We’ve received so many inquiries about the holiday loans,
and paystub loans that have been offered in previous years
around this time of the year. I’d like to share with you
what I know at this point.
Here’s what happening:
#1 – The Banks stopped offering the paystub advances/holiday
loans/no-W-2 refunds.
There are four primary banks that contract with tax offices
to offer fast refunds and to have tax prep fees taken out
the refund. Two of these banks, Household (HSBC), and Santa
Barbara Bank & Trust (SBBT), have announced that they will
no longer offer the paystub advance loans (holiday loans, no
W-2 loans). This means that your tax preparation companies
(i.e. H&R Block, Jackson Hewitt, Liberty Tax; also CPA
offices, TaxRoute, and others), will not be able to offer
any type of paystub loan, including holiday loans,
and no-W-2-needed loans. In the past year there has
been significant risk (and many incidents of fraud) that
have resulted from the paystub loans, AND the refund
anticipated loans (RAL’s or fast refunds). The remaining
banks have not yet issued a statement as to whether or not
they will offer paystub loans.
#2 - New Jersey state passed legislation that limits the
fees the banks can charge for refund anticipated loans (RAL’s).
This includes any fast refunds, with or without a W-2.
One of the major banks, SBBT, has announced that they will
no longer offer fast refunds in the state of New Jersey as
they cannot do so and make a profit.
All the tax companies are trying to decide how they want to
respond and what they want to do with their business.
These announcement were made recently and most tax
preparers, and tax preparation companies are eagerly
awaiting any updated information on this situation. |
