Tax services provider H&R Block said it will not offer refund anticipation loans during the 2012 tax season, but will continue to provide other low-cost financial products.
A refund anticipation loan (RAL) is a short-term loan based on a taxpayer’s anticipated federal tax refund and is a highly profitable business for tax preparers. The loans usually last 7-14 days until taxpayers receive their refunds from the U.S. Internal Revenue Service.
“Knowing we had a strong 2011 tax season without RALs, our analysis did not present a compelling reason to bring back the product in 2012,” Chief Executive Bill Cobb said in a statement.
H&R Block was unable to offer RALs in 2011 after regulators directed its third-party lending bank to stop funding the product.
The Kansas city, Missouri-based company said it will continue to offer other low-cost financial services such as refund anticipation checks (RACs).
RACs allow taxpayers to deduct the cost of tax preparation from their tax refund.