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 associated with Comptroller for the Currency (OCC) is issuing this guidance to describe security and soundness measures that nationwide banking institutions and federal cost savings associations (collectively, banking institutions) should follow when they offer income tax 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 relates to all OCC-supervised banks that provide income tax refund-related items.


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

  • Ensuring that the financial institution’s board of directors keeps sound risk administration policies, procedures, and methods to oversee all taxation refund-related items.
  • Applying effective interior settings and review requirements to promote and solicitations.
  • Supplying appropriate disclosures that explain material components of these products to customers.
  • Implementing appropriate homework and sufficient procedures to ensure tax refund-related items supplied by 3rd events adhere to relevant guidance.
  • Making sure Bank Secrecy Act (BSA) conformity risk management systems cover income tax products that are refund-related.
  • Supplying training programs (including certification processes) that target regulatory needs, internal policies and procedures, and obligations for keeping a fruitful conformity system.
  • Maintaining capital that is adequate liquidity amounts.
  • Developing prompt and accurate administration information systems (MIS) for income tax refund-related services and products.
  • Ensuring the lender’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 services and products, and settlement solutions to send funds that are tax-related. 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 customer defenses and danger management controls that target security and soundness issues, but, the products might provide reasonable choices for clients.

Tax refund-related items can include some or every one of the after features:

  • Item emerges by way of a income tax planning solution.
  • Item is predominantly provided during taxation period.
  • Costs connected with taxation planning as well as other services or products are subtracted through the client’s taxation reimbursement.
  • Client’s income tax direct lender installment loans in hawaii reimbursement is employed to settle or collateralize the mortgage, or even to start a deposit or account that is prepaid.
  • Merely a little percentage of records, exposed through the taxation period, stay active later on into the 12 months.

You can find three primary forms of income tax products that are refund-related

Credit services and products

Tax refund-related credit services and products presently available on the market include the immediate following:

  • Reimbursement expectation loans (RAL), that are short-term loans built in expectation of a tax reimbursement being qualified and compensated by the irs (IRS) or even a continuing 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 provided through third-party income tax preparers prior to the client gets a W-2 type when it comes to year that is current. These loans display more credit danger than typical RALs because funds are advanced predicated on past years’ earnings or a pay stub that is current.
  • Other bank programs that anticipate (whether or not they cannot fundamentally require) loan payment from future tax refund proceeds.

Deposit products and access that is prepaid

Tax refund-related deposit items presently in the marketplace include the transmittal of the taxation reimbursement by the relevant income tax authority 1 to (1) a restricted or special-purpose deposit account that a bank establishes to issue a check to your consumer 2 or (2) a bank-issued access card that is prepaid. 3

Settlement solutions

Tax refund-related settlement solutions include the transmittal of a taxation refund by the relevant taxation authority to an account that is bank-controlled. The financial institution typically releases funds to your client after re payment to your taxation preparer for the taxation planning solutions.

Safe and Sound Methods regarding the Tax Refund-Related Items

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

Banking institutions’ risk administration policies, procedures, and methods for taxation refund-related items should really be (1) commensurate because of the complexity and nature of these task; (2) in keeping with safe and sound banking methods and appropriate reporting demands; and (3) undertaken having an admiration of and ability to deal with all relevant customer security and reputation danger factors, along with appropriate conformity responsibilities, linked to the activity.

The chance administration principles set forth in this guidance are divided in to three groups: (1) danger administration for many income tax refund-related services and products; (2) supplementary danger administration for taxation refund-related items involving an extension of credit (income tax credit that is refund-related); and (3) supplementary danger management for taxation refund-related services or products for transmitting a reimbursement (tax refund-related deposit services and products).

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