North Jefferson News, Gardendale, AL

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January 13, 2011

Rapid Refunds limited this year

Jan. 8, 2011 — A program that allows millions of people every year to receive tax refunds within 24 hours has been halted at many businesses, including some in the north Jefferson County area.

Hallmark Accounting PC at 4354 State Hwy. 160 in Hayden is not offering Rapid Refunds to its customers this year.

“The only reason we’re not doing it this year is because of the change with the banks,” said Michelle Hallmark.

However, she said only about five people used the program at Hallmark Accounting last year, so it will not greatly affect her business.

Rapid Refund is a short-term loan program that allows people to receive money, usually within 24 hours, based on the amount of their tax refund from the government.

“It’s a big, big business, especially for Jackson Hewitt and H&R Block,” said Kevin Green of McAnnally & Company Income Tax at 1501 Decatur Hwy. in Gardendale. “It’s a very popular product.”

Jackson Hewitt still offers Rapid Refunds this year; however H&R Block — as well as McAnnally & Company — are blocked from offering the loans, which typically charge high interest rates, according to published reports.

According to Green, the Office of Comptroller of the Currency, which regulates banks, has stopped the banks used by McAnnally, Hallmark and H&R Block — along with many others — from offering the Rapid Refund loans.

“Last year, our bank was stopped by the government ... we were kind of left high and dry,” Green said. “Consumer groups are saying they’re taking advantage of low-income folks.”

Green said about 5 percent of his customers used Rapid Refund in the past.

The program is still available, however, to Jackson Hewitt Tax Service customers.

“The earlier in the year it is, the more likely it is a person gets the Rapid Refund,” said Elizabeth Castleberry, who was formerly manager at the Fultondale location and now works in Gardendale. The Fultondale and Gardendale Jackson Hewitt businesses have merged into one location at 1060 Main Street in Gardendale.

Castleberry said “definitely over half” of Jackson Hewitt customers use Rapid Refund. She said about 75 percent of those who apply to use the program are approved.

Castleberry said it works like this: Individuals take their data to tax preparers, who file the return. The return is submitted to the IRS and is accepted or rejected.

If there are no red flags and the IRS accepts the return, the individual applies through the bank for a Rapid Refund loan. The entire process takes about 24 hours.

“The bank says yea or nay on the loan,” Castleberry said. “There’s always been a misunderstanding with the general public that it’s the actual refund and not a loan. But it is a loan in advance of your refund.”

If the bank says yea, the IRS must then “acknowledge and accept the loan,” Castleberry said, “just to make sure everything goes through kosher.”

When everything is approved, either Jackson Hewitt can cut a check from the local office or the loan is deposited into the customer’s bank account.

“Then when the IRS actually releases the money for the refund, it goes directly to the bank, because the bank is the one that paid out the money on it,” Castleberry said. She said if the loan was not for the full amount of the refund, the balance of the refund is sent from the bank to the person.

“It’s generally a safe loan by the bank,” Castleberry said, although she said things can go wrong. For example, an individual might have worked in another state and didn’t pay his taxes, resulting in a lien against the refund.

In that case, she said, the bank might not get from the IRS the full amount it loaned out to

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