Yes, tax season is over, but the battle of tax refund anticipation loans is still ongoing. The Federal Deposit Insurance Corp. (FDIC) is going after Republic Bank & Trust Co., the last bank standing who issues tax refund anticipation loans. The FDIC claims that the bank is mismanaging its refund anticipation loan program and that they should cease and desist immediately. But Republic is fighting back saying that the FDIC is simply trying to stop it from issuing the tax refund anticipation loans because it doesn’t want it in the business of offering the product.
The bank is suing the FDIC, alleging the agency is abusing its power by trying to stop refund anticipation loans without going through its standard rule-making procedures. The lawsuit says no federal or state law prohibits the loans or requires specific underwriting standards.
Republic Bank currently is the lone source for refund anticipation loans. Other banks have stopped offering them under pressure triggered by a change in IRS policy.
This year, the IRS stopped telling tax preparers and their banks whether a person’s refund was subject to garnishment by the government for debts, such as unpaid taxes, child support or student loans.
One thing is for sure, the tax refund anticipation loans have become increasingly unpopular because they hit low-income families with high fees and can even result in debt if the taxpayer’s refund is smaller than anticipated. So will taxpayers be able to take out tax refund anticipation loans in 2012? Probably not, if the FDIC gets its way.
(source: Articles.MCall.com )