Released: September 17, 2006

Tax anticipation loans criticized

Source: By Kevin McCoy, USA Today

H&R Block CEO Mark Ernst appeared eager to turn the page on a flurry of disappointing corporate news. Speaking at the firm’s annual shareholders meeting in Kansas City, the head of the nation’s largest tax preparer outlined a fee-reduction plan that implicitly responded to critics who have charged that refund-anticipation loans unfairly siphon high interest charges from millions of low-income Americans.

But any hope that the changes announced at the Sept. 7 meeting would defuse that criticism evaporated as Peter Skillern, head of a watchdog group that has assailed the loans, followed Ernst at the microphone. Skillern, concluding an unsuccessful David-vs.-Goliath bid for a seat on Block’s board, commended Ernst and said he would publicly support the changes — but then resumed the pressure.

“Rather than try to dress up this pig and have the best-dressed and best-acting pig in the market, we need to get refund-anticipation loans out of the market altogether,” said Skillern, executive director of the Community Reinvestment Association of North Carolina. He urged Block to lead a reform to “change the rules of the game.”

“We appreciate that Mr. Skillern attended our shareholder meeting and said he would endorse publicly the significant reforms H&R Block has made to its refund-anticipation loan product,” the company said.

Skillern issued his call amid a recent flurry of activity in Congress, the IRS and the courts that could better educate taxpayers about refund-anticipation loans and could impose new regulations on the transactions.

Each year, an estimated 10 million Americans, frustrated by weeks-long waits for their IRS refunds, turn to tax preparers who provide checks within days. Those checks are usually refund-anticipation loans, payments that are secured by and repaid from a pending federal tax refund.

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