Thousands of taxpayers loaded up on debt early this year
using a new variation of tax refund loan available in mid-November often called
a holiday loan. Based on a taxpayers projected tax and calculated using tax
information printed on their pay stub, these pre-filing season refund loans
cost low-income taxpayers millions and often lock them into additional tax
refund loans or other unnecessary and expensive tax preparation products. But there is good newsall three national
banks, which funded the loans offered by storefront tax preparers such as
H&R Block and Jackson Hewitt, announced that they would not offer these
types of loans next tax season.
HSBC, JP Morgan Chase, and Santa Barbara Bank & Trust, all of which offered variations of the pre-tax season refund loan, announced last March that they would not longer offer these loans through their tax preparation partners.
Woodstock Institute and other fair finance organizations throughout the country have worked to protect the assets of lower-income people during tax filing season as those filers are continually bombarded with new, high cost consumer credit options. The recent announcement marks a significant victory and is a step towards substantive reform of an industry that continues to siphon millions of dollars from lower-income taxpayers every year by making expensive and unnecessary loans to low-income taxpayers.