recent calls for me to prepare tax returns

[dyne]

I have received about ten calls lately asking if I can prepare their 2007 tax returns NOW before Christmas. I have never received calls this early before. What is going on? Last year was my first year to file electronically so perhaps these people called me because I am now filing electronically. A preparer friend advised that I should expect a deluge of calls now that I am filing electronically. Comments?

[Donald Rihn, EA]

Early filing

I have received about ten calls lately asking if I can prepare their 2007 tax returns NOW!
before Christmas. I have never received calls this early. What is going on? Last year was my first year to
file electronically so perhaps these people are prospective new clients. Comments?

They probably want to file using their last paycheck stub. You can't do that.

Besides, the IRS is holding up e-filing until they get their computers up for the AMT tax fix.

[Jesse]

As I went past our local H&R office Friday and noticed it was closed I wondered about the "Rapid Refunds". Last year it seemed aroung Thanksgiving they were pushing "bring in your last paystub and we'll get your refund to you early" campaign and the office was open from 8:00AM to 9:00PM through all of December. Is this no longer available? Is it because of the AMT patch?

MERRY CHRISTMAS to all!!!!

dyne - I just posted this observation/question on a different post before reading this one.

Donald - Is it that H & R can no longer do these for some other reason than the AMT patch issue?

[John of PA]

No

This is one time in life where we must learn to say NO. You can meet with them, get thier info., then tell them to just drop off the W-2's when they come in, but it's too early to file, too many things can go wrong, the state software may not even be ready yet, and the Govt. probably will not issue thier refund early anyway.

[JohnH]

One more thing

When they drop off their info, be sure to tell them that each time they call back asking "is it done yet?" you'll keep putting their return at the bottom of the stack.

[OtisMozzetti]

In my opinion, the correct answer to calls to prepare a tax return now are that you'll gladly get the return jump started and even almost completely prepared (subject, of course to additional income during the remainder of 2007). That way the client will be able to get the return filed as quickly as possible during 2008 when the final information is provided. Keep in mind that the IRS supposedly was going to open for e-filing on Friday Jan. 11. Always ask whether any income has been omitted especially when the client claims an EITC, and remind the client that any amendment will cost that client for the amendment. Maybe these clients aren't asking to GET THE TAX RETURN UNDERWAY, but instead are asking FOR SOME CASH RIGHT NOW.

[Bees Knees]

Welcome to the board Otis. It’s good business advice to hook a client when they are ready to be hooked. If you put them off until February, they will go some place else. Getting the return started now, even if it can't be completed, will prevent them from going to your competition.

[Golden Rocket]

Savvy Advice

In my opinion, the correct answer to calls to prepare a tax return now are that you'll gladly get the return jump started

Mozzetti, savvy advice, and I'll repeat - welcome to TTB forum. Please visit often - we share information, and we have fun.

The initial response to a new customer should never be "No - we're not set up to do this." If he wants a service we don't render, we should make referrals to associates who do. If we are opportunistic toward this early "last check stub" crowd, we might use it as a chance to explain to them the AMT, and the possible delays in the refund process this year. Granted -- very few of them will care to understand, but you can never underestimate the impression made upon potential customers, even if they end up going to the big RAL shops.

I believe this entire scenario of filing a return based on the last check stub was technically a misnomer - i.e. I don't ever think it was done. I believe the last check stub became the basis of a RAL under an ambitious new program launched last year by H&R Block. Of course, the REAL return was filed later, after the W-2 was available, and at that point the filing of the return and ultimate settlement with the bank became consummated. I think some customers never really knew the difference. They associated the trip to HRB with simply walking out of there with money. Although I doubt there was any attempt to deceive these customers, this whole affair simply provided them with more early customers and more revenue for their bank.

I have yet to see this scheme this season. That isn't to say it won't happen, but it might have backfired, and the franchise businesses might have dropped it for any number of reasons. Some of the customers may have never brought their W-2 back, they may be afraid of refund delays this year, etc. Another thing that could have happened is their ex-spouse might have beaten them to the punch, filed earlier, and claimed dependents. We all know this happens, and even if IRS catches them after a couple years, that kind of lengthy retribution is not exactly what the banks have in mind when they push the RAL.

