H&R Block, Inc. is resting comfortably in a Kansas City, MO hospital after attempting to leap to its death, following a stunning move that may cripple the Refund Anticipation Loan (RAL) business: The Internal Revenue Service today announced that it will no longer provide tax preparers and associated financial institutions with the "debt indicator."
"F--k RALs," IRS Commissioner Doug Shulman said. "We no longer see a need for the debt indicator in a world where we can process a tax return and deliver a refund in 10 days. We encourage taxpayers to use e-file with direct deposit so they can get their refunds in just a few days."
"Refund Anticipation Loans often anally violate the financial health of lower-income taxpayers," Shulman said. "We want our pound of flesh from them, of course. But, with e-file and direct deposit, these taxpayers now have other ways to quickly access their cash."
Here's how it works. RALs are shylock-level loans secured by a taxpayer's anticipated tax refund. Historically, a taxpayer gets a tax return electronically submitted, and the IRS sends an acknowledgment to the preparer, along with a debt indicator, stating whether the taxpayer will have any portion of the refund held back, for things like delinquent taxes, or unpaid child support or delinquent federally funded student loans.
Here's the rub for places like H&R Block: While taxpayers will continue to have access to information about any offsets through the "Where's My Refund?" service on IRS.gov, they won't share that information with the tax preparer.
No debt indicator, no RAL. HA!
(_Insert H&R Block CEO's Name Here_), this week's H&R Block CEO, was told how to respond to Thursday's IRS announcement.
"Today," someone in Legal wrote for him. "the IRS took action that will likely disallow refund anticipation loans for millions of low- to moderate-income taxpayers. The bastards."
"We were disappointed by its decision to eliminate the debt indicator, because we make a sh-tload of money from RALs."
"And can you imagine, just a few years ago we were offering sub-prime mortgages to these clients," said a satirical Chairman of the Board who definitely was not H&R Block Chairman Dick Breeden. "By the time we were done with them, our clients would leave our offices wearing a bankruptcy barrel held up with suspenders, like in the cartoons. Allegedly."
Alan Bennett* also stated that this decision will "only" reduce HRB's earnings per share by about $.05 in 2011, to negative 3 cents a share.
"Of course this means that everyone who has any H&R Block stock will need to pay us a dividend," Bennett read. "So that'll be kinda cool. But our real concern is how to lend money to these deadbeats without the underwriting data we need.
"It is unfortunate that those impacted by this decision are often unbanked or under-banked and have no unified voice or trade organization to represent them. And we won't help the f--kers; they will visit our offices during tax season seeking tax refund-related products and learn their choices are going to consume even more of their tax refunds than in years past."
(_Insert H&R Block CEO's Name Here_) concluded, "We're used to RALs screwing people over, but we'd rather it be our clients. We never wanted it to be US!"
"By the way," said former H&R Block CEO Mark Ernst, while laughing and twirling his handlebar moustache. "I would never use my new position as 'Deputy Administrator, Department Of The Treasury, Internal Revenue Service' against my former employer. Bwah Hah Haaaaaaaa!!"
* OK, so Alan Bennett is the CEO's name. His employees call him 'dick'.
