Rals-

[gman]

Anyone offering RALs this year and having trouble with banks??

[dkss]

What kind of trouble are you having? I am using republic bank again this year.

[MLINDER42]

Rals

I use River City no trouble as of yet.

[David1980]

If you've done RALs in the past the bank should still authorize you to do them unless you had a high loan loss percentage or were expected of fraud or something. If you hadn't done RALs before, they may not have approved you.

The real issue I think is going to be the number of RALs that taxpayers sign up for that get turned into RACs. With the poor economy people have more debt, more debt trouble. They'll start to miss child support payments, student loan payments, not have paid their tax bills, etc. So there will probably be a lot more risk at the taxpayer level for offering RALs, which I would expect will show up as more and more RALs getting turned over into that 8-15 day product.

Personally, I hate that part of the tax prep business and discourage them (yet offer them, gotta do what you gotta do.) It'll be nice when all returns are processed through the faster system with the IRS and the normal turnaround time for a non-loan refund is only a couple days. RALs will effectively die, as will their atrociously high fees.

[FEDUKE404]

RALs are a problem for Jackson-Hewitt

Jackson-Hewitt certainly is!!

Apparently their "pay stub loan" program has taken a serious hit for 2010.

J-H link

FE

[David1980]

Jackson-Hewitt certainly is!!

Apparently their "pay stub loan" program has taken a serious hit for 2010.

J-H link

FE

Based on part of the facts and making wild assumptions, yes.

However, if you actually look at what SBBT is saying as opposed to sensational news articles, there's effectively no change at all for JH.

http://www.sbbtral.com/

December 30, 2009

To all Transmitters and Tax Preparers,

As we indicated a few days ago, we have entered into an agreement to sell the tax processing division of Santa Barbara Bank & Trust. The sale process continues to progress and we expect to close the sale shortly. The new company will now operate under the name Santa Barbara Tax Products Group, LLC (SB). SB will continue to operate as an independent company under the same management team, in the same facility, with the same employees using the same hardware and processes. At the same time, SB is making arrangements with a new bank to provide the RALs and RTs and other tax related bank products this tax season. Under the terms of this arrangement, SB will continue to be the processor and handle all customer service issues. SB does not anticipate any interruption in service.

SB will continue to use the same Santa Barbara Bank & Trust check stock that was just shipped to you so do not throw out your check stock. If you previously registered with SBBT and your enrollment was approved, your registration is still active and no immediate action is required on your part, although we would expect the bank to require your consent to facilitating its delivery of tax products in place of SBBT. We will send you a new financial service agreement in the next week reflecting the new bank's role in the program. We will also provide your transmitters with revised bank documents within the next few days so transmitters can update their software with the name of the new bank and any document changes the new bank may require. You may not use any bank documents that have the name SBBT in them. Your use of such documentation will constitute grounds for your exclusion from the program. Please be patient and use the updated software to print documents that reflect the new bank.

Thank you for your patience and cooperation. We will continue to update our website as information becomes available. Please log in to track all updates which are under the 'Latest CISC Updates' link.

Rich Turner,
RAL/RT Program Director
Santa Barbara Tax Products Group, LLC

Edit: Note that Rich Turner's quote & the article linked are both talking about RALs and "assisted refunds" (8-15 day where tax prep fees withheld from product.) I noticed you said pay stub loan program. I didn't see any notes at all about them having or it involving a pay stub loan program in that link.

[FEDUKE404]

Facts & assumptions ???

Based on part of the facts and making wild assumptions, yes.

However, if you actually look at what SBBT is saying as opposed to sensational news articles, there's effectively no change at all for JH.

DANG, David1980! Did someone relieve themself in your cereal bowl or something??

I'm just the messenger, responding in part to the original post by gman, and I saw no indication of "wild assumptions" in the news article which I provided.

JTX did have some recent issues with their RAL provider, so I'm not quite sure where your phrase "sensational news" came from. The issue was even reported by the NYTimes in this link: http://www.nytimes.com/2009/12/25/bu...25jackson.html Another "sensational" report is this one from Reuters:

http://www.reuters.com/article/idUSSGE5BN09B20091224

Their "pay stub" loan program (and Block also followed) of recent years may no longer be in effect, so mea culpa on that one. Actually I don't spend very much of my time reading anything about Jackson-Hewitt in the first place. Apparently your own relationship with JTX is a bit more involved?

