Administrative Burden

Another profit opportunity for tax preparers is to broker loans from banks that they can sell to filers based on their anticipated return. The IRS initially shared filer debt information to tax preparation firms. This allowed these firms to offer refund anticipation loans to customers without the risk that other creditors could claim the refund. Although refund anticipation loans might be repaid in just a couple of weeks, the associated fees made them highly profitable. At one point, such quick-refund products accounted for 30 percent of the total revenue for Jackson Hewitt Tax Service.