Shares of Jackson-Hewitt stock continued to plummet in February as word of their problems with their RAL lender continued to make news. The stock opened at $2.16 today, well below the $4.50 mark it had dropped to after its December announcement that it would not be able to cover all of its RALs for the 2010 tax season.
Jackson-Hewitt previously reported that a unit of Pacific Capital Bancorp has only committed to cover about 50% of its anticipated loans for the RAL and assisted refund programs. Reports indicate that the bank was not able to get approval to offer more loans due to capital concerns.
Despite efforts to find an alternative lender, Jackson-Hewitt reported in late January that it “does not expect to have a contractual commitment covering more than approximately 50% of its RAL program for the 2010 tax season as compared to its RAL program for the prior tax season.”
Bad news for Jackson-Hewitt but perhaps good news for taxpayers. You’ll recall that I am not a fan of RALs since the fees and rates are often undisclosed and excessive and the taxpayers are purposefully misled about their alternatives. When considering a RAL or assisted refund, here are a few things to remember:
- The IRS does not charge a fee for e-filing.
- The IRS does not charge a fee for direct deposit.
- Most reputable software programs, like TurboTax and CompleteTax, offer a free or low-cost e-file option.
- If you do not have the means to pay a professional, free help is available.
- A good tax professional will answer your questions about fees and refunds upfront.
- Fees for tax preparation and RALs should be separately stated. If you do not receive a fee schedule, ask.
- In most cases, the difference between an “immediate” refund and receiving your refund in 1-2 days is significant. Compare the costs before you make your decision.
- The IRS is not responsible for the terms of your RAL, so read the fine print in the contract.
- With e-filing and direct deposit, most taxpayers will receive their refund in two weeks or less.
This is an example of crony-capitalism. However one feels about RALs, canceling RALs from one Bank among the many who do RALs days before the start of the tax session is grossly unfair. Make no mistake, the problem was not due to ‘capital concerns’, it was an arbitrary last minute decision.
Did the fact that H&R Block made heavy contributions to ACORN, and that their former CEO (and ACORN convention keynote speaker) Mark Ernst is now a senior official in the IRS have anything to do with this capricious last minute decision? It’s hard to say. But this sure smells.
The IRS does not charge for efile BUT my tax software company does – Thomson Reuters … I must pass an efile charge to clients
If price was an issue, RAL’s would not exist. There are a large number of taxpayers who either do not have checking accounts or do not wish to furnish account routing information to the IRS. Many of these people are collecting “Earned Income Credits” and this is “found money,” over and above any paid in tax which is being refunded, which they are willing to pay to get it fast.