Republic Bank & Trust Co., one of the major sources of funds for refund anticipation loans, said this week it expects to increase prices on products from its Tax Refund Solutions segment and to revise RAL underwriting. It issued that statement after the Internal Revenue Service announced it would drop the debt indicator for the next filing season. The bank also said IRS plans for a mechanism that would enable taxpayers to pay fees for professional preparers from their return would compete with its Electronic Refund Checks.
Despite the likely price hike, Republic, which said RALs represented about 30 percent of its tax product volume during the filing season, does not anticipate any drop in consumer demand.
In providing the debt indicator, the IRS let preparers and lenders know if taxpayers had obligations such as unpaid child support or student loans which would be offset against any tax refund due. Most observers expect the move will generally raise loan fees, which had been declining over the past two years.
Concering the possible tool that could compete with electronic refund checks, also known as assisted refunds in other programs, that wouldn't come until the first quarter of 2012.
Republic provided funding for the loan program at Liberty Tax and half of Jackson Hewitt's program, among others, during the last tax season
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
