PARSIPPANY, N.J. - Jackson Hewitt Tax Service was notified last week that regulators have forced Santa Barbara Bank & Trust out of its refund anticipation program. Santa Barbara had been expected to provide about 75 percent of funds for financial products during the upcoming tax season.
The information was released via a Jackson Hewitt filing with the SEC last week. Santa Barbara also informed Jackson Hewitt that it has signed a non-binding letter of intent to sell its RAL and Assisted Refund business. Santa Barbara is a subsidiary of Pacific Capital Bank Corp of Santa Monica, Calif., which issued a statement on December 24 that it had been informed on December 18 by the Office of the Comptroller of the Currency that the bank would not receive approval to provide RALs in 2010.
The tax service said it and the bank are working to prevent interruption of its financial product program for the 2010 tax season and that it is looking for alternative arrangements to provide financial products. Pacific's statement said the pending sale of its Tax Division is to a private equity firm which is working with other institutions to continue the RAL business with the intention of keeping the division intact.
Other tax services have not yet issued official statements, although Santa Barbara has been a major player. A spokesperson for Liberty Tax Services said that company has an alterantive in place and would issue a statement tomorrow.
