Republic Bancorp is considering legal action against Jackson Hewitt Tax Services. Republic has demanded mediation and arbitration after Jackson Hewitt terminated a contract under which Republic Bank provided refund transfer and direct deposit products via its tax preparation retail stores.
Jackson Hewitt was the second chain to drop Republic. Late in August, JTH Holding, parent of Liberty Tax Service, also terminated its contract with Republic. However, Republic said it was working with JTH to reach an agreement and did not threaten legal action in its SEC filing last month.
It is believed that Liberty's move would pave the way for a new kind of refund loan program in conjunction with Meta Bank. Both JTH and Jackson Hewitt said the reason for the cancellation was that Republic could not meet the terms of the contract, which required to provide refund loans to their customers.
Republic's latest SEC filing reiterates its position that no event has occurred that justifies Jackson Hewitt's or JTH's action. Republic was the last bank to provide Refund Anticipation Loans after federal regulators drove it from that market at the end of the 2012 tax season.
The bank holding company said revenue from Jackson Hewitt represented about 40 percent of the revenue of its Republic Processing Group for the first halves ended June 30 in 2012 and 2011. "Termination of this contract will have a material adverse impact to the Company's results of operations in 2013 and beyond," Republic stated in its SEC filing this week. The bank said that Liberty's business represented 19 percent of the revenue for the RPG segment for the six months ended June 30 and 20 percent for the same period in 2011.