The bank that Jackson Hewitt Tax Service uses to process and administer its refund anticipation loans will not be in a position to originate RALs for the 2010 tax season, according to the company.
The No. 2 tax preparation chain behind H&R Block said in a regulatory filing Dec. 24 that Santa Barbara Bank & Trust, a division of Pacific Capital Bank, had made the determination about the RAL business based upon a directive the bank received from its regulator. Jackson Hewitt had expected SBBT to provide approximately 75 percent of its overall program for financial products for the 2010 tax season, including both RALs and assisted refunds. SBBT has also informed the tax prep chain that it has signed a non-binding letter of intent to sell its RAL and assisted refund business.
Jackson Hewitt is working with SBBT to prevent any interruption in providing RALs and anticipated refunds in the upcoming tax season, while also seeking alternative arrangements for financial products. However, the company could provide no assurances on its efforts to find alternative sources or on SBBTs success in selling its business. If no alternative sources are obtained or if such sale is not consummated, it would have a material adverse effect on our business, financial condition and results of operations, said the company.
Shares of Jackson Hewitt fell 23 percent Thursday after the filing with the SEC, and were down about 2.5 percent in mid-afternoon trading Monday.
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