Tax Refund-Related Goods: Risk Management Gu

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Ceos of all of the National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested events


Any office of this Comptroller regarding the Currency (OCC) is issuing this guidance to describe security and soundness measures that nationwide banking institutions and federal savings associations (collectively, banks) should follow when they provide taxation refund-related services and products. This guidance replaces OCC Bulletin 2010-7 (February 18, 2010), which sent the “OCC Policy Statement on Tax Refund-Related items, ” but doesn’t supersede or amend just about any OCC issuances.

Note for Community Banks

This guidance pertains to all OCC-supervised banking institutions that provide income income tax products that are refund-related.


The guidance outlines security and soundness measures banking institutions should follow when they provide income tax refund-related items. Those measures include

  • Making certain the lender’s board of directors keeps sound danger administration policies, procedures, and methods to oversee all taxation refund-related services and products.
  • Implementing effective controls that are internal review requirements to promote and solicitations.
  • Providing disclosures that are appropriate explain material components of the merchandise to consumers.
  • Applying appropriate diligence that is due sufficient procedures to make sure that tax refund-related products given by 3rd parties adhere to relevant guidance.
  • Making sure Bank Secrecy Act (BSA) compliance risk management systems cover income tax refund-related items.
  • Supplying training programs (including certification processes) that target regulatory demands, interior policies and procedures, and responsibilities for keeping a fruitful compliance system.
  • Maintaining capital that is adequate liquidity amounts.
  • Developing prompt and management that is accurate systems (MIS) for income tax refund-related items.
  • Ensuring the financial institution’s conformity along with relevant legal guidelines, including those involving customer security.


The term “tax refund-related services and services and products” encompasses credit services and products, deposit items, and settlement solutions to transfer tax-related funds. Tax refund-related items present specific safety and soundness and conformity dangers, due to (1) their own payment and expense structures and (2) banking institutions’ reliance on third-party income tax return preparers whom connect to customers. With appropriate consumer defenses and danger management controls that target security and soundness issues, nonetheless, these items may possibly provide reasonable choices for clients.

Tax refund-related items can sometimes include some or all the after features:

  • Item exists through a taxation planning solution.
  • Item is predominantly provided during income tax period.
  • Charges related to income tax planning along with other products are subtracted through the consumer’s taxation reimbursement.
  • Consumer’s income tax reimbursement is used to settle or collateralize the mortgage, or even to open a deposit or account that is prepaid.
  • Merely a percentage that is small of, exposed through the taxation period, stay active later on when you look at the 12 months.

You can find three primary forms of income tax refund-related services and products:

Credit products

Tax credit that is refund-related currently available on the market include the immediate following:

  • Refund expectation loans (RAL), that are short-term loans manufactured in expectation of a tax reimbursement being qualified and compensated because of the irs (IRS) or even state taxation authority. A bank makes the loan through third-party income tax preparers that provide both income tax planning solutions and RALs.
  • “Holiday loans” and “pre-file” or “pay-stub” loans, that are offered through third-party taxation preparers ahead of the consumer gets a W-2 type for the present 12 months. These loans display more credit danger than typical RALs because funds are advanced level predicated on past years’ earnings or perhaps a present pay stub.
  • Other bank programs that anticipate (even though they cannot fundamentally require) loan payment from future income income tax refund proceeds.

Deposit products and access that is prepaid

Tax refund-related deposit items presently available on the market include the transmittal of a taxation reimbursement by the relevant tax authority 1 to (1) a finite or special-purpose deposit account that a bank establishes to issue a check towards the client 2 or (2) a bank-issued prepaid access card. 3

Settlement services

Tax refund-related settlement solutions include the transmittal of a taxation reimbursement by the applicable taxation authority up to a bank-controlled account. The financial institution typically releases funds towards the client after payment to your income tax preparer because of its income tax planning solutions.

Safe and Sound Methods regarding the Tax Refund-Related Items

This guidance addresses noise underwriting and system administration methods for banks offering tax refund-related items and it is on the basis of the premise that banking institutions should offer products that meet clients’ monetary requirements for a nondiscriminatory basis and without subjecting clients to treatment that is unfair.

Banking institutions’ danger administration policies, procedures, and methods for taxation refund-related services and products must be (1) commensurate using the complexity and nature of these task; (2) in keeping with safe and banking that is sound and relevant reporting demands; and (3) undertaken having an admiration of and ability to deal with all relevant customer security and reputation danger factors, in addition to legal conformity responsibilities, from the task.

The chance administration principles set forth in this guidance are split into three groups: (1) danger administration for several income tax refund-related items; (2) supplementary risk administration for income tax refund-related items involving an expansion of credit (taxation refund-related credit items); and (3) supplementary danger management for income tax refund-related services or products for transmitting a reimbursement (taxation refund-related deposit items).

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