For my own 2¢ worth, I would not get within a mile of any RAL products, but for those accountants who choose to go that route they certainly have the option to do so. I understand it is a great way to garnish more income, but my own clients are quite content not to throw their money down that hole just for a speedy refund.

FE

[David1980]

News sites claiming JH is not going to be offering RAL's while SBBT is sitting there saying "SB does not anticipate any interruption in service" is the very definition of sensationalist news. Of course news organizations are involved, who creates sensationalist news stories? They sell papers. They need to push outrageous claims to move those papers/articles. I was simply pointing out, with a quote from the source rather than from a news article, that JH is probably not affected at all (other than signing new bank docs I guess.)

[JohnH]

I often wonder about the JH business model. I frequently see them open an office and then close it within a year or two. From conversations I've had with the owners when they would open an offfice near me, it would seem that the franchise owner was rarely present once the office is up & running. I meet them & introduce myself when the office opens, then never see them again while noticing that they've hired someone to actually run the office. If I'd ask about the owners, I'd often get a vague answer to the effect that "I think he's at the other office" or some similar response. The preparers I've met seemed knowledgeable enough with respect to tax matters, but usually young and/or and having little or no understanding of accounting or business matters. Is it typical for someone to buy the franchise rights for a given area, open a few offices & hire peparers, and then manage several locations from a distance?

My impressons are only based on a half-dozen interactions, so they may not be typical.

[ChEAr$]

As for the JH owners, I get the impression they for the most part absentee owners with no
real knowledge of the tax business. After all, JH is a franchise, and a franchisor provides
everything necessary to be a success! (grin

One contact I had once was with an out of town lawyer who called me to see if I wanted to sell out to him.

[JohnH]

After I posted that question, I went to their web site just to see how they promote their franchises. Sure enough, just as you said Harlan, they even promote the idea that you don't need to know anything about taxes to be a franchisee. (It's helpful, but not necessary - what's most important is that you have the franchise fee.)

[FEDUKE404]

Some background information

I often wonder about the JH business model. I frequently see them open an office and then close it within a year or two. ... Is it typical for someone to buy the franchise rights for a given area, open a few offices & hire preparers, and then manage several locations from a distance?

My impressons are only based on a half-dozen interactions, so they may not be typical.

This somewhat recent event should be of interest to you:

http://www.justice.gov/tax/txdv07215.htm

(The feds actually closed some JH offices in early April of that year - NOT good for business!! I think the Raleigh operations were actually owned by the Chicago crowd.)

FE

[JohnH]

Yes, that is interesting. My idea of opening a tax office wold be to choose a good location and then establish yourself there in order for clients to know where to return each year so you can build up your client base. But if your business model anticipates near-100% turnover, then I suppose focusing on return clientele doesn't matter so much. Just hook up the computers wherever you think you might snag the most traffic. If the numbers aren't sufficient or if the rent is cheaper somewhere else, move the office next season. That must be the mindset behind this "kiosk"-type business model. I also didn't know until I looked at their web site that they have some sort of partnering relatonship with Wal-Mart. I guess that's consistent with the mindest. Apparently it works for them since they keep doing it.

[David1980]

There's a certain profit to be had in staffing tax preparation offices with people who are willing to commit fraud. (Incidentally, staffing tax preparation offices with those who simply don't know better also works, which is why I suspect some of the national chains have such low standards to prepare taxes for them.)

If random Joe shops around for the best refund, he's going to get it at either the location that intentionally makes a fraudulent return, or accidentally makes a fraudulent return because they don't know better. Thus the incompetent & the lying are rewarded with business.

[WhiteOleander]

There's a certain profit to be had in staffing tax preparation offices with people who are willing to commit fraud. (Incidentally, staffing tax preparation offices with those who simply don't know better also works, which is why I suspect some of the national chains have such low standards to prepare taxes for them.)

If random Joe shops around for the best refund, he's going to get it at either the location that intentionally makes a fraudulent return, or accidentally makes a fraudulent return because they don't know better. Thus the incompetent & the lying are rewarded with business.

Hmmmmmmmmmmmm,
So those offices opened by individuals with no training are inheritently better? Those offices that are owned by an individual that close on April 15th because the owner heads to the Rockies for the summer. Therefore, their clients can't get any help regarding an IRS letter they have received. The clients can't even get a copy of a prior return. So, these clients come to the "national chain" to get help. Those chains that are staffed with inferior tax preparers?