Would be interesting to know if HRB is offering this again - I don't see any evidence of it. Gary, are you out there? Oleander, can you tell us?

[WhiteOleander]

Well, I will tell you what I know. Based on what I have heard. I don't have any absolute proof.

Last year Block did offer the early money prior to the tax season. However, we weren't the first to do it. I understand that Jackson/Hweit and Liberty had been offering the service for several years. Well. what I have been told was that last year was a nightmare for the banks. HSBC, Santa Barbara, and one other I think.

The client would come in with their most recent pay stub and an estimate of their refund would be figured. The IRS was not involved at all at this point. The program was not really a tax program. Then, the bank would loan them money based on this expected refund amount. Their credit was run. They got as much as $1500.00.

So, of course the hope was that the person would return to us to prepare their taxes. But, there was no obligation to do so. We didn't keep the W-2's or anything.

What happened in the larger cities is the person would go to Block and get a loan, go to Jackson/Hewitt and get a loan, and go to Liberty and get a loan. Then they would go file by paper or online themselves and bypass the banks when they filed their taxes. So, the bank got no money repaid and of course, none of the companies got to prepare the taxes. Since these were loans by the bank, the bank cannot get the IRS to hold the future refunds to pay them back. They are out of luck. And the people that took the loans don't really have anything to take. So, there's really no point to sue. There's nothing to get. And in Texas, you can't garnish wages for this type of debt.

This year, Block did a program through their bank. HRBlock Bank. Not HSBC. It was only for our prior clients and very scaled down. It was very strict. It basically is a secured credit card. But, the bank loaned them the $500.00 to secure the card. It is a debit card. They can pay it back through their refund or on their own like a regular credit card. So, we'll see if this program works better or not. It really was intentioned to be short trem and only to give them a little help for Christmas.

This is the info I have.

[Golden Rocket]

Thanks

Thanks to the White Oleander, and Merry Christmas to you.

I had suspected something had run afoul, and that's why we're not hearing of check stub loans this year. I also suspected that JH was doing the same thing but didn't have specific knowledge.

At some point, sharing of databanks may prevent the fraudulent activity you describe. Years ago, even prior to e-filing, Beneficial Finance in Cincinnati made RALs to customers on condition that IRS mail the refund to the Beneficial office. (This was in the mid-70s) But there were dozens of Beneficial offices in Metro Cincinnati and several customers went to multiple Beneficial offices and received duplicate loans. Beneficial was horrified when they would receive only one refund. This is fundamentally the same problem as you described, only it happened 30 years ago. Today's datasharing and networks are so sophisticated this couldn't happen today -- at least not with the same Finance Company.

I dislike RALS, do not offer them, and am notoriously critical of financial products offered by HRB and others where the customer's best interests are sacrificed for obscene profits. However, these are ambitious corporate programs designed to appeal to the public and sell to them these services just like any other for-profit corporation. In all my pious concern for the client's pocketbook, there is not a single year where someone doesn't leave my desk and go down to HRB or JH because they offer RALs and I don't.

White Oleander, thanks for your info. I am guilty of "Block-bashing" for reasons discussed above, but all of us know that HRB is a huge factor in our industry, and what happens there is important to us. And I appreciate some of their best folks such as yourself, Gary, and Oxtrainer enjoying the comradery of this forum.

[WhiteOleander]

I don't like RAL's either. I have spent my time trying to explain to the client just how much more they are spending to get the money maybe 10 days faster. But, they just do not care. I get frustrated. My fee is the same no matter which filing option they choose. The bank makes the extra money.

I understand that some legislation was passed this summer by Congress. It is supposed to limit the interest on these types of loans to 36%. But I have not seen the paperwork yet. That seems high. But, compared to what it was, that"s a deal!!!

Merry Christmas to you and all who post here.

I have a feeling the recent legislation that was passed will be our biggest problem this year.