Tax Refund-Related Goods: Risk Management Gu

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


Work of the Comptroller regarding the Currency (OCC) is issuing this guidance to describe security and soundness measures that nationwide banking institutions and federal savings associations (collectively, banking institutions) should follow when they provide income tax refund-related services and products. This guidance replaces OCC Bulletin 2010-7 (18, 2010), which transmitted the “OCC Policy Statement on Tax Refund-Related Products, ” but does not supersede or amend any other OCC issuances february.

Note for Community Banks

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


The guidance outlines security and soundness measures banking institutions should follow when they provide taxation refund-related services and products. Those measures consist of

  • Making sure the financial institution’s board of directors maintains risk that is sound policies, procedures, and methods to oversee all income tax refund-related services and products.
  • Applying effective controls that are internal review criteria to promote and solicitations.
  • Providing disclosures that are appropriate explain material areas of the merchandise to customers.
  • Implementing appropriate diligence that is due sufficient procedures to ensure tax refund-related items given by 3rd events conform to relevant guidance.
  • Making certain Bank Secrecy Act (BSA) conformity danger management systems cover income tax products that are refund-related.
  • Supplying training programs (including certification processes) that target regulatory requirements, interior policies and procedures, and duties for keeping a compliance program that is effective.
  • Keeping sufficient money and liquidity amounts.
  • Developing prompt and management that is accurate systems (MIS) for income tax refund-related items.
  • Ensuring the lender’s conformity along with relevant legal guidelines, including those consumer protection that is involving.


The term “tax refund-related services and products” encompasses credit items, deposit items, and settlement solutions to transfer tax-related funds. Tax refund-related items present safety that is particular soundness and conformity dangers, due to (1) their particular payment and value structures and (2) banking institutions’ reliance on third-party income tax return preparers whom communicate with customers. With appropriate customer protections and risk management controls that target security and soundness concerns, nonetheless, these items may possibly provide reasonable alternatives for clients.

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

  • Item exists via a taxation planning solution.
  • Product is predominantly provided during taxation period.
  • Costs related to income tax planning along with other services or products are subtracted through the consumer’s taxation reimbursement.
  • Client’s income tax reimbursement can be used to settle or collateralize the mortgage, or even to start a deposit or prepaid account.
  • Merely a percentage that is small of, exposed through the tax period, stay active later on within the 12 months.

You will find three primary kinds of taxation products that are refund-related

Credit services and products

Tax credit that is refund-related presently available on the market include the annotated following:

  • Reimbursement expectation loans (RAL), that are short-term loans built in expectation of an tax reimbursement being qualified and compensated because of the irs (IRS) or even a continuing state taxation authority. The mortgage is manufactured with a bank through third-party income tax preparers offering both taxation planning solutions and RALs.
  • “Holiday loans” and “pre-file” or “pay-stub” loans, that are provided through third-party income tax preparers ahead of the client receives a W-2 form when it comes to present 12 months. These loans display more credit danger than typical RALs because funds are advanced level centered on past years’ earnings or a present pay stub.
  • Other bank programs that anticipate (even though they don’t fundamentally require) loan payment from future tax refund proceeds.

Deposit products and prepaid access cards

Tax refund-related deposit services and products presently available on the market involve the transmittal of the taxation refund by the applicable income tax authority 1 to (1) a small or special-purpose deposit account that the bank establishes to issue a check into the 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 a bank-controlled account. The lender typically releases funds to your client after re re payment to your income tax preparer for the taxation planning solutions.

Safe and Sound Methods regarding the Tax Refund-Related Items

This guidance addresses noise underwriting and system administration techniques for banking institutions that provide tax refund-related services and products and is on installment loans idaho the basis of the premise that banking institutions should offer products and services that meet clients’ monetary requirements on a nondiscriminatory basis and without subjecting clients to unjust therapy.

Banking institutions’ danger administration policies, procedures, and techniques for taxation refund-related items ought to be (1) commensurate aided by the complexity and nature of these task; (2) in keeping with safe and banking that is sound and appropriate reporting needs; and (3) undertaken with an admiration of and ability to address all relevant customer security and reputation danger factors, in addition to appropriate conformity responsibilities, from the task.

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