Tag Archives: Jackson Hewitt

Jackson-Hewitt Figures Costs for Employers for State Refusals under Obamacare in Billions

New Orleans  Credit to where credit is due, you have to give the devil his due, Jackson-Hewitt, the tax preparers, performed a public service in trying to calculate what businesses are going to have to pay, partially as a result of recalcitrant, Republican denials of full coverage protections under the Affordable Care Act (ACA), and the price tags are in the billions.  I know Jackson-Hewitt well, having been out to the New Jersey suburbs to their offices to negotiate with them regularly when we were not meeting in Manhattan with their general counsel at their spaces near Times Square, and met with their folks from top to bottom to negotiate agreements to reduce the practices and the costs of refund anticipation products.

In the summary of their report they cite the cost to Texas to mid-sized employers with over 50 workers due to the Governor’s refusal to accept ACA at between $250 million and almost $500 million.  In just the 22 states where governors are denying health care, the estimated burn ranges from $800+ million to $1.2 billion.  Nationally all of the potential penalties could range several billion for employers.

Governors’ like Louisiana’s Bobby Jindal are clearly sweating the numbers because they have been pretending that all they were really doing was killing off more poor people by denying coverage expansion, and figuring that their base doesn’t really care so much about that, but these mid-sized businesses are their bread and butter.  Jackson-Hewitt called the Louisiana number for employer payments of penalties at between $51 million and $72 million.  Meanwhile in the Baton Rouge Advocate reports clearly on the dispute as Jindal’s head of Health and Hospitals tried to defend his claim that the cost would only be about 10% of what Jackson-Hewitt’s conservative numbers showed.  The Jackson-Hewitt spokesperson volunteered to meet with Jindal’s folks and show them the math, pointing out that they didn’t have a “dog in the race” because they actually make more money doing the tax returns for businesses having to pay the penalties.  What a painful irony this is!   Jindal’s guy tried to claim that he was sticking to his story, no matter what the facts were, which I read as him really saying that his own job depended on his “lying eyes” as Richard Pryor called it.

The piper is going to be paid by more than just poor people for this last stand at the schoolhouse by these governors.  Here are the Jackson-Hewitt numbers, and thanks again for them!


H&R Block, HSBC, & the end of RALs

57334671TB002_Last_Minute_TNew Orleans Refund Anticipation Loans or RALs are a product that have preyed on lower income worker families since their inception and promotion by the big tax preparers, H&R Block, Jackson-Hewitt, and Liberty, as well as smaller fry who could get access to credit.  Negotiating with these companies could get depressing when I worked with the teams of ACORN members who the ACORN Financial Justice Center when better disclosure meant looking at a rate package that would be between 220 and 250% annualized.  There was never anything good about the products no matter what they were called, but their heartbeat was the desperate need of many families to have the money the few days quicker than it could be obtained from the IRS on an electronic or mail filing.

In a significant concession HSBC, the main lender to the large preparers, announced that it was departing the business in what they described to me, and I reported in Citizen Wealth, as “reputational” concerns.  Despite the fact that they were making almost $200M per year from this business, there was no way to disguise its predatory nature.  JP Morgan-Chase was another big player in a session where they were conceding that they would lower rates, asked me sarcastically if we thought it would be “better if they got out of the business,” to which we answered “yes!”  Santa Barbara Trust was the last major lender still hanging in the business.  HSBC has assured us that they were on a step down, transitional contract, which would pull them completely out of the business with H&R Block by the end of 2009 while they dropped other companies immediately.

Given that background, I was both disappointed and delighted to read the news from H&R Block that they were scrambling to replace HSBC as their lender and credit source for RALs for the 2011 tax season.  This should not have been a surprise to them, but it was a surprise to me to see that HSBC had continued to stand behind the RALs in 2011, long after they had assured me that they would be out of the business completely.  Clearly in the last 2 ½ years since I left ACORN the organization had taken its eye off of the target and the consequences had not been good for lower income working families who are dependent on professional preparers.  That is disappointing.

Delightful was seeing that the IRS finally did the right thing after having been an enabler to this thievery for so many years and eliminated a code this last summer that allowed tax preparers to know whether or not the likelihood was good that the filer would receive their entire refund sufficiently to cover the charges and fees being larded on by the preparers.  The IRS was effectively doing a low grade “credit check” for the preparers.  Disgusting!  Once they did that the Office of the Controller of the Currency (OCC), one of the many federal bank regulators, issued a determination barring HSBC and the like from such lending by classifying it now as too risky, despite a last minute contract extension that Block (after filing suit against HSBC for reneging on the contract) had negotiated with HSBC for the 2011 season where Block would cover all HSBC losses.  Finally the federales did the right thing!

Though this may be the death knell for RALs, which are a loan with interest, against the sums, some of the other predatory schemes will still survive.  Block announced that it would continue to fund refund anticipation checks, which are more like advances, through its own bank, the H&R Block Bank.

These predatory operations have been crack cocaine for the big-time preparers for years, so it will take some time and effort to cut the heads off of theses snakes, but at least more of the tails are now going.

Thanks to Eileen A.J. Connelly and David Pitt, AP personal finance writers for a great story on these developments!