Tax prep chains H&R Block and Jackson Hewitt said they are not concerned by the Internal Revenue Service's proposals to restrict the marketing of refund anticipation loans and require consent before tax preparers can share taxpayer information with third parties.
Block plans to work with the IRS on the proposal. "We look forward to working with the IRS on continuing to develop best practices for refund anticipation loans, just as we did over the past two years on the privacy rules announced today, which reflect many of H&R Block's existing guidelines," said the company in a statement.
The IRS said in its proposal that it was concerned that RALs give tax preparers a financial incentive to take aggressive tax positions in order to inflate refund claims, as well as RAL fees. Block, however, disputed that contention.
"H&R Block's tax professionals are not compensated on the sale of ancillary products, so there is no incentive for them other than serving taxpayers' best interests," said Block. "In addition, RALs are currently regulated by 10 federal laws and IRS rules. The typical RAL at H&R Block costs about 2 percent of the principal, or less than the cost of a credit card advance, bank overdraft, or in many cases, using an ATM."
Jackson Hewitt expressed doubts that the proposal would lead to the elimination of refund anticipation loans. The tax prep giant noted that the IRS said it was in the very early stages of determining whether changing the method for delivering RALs would increase tax compliance.
Jackson Hewitt also said it would go along with the IRS's plans to require taxpayer consent before tax preparers can share taxpayer information with third parties. "Jackson Hewitt firmly believes in the taxpayer's right to control their tax return information through a written consent process," said Jackson Hewitt CEO Michael Yerington in a statement.
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