Did you know that, according to the FDIC, over six percent of American households did not have or use a bank? And that nearly nineteen percent more are considered “underbanked?” (Underbanked people have a checking or savings account but also use financial products and services from outside the banking system, like prepaid cards and check cashing services.)
The problem of bank access is real. Not everyone has access to an affordable, safe, and secure banking service. What does that mean to you and your clients at tax time?
You may want to consider using tax-related bank products to help your clients access their income tax refunds faster and more reliably.
What Is a Tax Bank Product?
Tax bank products are software solutions that facilitate fee payments without requiring your client to have an account. These are financial products created specifically to receive tax preparation and refund services. Most of these products offer refunds in a variety of ways, including electronic refund checks, electronic refund deposits, and prepaid debit cards.
These products allow clients to use your services without paying your fee upfront. Instead, your tax prep fees are deducted from the client’s refund. The money is routed from the IRS to something called a “Refund Settlement Bank,” which is another name for tax bank. Several are available. Check with the software vendor to learn which banks it offers.
How Can You Offer a Tax Bank Product?
In order to provide tax bank products to your clients, you must first apply to become an authorized e-file provider. Becoming an approved e-file provider is just part of doing business these days, and you may already be one.
Next, you select the bank you want to deal with. Then set up the software and go!
The Benefits of Offering a Tax-Refund Bank Product
Offering tax bank services benefits both you and your clients.
Your clients get tax preparation services without any out-of-pocket payment to you. It’s easier for them to come to you to have their taxes prepared if they don’t owe payment upfront. Other benefits include:
- Fast tax refund receipt via e-filing and refund transfer.
- Options for receiving the refund: as a check, debit card, or direct deposit.
- Access to loans based on the expected refund.
What do you get out of the deal?
- You receive payment for your services quickly. No endless invoicing, emailing, or phone calls chasing payment.
- You can out-compete other tax preparation services that don’t offer tax bank services.
- You attract clients who can’t or don’t want to pay for your services upfront.
- It’s easy to do.
Expand your services by offering a tax-refund related banking service through your business. Grow your client base by offering easy access to tax preparation services, as well as, cash advances and small loans that cost less than from the local loan shark.
Be a hero to the unbanked and underbanked. Nobody should forfeit their tax refund because they can’t afford tax prep services or a way to receive their refund safely. Offer tax bank services this tax season and watch your bottom line and community popularity grow.
This blog was written by Jayson Mullin, a partner at Top Tax Defenders, a tax resolution company with over 30 years of experience working with the IRS to aggressively help clients with any type of tax relief problems.