Storefront financial services outlets, including check cashers, payday lenders, rent-to-own stores, retailers, car dealers, and other fee-based providers, have long participated in the frenzy to make money during tax season, when low- to moderate- income consumers receive the largest single infusion of funds at any point in the year. With the near demise of RAL products, the ability to sell “fast” money is changing.
PLS sells a prepaid debit card, issued by The Bancorp Bank, as a means of getting direct deposit of tax refunds, and consumers are told that they can load the tax refund onto their own cards or one sold by the store
For example, PLS Loan Stores, a chain that offers check cashing, payday lending, and auto title loans, also offers in-store tax return preparation for federal and state returns at its stores in Arizona, California, Indiana, Mississippi, and Texas. To get refunds faster, PLS urges filing as soon as possible and use of direct deposit to the taxpayer’s bank account or a RAC as speedier options. The in-store tax preparer at an Arizona store we visited stated that she was not authorized to answer questions but did note that preparation of the 1040EZ form was free. PLS in-store brochures in Arizona disclose check cashing fees at one percent plus $1 and offer a $5 off coupon to cash income tax refund checks over $1,000.
Cash America, the large pawn/payday loan national chain, promotes its tax filing payday loans New Hampshire services but notes on its website that “Cash America does not provide nor offer Refund Anticipation Loans.” Cash America does offer an estimate on the size of tax refunds and acts as a sales representative for e-Tax, described below. The options offered to handle refunds are RACs received in one to two weeks and IRS e-file with the refund sent by check in four to six weeks, as well as check cashing at Cash America for an additional fee.
This same offer is made by National Cash Advance’s parent, Advance America, the large national chain of payday lenders
eTax Partners, Inc., located in Alpharetta, Georgia, is a remote tax preparation program that promotes itself as a “direct to business” tax preparer. Clerks at retail outlets enter data into the online form, then the tax returns are prepared at eTax. An eTax Partners handout listed the cost of federal tax preparation starting at $59, and claims that “eTax has developed the easiest system to earn huge revenue in a short period of time. Prepare returns in under 10 minutes, making over $100 each, utilizing only a location’s existing customer base.” Promotional material for eTax for a Rent To Own tradeshow claimed that most companies make over $10,000 per location in their first year and double the business in their second year.
National Cash Advance, a payday lender, offers to estimate taxes with actual tax preparation provided by eTax. National Cash Advance also offers a $20 coupon for tax preparation fee.
Advance America is offering tax preparation services from e-Tax and RACs from e-Collect/EPS Financial. Advance America does not appear to be offering RALs. This year, we conducted a mystery shopper test of an Advance America store in Columbia, Missouri (see Appendix A for details). The tester was charged a tax preparation fee of $115 (originally $135 but with a $20 coupon) and a “bank/transmit” fee of $92. Since EPS Financial charges at most $20 for a RAC, see Section I.I above, it appears that Advance America or e-Tax is charging a $72 transmitter fee.