H&R Block, the number one U.S. tax preparer, has been denied access to refund anticipation loans (RALs) from HSBC by the Office of the Comptroller of the Currency. This will result in the loss of credit for millions of taxpayers, said H&R Block CEO Alan Bennett in a firm release.
Refund anticipation loans or RALs last from seven to 14 days until taxpayers receive their refunds from the IRS. They are key tools for H&R Block to attract early customers.
Bennett said taxpayers will now be forced to use higher-priced alternatives. “While we are very disappointed by this decision, we have been preparing for the loss of RALs, so we have several other financial products available and under development for this tax season,” said Bennett.
H&R Block reported $146.2 million in revenue from loan participation fees and related revenue with about 40% of its tax preparation clients purchasing a settlement product during the fiscal year.
The impact of the ruling has been a massive dive in H&R Block’s stock, down 7.25% today. The company has had an awful 2010, and is down 47.88% year to date.
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