Jackson Hewitt Tax Service warned in a regulatory filing that it only has enough funding to cover 50 percent of the refund anticipation loans it anticipates making this tax season.
The Parsippany, N.J.-based tax prep chain has been facing challenges ever since Dec. 24, when it revealed that its main RAL partner, Santa Barbara Bank & Trust, would not be able to originate RALs this tax season. SBBT had been expected to provide 75 percent of Jackson Hewitts business in refund anticipation loans and anticipated refunds, which provide clients with access to their refunds in eight to 15 days.
SBBTs parent, Pacific Capital Bancorp., was told by banking regulators at the Office of the Comptroller of the Currency that it needed to have stronger capital ratios in place to be able to originate RALs, and it agreed to sell the division to a private equity firm (see Jackson Hewitt in RAL Trouble from Bank Partner). Earlier this month, Jackson Hewitt announced that it had signed an agreement with Republic Bank & Trust to fund 45 percent of its refund anticipation loans and anticipated refunds for the next three years (see Jackson Hewitt Strikes RAL Deal with Republic).
On Wednesday, Jackson Hewitt said in a regulatory filing that it has signed a new deal with Santa Barbara Tax Products Group, the name of the new business operating Santa Barbara Bank & Trusts tax division, and with savings bank MetaBank, to provide 50 percent of the funding for its RALs and anticipated refunds for the current tax season. The anticipated refunds products will be covered 100 percent, when also taking into account the agreement with Republic Bank. However, the agreement will end up covering only about 50 percent of Jackson Hewitts RAL program, and Jackson Hewitt said it could not provide any guarantee it would be able to fully fund the RAL program this season.
No assurances can be given regarding the outcome of any efforts to obtain additional funding to provide for a sufficient source of RALs for the 2010 tax season or even if such funding is obtained, that a RAL program would be successfully implemented, said the company.
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