Most of you are aware that the nature of financial products associated with tax returns is changing
dramatically. This is due to a number of factors, including legislation, bank regulation, changes in IRS
policies, and other factors. Some banks are exiting the industry (HSBC and Chase) and others are finding
it challenging to offer loan products. Fees are also coming under scrutiny and at least four states have
implemented legislation to regulate fees. So, times are indeed changing.
We want to take this opportunity to give you an update on where things are today and what the coming
season might look like in terms of financial products.
As most of you know, IRS will no longer provide the debt indicator (DI) in the acknowledgments for
electronically filed returns. The DI was a factor in loan approvals in the past. It was not the only factor,
but the absence of the debt indicator decreases the confidence of providing a loan and it increases the
risk of the loan defaulting. As a result, banks which offer loans have had to tighten their loan criteria
and take measures to reduce risk, such as lowering the maximum loan amount.
If you’re familiar with bank products, you’re probably familiar with the fees you can charge for them.
Well, you may need to re-familiarize yourself with the fees. Most separate fees now have to be charged
as part of tax preparation and some will apply to all returns. Here are some significant changes:
• “Doc Prep Fee” is no longer allowed as a bank product charge. However, you can assign a form
charge in pricing setup for the “Financial Product Assistance Fee”, except in restricted states,
and that will be charged as part of the preparer bill.
• “E-file Fee” is no longer allowed as a bank product charge. However, you can assign a form
charge in pricing setup for the Form 8879 (in effect, an e-file fee), as part of preparer fees.
• “Service Bureau Fee” no longer exists in its traditional form. However, there is a new
Franchise/Network Fee option that will operate very similar to the former Service Bureau Fee
and, in fact, encompasses the Service Bureau Fee for the banks that still allow it. Simply use the
new field for Service Bureau fees. Limits apply and vary by bank.
• If your office is in Arkansas, New York, Maryland, or Maine, your fees for returns with financial
services products or bank products cannot be different from fees for returns without those
products. The result of this change is that IF you charge a Franchise/Network Fee, for example,
it must be charged to every customer equally and will show up on the preparer bill when the
return is calculated.
Drake attempts to provide a wide array of choices when it comes to financial products. We currently
partner with five entities – two banks that offer loan products and three financial service providers that
currently do NOT offer loan products, but provide other refund-related products. With loan products,
the loan amount is typically disbursed the same day the return is filed. All loans are subject to approval.
Non-loan products are products where the refund is distributed after the IRS has deposited the money.
All products give the ability to have preparer fees withheld from the refund and can be disbursed via a
check in the preparer’s office, direct deposit into the taxpayer’s account, or loaded onto a re-loadable
Here are a few notes about each of the five providers:
Republic Bank – Offers Loans (RALs) and non-loan products. Max loan amount: $1500. Minimum
refund to qualify for a loan: $2000. The E1 prepaid card is available with Republic Bank products.
Enrollment is closed for Tax Year 2010, as of 11/1/2010. Visit www.republicrefund.com for pricing.
River City Bank – Offers loans (RALs) and non-loan products. Max loan amount: $750. Minimum refund
to qualify for a loan: $1750. Enrollment is closed for Tax Year 2010, as of 10/29/2010. Visit
www.rcbral.com for pricing.
Financial Service Providers:
EPS Financial Services – Offers non-loan products, primarily geared toward fee collection services (ecollect).
The E1 prepaid card is available with EPS products. Prices vary, depending on disbursement
type, but are as low as $5 for a card disbursement. See www.epsfinancial.net for more information.
Advent Financial Services – Offers non-loan products (Refund Deposits). The GetIt prepaid card is
available with Advent products. Pricing is not yet available. See www.adventafs.com for more
Tax Products Group (formerly Santa Barbara) – Offers non-loan products (Refund Transfers). Program
details are not yet available. The E1 prepaid card is available with TPG products. See www.sbtpg.com
for more information.
Note: Drake Software charges a $2 transmitter fee on all bank products and financial service products.
Technology fees may apply as well, and vary by bank.
If you have not yet decided on bank product offerings, please let us know if we can help you to make an
informed decision. If you’re ready to submit your application with any of the financial service providers,
visit the enrollment application web site at https://eom.1040.com. Have your EFIN and Drake password
We will pass along new information as it becomes available. Program details, including pricing, will be
posted on our web site, https://support.drakesoftware.com as they become available.
Thank you for your business!