquartered in London, United Kingdom.[3] As of 2010, it is the world's sixth-largest banking and financial services group and the world's eighth-largest company according to a composite measure by Forbes magazine.[7][8] It has around 8,000 offices in 87 countries and territories across Africa, Asia, Europe, North America and South America and around 100 million customers.[4][9] As of 30 June 2010 it had total assets of $2.418 trillion, of which roughly half were in Europe, a quarter in the Americas and a quarter in Asia.[6]

HSBC Holdings plc was founded in London in 1991 by The Hongkong and Shanghai Banking Corporation to act as a new group holding company and to enable the acquisition of UK-based Midland Bank.[1] The origins of the bank lie in Hong Kong and Shanghai, where branches were first opened in 1865.[2]

[Eli]

Last year was the first year I went without them.

Tom

Lodi, CA

I also did not offer them last year. I lost a few clients, but made up for those with referrals from other clients. I'm not sure that I will even offer RAC's this year. I'm thinking I will send out my annual letter & just advise the clients that the returns will need to be paid up front.

Eli

[BulldogTom]

Good to see you on the board again Eli. Long time you been hiding.

I am sitting on the fence on fee collect this year. I have added CC and Debit Card payment options this year. Not sure if that is enough. Still sorting through this all.

Have a good season my friend.

Tom

Lodi, Ca

[Eli]

Good to see you on the board again Eli. Long time you been hiding.

I am sitting on the fence on fee collect this year. I have added CC and Debit Card payment options this year. Not sure if that is enough. Still sorting through this all.

Have a good season my friend.

Tom

Lodi, Ca

It's been a trying year, Tom. My oldest brother was ill during the summer & just passed away last week on Monday. We buried him this Monday & the last of my family left this morning.

Now I have to hurry & get my printed supplies done, order toner & get my letters printed, folded & stuffed. I just hope this year will be a better year :-)

I hope you & your family are doing well.

Have you checked into Fee Collect at all? Any cons or pros?

Thanks!

Eli

[BulldogTom]

I used it last year. Worked fine once the SBBT debacle was cleared up. What a nightmare. I was signed up for SBBT for Ral's when they announced they were not going to have them. So I tried to switch to fee collect and it was a real headache getting it done. The bank application was in the system and kept screwing with the approval for fee collect. But like I said, once that went away, fee collect was very smooth. Reasonably priced. worked for some of my clients. I am thinking I will keep it again, but need to talk to the wife to make sure.

So sorry to hear about your loss.

Tom

Lodi, CA

[Eli]

Thanks, Tom! Do they just do a direct deposit to the client's account?

[Lynn EA USTCP in Louisiana]

Thanks, Tom! Do they just do a direct deposit to the client's account?

Eli, from what I know Fee Collect requires the client have a bank account, to which direct deposit is made.

One client who really wanted to take advantage of Fee Collect didn't have a checking account, so we couldn't go that route. We went with a mailed refund check. He swore he'd pay me after his refund arrived; I trusted him. He was as good as his word - paid me faithfully within 2 days of receiving his refund. I wouldn't have done that for every client, though. For this person, this year's Wells Fargo credit card offering might be an option.

Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

[BulldogTom]

Lynn is correct. They have to have a checking account.

There was some talk that next year (2011 returns filed in 2012) the IRS is going to allow the Paid Preparer to take their fees from the refund without going through a bank. I haven't seen anything on this in a while. It was first mentioned when the news that they IRS would no longer give the banks the debt indicator.

I would really like to see that come about. That may be part of the reason for the PTIN registration requirements.

Tom

Lodi,CA

[chuck]

I feel fortunate. 427 returns filed last year. Almost all refunds were direct deposit type. 426 people paid me with 21 days of the completion of their return. Evidently, I was supposed to do one for free. No RALS RACS whatever for me. Maybe I'm just lucky, but my Michigan clients pay me and I do not have to worry.

[Margaret CPA in OH]

Eli, as others have mentioned, welcome back but with my condolences for your loss.

[Lion EA]

I'm sorry for you loss, Eli.

[Eli]

Lynn is correct. They have to have a checking account.

There was some talk that next year (2011 returns filed in 2012) the IRS is going to allow the Paid Preparer to take their fees from the refund without going through a bank. I haven't seen anything on this in a while. It was first mentioned when the news that they IRS would no longer give the banks the debt indicator.

I would really like to see that come about. That may be part of the reason for the PTIN registration requirements.

Tom

Lodi,CA

Thanks for the info.

Eli

[Eli]

I'm sorry for you loss, Eli.

Thank you both :-)

Eli