Many tax preparation offices were caught off guard last season by Santa Barbra Tax Product Group’s December 2009 notification that they would not be supporting Refund Anticipation Loans. This season, Santa Barbra has converted their practice in name to Tax Products Group and is indicating that they will be offering Refund Anticipation Loans for the coming 2010 tax season. There should be a considerable sense of urgency this season for getting your tax office’s application processed by the banks whether you are choosing to work with TPG, or any of the other providers in the industry.
Last year’s surprise notification that SBBT would not be providing Refund Anticipation Loans, proved as a difficult hurdle for many tax offices relying on them for this product. Many offices base their entire marketing campaign on the ability to offer these rapid refund checks and without their availability, found they did not have much to offer their customers in the sense of "Why you should come to my tax office versus the competition." To head this problem off early this season, I suggest two strategies; Promote more service oriented aspects of your tax preparation business rather than just the ability to get customers their refunds fast, and also be sure to get registered with the bank of your choosing early this preseason.
Promoting your tax preparation services on their merit as opposed to the speed in which you can get your customers cash in their hand allows you to be competitive on a business service that is within your control. The way the industry and regulation is trending, it will not be long before the Refund Anticipation Loan is forced into extinction for all providers. You should be promoting your tax preparation accuracy and reliability along with your strong reputation and price competitiveness. These are all aspects of your business which you can control, as opposed to promoting a product that you simply are a middleman broker of.
Register your tax office with the bank of your choosing early this preseason. The banks that offer Refund Anticipation Loans have found themselves under greater scrutiny now more than ever before. These banks are finding that they are being regulated with more scrutiny relating to their capital reserves to loan application ratios. This means the banks are being forced to be more limited in their acceptance of front end RAL providers and are even severing their ties with many returning offices if they did not have prior season numbers conducive to profitable loan products. Chase and HSBC have already left the independent RAL market and other major banks have published that they will not accept new offices that do not have an established history of processing high number of bank funded returns with a minimum amount of loan loss. All of this information boils down to there being a limited number of RAL providing offices that banks will be able to sign up this season, and the banks operating with more scrutiny in their approval process of who those offices will be.
