Tag Archives for " Refund "

H&R Block Will Not Offer Refund Anticipation Loans this Tax Season

September 13, 2011 – H&R Block, the nation’s largest tax preparer, announced today that it will not be able to offer refund anticipation loans during the 2012 tax season due to an increase in the amount of tax returns the company prepares and the decline in demand for the high-cost loans.

This is the second consecutive year in which the company has not offered these loans, eliminating them last year as a result of an Internal Revenue Service (IRS) regulation that did not allow banks to fund them.

In preparation for the 2011 tax season, the IRS announced that it would no longer provide tax companies with the debt indicator, which was the figure they used to determine the anticipated refund amount.

“Refund Anticipation Loans are often targeted at lower-income taxpayers,” IRS Commissioner Doug Shulman said in a 2010 press release. “With e-file and direct deposit, these taxpayers now have other ways to quickly access their cash.”

Last year, only a few smaller tax firms were able to offer the service through a single bank, Republic Bank and Trust in Kentucky. H&R Block expressed concern that regulations were only applied to certain banks and tax preparation agencies, not all.

Regardless, the company maintains that eliminating this service from its offerings did not and will not affect its success.

“We evaluated our options to determine what was best for our clients, the business and our shareholders,” H&R Block President and CEO Bill Cobb said. “Knowing we had a strong 2011 tax season without (refund anticipation loans), our analysis did not present a compelling reason to bring back the product in 2012.”

As evidence of this, the company gained 18.6 percent more first-time clients in 2011.

A refund-backed loan offers the amount of the taxpayer’s federal tax refund with a short-term payback, which was helpful in the times when the IRS took up to eight weeks to issue the refund checks. According to a press release from H&R Block, however, the IRS payments will be issued within a two week period in the 2012 season. This is one reason behind the decrease in demand for the loans.

Another reason H&R Block cited for stopping the service was the high fees associated with the loans. According a release from the Consumer Federation of America, this year the fees for refund anticipation loans were $61 for a $1,500 loan, signifying a 169 percent APR – although it is paid off in just a few weeks.

To compensate for those who would have applied for the loans, the company announced that it would continue to offer other options, such as refund anticipation checks, which allow individuals to use to their refund to pay tax preparation fees.

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Auto Title Loans Involved in Tax Refund Fraud

Arturo Villarreal-Alba, from Whittier, California, pled guilty in a US District Court to charges of conspiracy to defraud the United States through an income tax return filing criminal plan. Villarreal-Alba falsely claimed over $250 million in income tax refunds. Additionally, he was involved in mail fraud as part of a vehicle registration “title washing” criminal operation, according to the Whittier Daily News.

Villarreal-Alba, cooperated with Old Quest Foundation Inc. and De La Fuente Ramirez and Associates in filing more than 400 false federal income tax returns to the IRS. As a result of their illegal operation, the IRS mistakenly gave millions of dollars in tax refunds to the two companies’ customers. In his plea agreement, Villarreal-Alba confessed that he referred customers to both companies who operated an Original Issue Discount scheme. He stated he was involved in at least two federal income tax returns from 2009 that claimed false refunds totaling $998,478.

On April 30, 2011, Villarreal-Alba was also indicted in a vehicle registration “title-washing” scheme.

Villarreal-Alba confessed that from 2009 to 2011, he operated this scheme. In this criminal enterprise, he would tell victims that there was a “special program” where vehicles could be paid off. He explained to victims that in the end they would end up owning one or more of the vehicles free and clear.

Unfortunately, many victims never saw those promises fulfilled, and instead ended up purchasing several vehicles using their own credit to obtain financing from car dealers. The victims’ signatures were then forged by Villarreal-Alba in order to obtain clear title from the DMV. Villarreal-Alba and his criminal then resold the cars or used them as collateral to obtain auto title loans.

In auto title loan lending, a borrower offers up their car as collateral in order to secure money. The auto title loan lender then evaluates the value of the car and gives money based upon its worth. Using this method, Villarreal-Alba would obtain auto title loans to further fund his criminal operations.

Villarreal-Alba also abused the United States Postal Service by fraudulently receiving pink slips from the DMV. Finally, Villarreal-Alba failed to file tax returns and report to the IRS the thousands of dollars in income which he criminally made in 2009 to 2010 from the tax fraud and title-washing scheme.

His sentencing is scheduled for January 18, 2013.

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