Tax season can be incredibly stressful for you to meet tax preparation demands, and taxpayers are either focused on what they owe or wondering about their refund.

Businesses and individual taxpayers often have plans for their refund money weeks before they even file their returns. It’s their nest egg, a way to pay off a troubling bill, or time on vacation with their family. Small businesses may rely on that money to keep their doors open. Whatever their goal, the question you’ll hear the most is, “When can I expect my refund?” They want the fastest turnaround, but how do you rush a government process?

The Solution

For those eager to cash in on their long-awaited refund, there is a solution to the bureaucracy waiting game. It’s called a Refund Advance Loan or RAL. With a RAL, taxpayers have access to their money weeks in advance. Advance loans are excellent for your company because you get paid quickly and offer a service to your client for an additional fee. You might have a few questions like:

1. How Does An RAL Work?

When you submit a tax return for a client, provided they give you accurate information, you should have a good idea of what their refund will look like. However, knowing the amount and accessing it are two different things. A tax preparer cannot make the wheels of government roll any faster, no matter how desperately our clients need the money.

Bank products for tax preparers close the gap between when you submit the paperwork and when they can access some of their money.

• Like any loan, the lender may require prior approval after a credit check to rule out possible fraud.
• Once your client passes, the bank sets up a temporary bank account to receive the tax funds. The client signs a release directing the IRS to deposit the entire tax refund into that account rather than their personal account.
• The lender loans the taxpayer a percentage of the expected refund with the expectation that they can reclaim their money and a fee from the tax refund when it arrives.
• The client spends part of the money, the tax preparer gets paid for filing the taxes and arranging the loan, and the loan company gets paid.
• The refund balance minus the debt repayment will go to the taxpayer, concluding your business with them for another year (or quarter, depending on how they file).

2. Are There Drawbacks?

There is one possible drawback the client should be aware of before they sign the paperwork. As with any loan or purchase made on credit, your clients must pay back what they spent plus the fee or interest charged by the lender. It sounds obvious, but it can catch your clients by surprise if you don’t point it out.

If the client doesn’t give you all the information when filing their taxes and the refund is less than expected, they must still pay back the entire amount agreed upon because they took the money. If they spend it and don’t get enough of a refund to pay the debt, they will owe the lender the balance.

3. What’s The Best Way To Access The RAL On Your Client’s Behalf?

Some companies offer refund loans for a fee. You can contact them individually and help your client apply for the loan, but it could be more efficient.

The better option is to use an integrated system. The best software for professional tax preparers, like UltimateTax, integrates bank products for tax professionals into the program. There are several advantages to working with this type of software:

• It streamlines the loan process. All the information needed to apply for the loan is in front of you.
• Sensitive information is safeguarded by the software firewalls, limiting the opportunity for a third party to access and misuse your client’s financial information.
• Integrated loan processing has standard fees and consistent rates.
• You get paid immediately rather than waiting for the taxpayer’s refund. It also allows you to serve clients needing more money upfront to pay for tax preparation services. The clients are happy. You don’t have to deal with payment plans or bill collecting.
• You grow accustomed to the screenings and questions, improving your efficiency and allowing you to see more clients daily. For many tax preparers, tax season is when they make most of their money for the year. More clients in less time makes for happy clients and a better bottom line for you.

A RAL can be the solution many potential clients need to be able to afford your services or keep their business doors open. For others, they are willing to wait for the extra refund money they can pocket. Even if you think your current clients won’t choose that option, offering bank products will give you a leg up against other tax preparers in your area, bringing in more clients than your previous tax seasons.