H&R Block Inc has said HSBC Holdings Plc will not provide funding for the no.1 U.S. tax preparer's refund-anticipation loans, or RALs, after U.S. regulators ordered the lender to terminate the contract.
The OCC's (Office of the Comptroller of the Currency) 11th hour timing will make it difficult for us to put alternative products in place at all of our locations in time for the early part of the 2011 tax season, H&R Block said in a statement late on Friday.
H&R Block will continue to offer its traditional refund-anticipation checks (RACs) that do not require any out-of-pocket costs by taxpayers, it said.
In October, H&R Block filed a suit against HSBC USA, a unit of HSBC, alleging breach of contract and saying that the bank had failed to conduct preparatory actions which would have allowed it to offer RALs.
RALs, which usually last 7-14 days until taxpayers receive their refunds from the U.S. Internal Revenue Service (IRS), are highly profitable for tax preparers.
(Reporting by Abhinav Sharma in Bangalore; Editing by Gopakumar Warrier)