H&R Block: How Does It Get Around Pub 1345, Page 44 Rules?

"Elle" wrote in news:xjaKj.2573$xd5.2073 @newsfe17.phx:

It is a question of English. "HSBC tries to make proceeds of an instant RAL available ..." That means that a RAL is NOT a refund, but a "Refund Anticipation Loan". Note: "proceeds", "anticipation" and "loan". Also note the words "HSBC Bank Application for a Refund Anticipation Loan"

And they also go on to say "...make proceeds of an instant RAL available on the day of application.".

A "provided" application? Certainly the taxpayer must have requested it, they don't hand it out to everyone who walks through the door.

How do you know the advice required by the IRS wasn't provided prior to receiving the requested application? As I recall, there is a client service agreement that everyone signs, which most likely addresses this issue. Do you really think a big ol' target like H&R is going to get tripped up over something like this? Even when now-disgraced Elliot Spitzer did his worst a few years back, most of his charges against Block were thrown out in court.

-Mark Bole

Even if it was, by my reading 4 (c) and (d) "undo" any such advice.

Yes. A quick overview from Wiki, under "RAL":

There does not appear to be any IRS regulation prohibiting the "undoing" in your eyes of advice required to be given.

The brackets had nothing to do with it. He was trying to make the distinction between a refund on the one hand, and a loan which is clearly called a loan, on the other. Ditto for GSalisbury.

To answer your original question, why not visit the IRS web site and search for "compliance enforcement". This issue does not appear to be on their radar, at least not publicly. Do you suppose all those other attorneys general you referred to might have some mixed motives for going after Block, just like Spitzer did when he was one?

Anyway, here is what the IRS says in Form 9325:

"A refund anticipation loan is a loan made to you based on the refund you expect to receive. This loan is a contract between you and a lender. The IRS is not involved in this contract, can't grant or deny the loan, and can't answer any questions about it. If you have any questions about a refund anticipation loan, contact your electronic filer or the lender."

I would not recommend RAL's to anyone, nor would I recommend junk food, reckless driving, tugging on Superman's cape, pulling the mask off that old Lone Ranger [a.k.a. "loan arranger", thanx Harlan!], and messing around with Jim. But there's no point in fretting if people do those things anyway.

-Mark Bole

"Elle" wrote in news:QhfKj.12576$yD6.2705 @newsfe08.phx:

Well, I started writing before I realized that, indeed. But when I read your original post, it seemed clear to me that H&RB were talking about a loan against the anticipated refund as collateral.

I once got burned by a Citibank offer of no interest for 6 months, and now even more heed the warning: If it sounds too good to be true, it probably is too good to be true." Why would H&RB "give" anyone money if the didn't earn some back?

I must be completely missing what you're driving at. Actually, I don't think I ever saw what the complaint was.

H&R Block does someone's taxes and a refund is calculated. They say "...IRS...takes as much as 12 days..." but hey (bastardizing your [] convention) [complete this loan application now and we can give you some money maybe today!]

I don't see where H&R Block says the IRS refund is any faster. They say THEY MAY be able to give them an amount faster.

I think that's distinctly different.

Of course the whole concept of RAL's is scam and a sucker bet. Geo.

Oh, I see your and their point now. I remain doubtful that this leger-de-main of wording that HR Block uses does not violate the IRS rule. Not to be stubborn; more that I have been reading about RALs (and one client's contract with HR Block) and my eyebrow went up at this statement in her Block paperwork.

It is on their radar. That's why the IRS has these rules. Google and/or see reports like

"With the advent of the earned income tax credit (EITC) and electronic filing, tax refunds have become big business. The EITC is a government benefit to low income workers, many of whom have children. Because approximately 56 percent of Refund Anticipation Loan (RAL) consumers also claim the EITC, there is a government interest in delivering this means -tested benefit to the beneficiary without intermediaries siphoning off fees. Moreover, because approximately ten percent of the population is unbanked,2 and financial literacy leads to asset building and provides a path out of poverty, the government has an interest in encouraging unbanked persons to enter the financial mainstream. Since tax refunds are often the taxpayer's largest lump receipt during the year,3 a major focus of "banking the unbanked" should center on taxpayers receiving refunds."

For all the reasons the many consumer sites on RALs list, I doubt any of the AGs have mixed motives.

When an impoverished, poorly educated parent of four comes to file income taxes on some $16,000 of income (so a simple return) and is charged $424 for prep, $30 for a "Refund Account" with HSBC, $26 as a finance charge, and 36% annual interest, without understanding that she can get her return done for free and with only a few more days wait worst case through efiling with VITA et al., there is a problem.

I will check out the IRS's compliance enforcement. Thank you.