Jackson Hewitt has signed an amended agreement with Republic Bank & Trust to act as a partner for refund anticipation loans after the tax prep chains previous partner, Santa Barbara Bank & Trust, was forced to stop providing RALs.
The agreement allows Republic to act as the financial product provider for approximately 45 percent of Jackson Hewitts overall program for financial products, including RALs and assisted refunds, for the next three tax seasons. The fee structure will remain consistent for the 2010, 2011 and 2012 tax seasons.
SBBTs sudden departure from the RAL business had threatened Jackson Hewitts revenue next season, as the tax chain had expected SBBT to provide approximately 75 percent of its overall program for financial products for the 2010 tax season (see Jackson Hewitt in RAL Trouble from Bank Partner). The agreement with Republic was announced in an SEC regulatory filing on Dec. 30.
The new agreement is the second time that Jackson Hewitt has amended an existing agreement with Republic for RALs and assisted refunds. Under the previous agreement, Republic had provided Jackson Hewitt with 25 percent of its financial products business.
Liberty Tax Service, which also did business with SBBT, also announced on Dec. 30 that it had signed a three-year deal with Republic to continue its RAL business. Under the agreement, Republic will provide tax refund products for over 90 percent of Liberty's locations.
SBBT was forced to stop providing RALs after its parent company, Pacific Capital Bancorp, was ordered by the Office of the Comptroller of the Currency to sell its E-Filing Financial Services Division to meet bank capital requirements.
SBBT has provided RALs and refund transfers for many other tax prep firms around the country, and is one of the leading RAL providers, along with Republic, Chase, and River City Bank. The tax division reportedly will be acquired by a private equity firm and will be renamed Santa Barbara Tax Products Group.
The sale process continues to progress and we expect to close the sale shortly, said RAL/RT program director Rich Turner, in a statement on the companys Web site on Dec. 30. He added that Santa Barbara is making arrangements with a new bank to provide RALs and refund transfers and other tax related bank products this tax season. Under the terms of this arrangement, the company will continue to be the processor and handle all customer service issues. Santa Barbara does not anticipate any interruption in service, and despite the name change the companys customers can continue to use the Santa Barbara Bank & Trust check stock that was recently shipped to them.