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


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 cost savings associations (collectively, banks) should follow when they provide taxation products that are refund-related. 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 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 consist of

  • Making certain the lender’s board of directors keeps sound danger administration policies, procedures, and techniques to oversee all income tax refund-related items.
  • Implementing effective interior settings and review criteria to promote and solicitations.
  • Providing appropriate disclosures that explain material components of these products to customers.
  • Applying appropriate diligence that is due adequate procedures to ensure tax refund-related items given by 3rd events adhere 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 needs, interior policies and procedures, and obligations for keeping a fruitful conformity system.
  • Keeping sufficient money and liquidity amounts.
  • Developing prompt and management that is accurate systems (MIS) for taxation refund-related services and products.
  • Ensuring the lender’s conformity along with relevant legal guidelines, including those consumer protection that is involving.


The term “tax refund-related services and services and products” encompasses credit items, deposit services and products, and settlement solutions to transfer tax-related funds. Tax refund-related items present specific safety and soundness and conformity risks, due to (1) their particular payment and value structures and (2) banking institutions’ reliance on third-party taxation return preparers whom connect to customers. With appropriate customer defenses and danger management controls that address security and soundness issues, but, the products might provide reasonable alternatives for clients.

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

  • Product exists via an income tax planning solution.
  • Product is predominantly provided during income tax period.
  • Costs connected with taxation planning along with other installment loans in hawaii services or products are subtracted through the consumer’s taxation reimbursement.
  • Consumer’s income tax refund is employed to settle or collateralize the mortgage, or even to start a deposit or account that is prepaid.
  • Just a little portion of records, exposed throughout the taxation period, stay active later when you look at the 12 months.

You can find three primary kinds of taxation refund-related items:

Credit services and products

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

  • Reimbursement expectation loans (RAL), that are short-term loans built in expectation of a tax refund being qualified and compensated because of the irs (IRS) or even a continuing state income tax authority. A bank makes the loan through third-party income tax preparers offering both income tax planning services and RALs.
  • “Holiday loans” and “pre-file” or “pay-stub” loans, that are provided through third-party income tax preparers prior to the consumer gets a W-2 kind for the present 12 months. These loans display more credit danger than typical RALs because funds are advanced level centered on past years’ earnings or perhaps a pay stub that is current.
  • Other bank programs that anticipate (no matter if they just do not 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 income tax reimbursement by the relevant taxation authority 1 to (1) a small or special-purpose deposit account that a bank establishes to issue a check to your customer 2 or (2) a bank-issued access card that is prepaid. 3

Settlement services

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

Safe and Sound Techniques regarding the Tax Refund-Related Items

This guidance addresses noise underwriting and system administration techniques for banking institutions that provide tax refund-related items 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 foundation and without subjecting clients to treatment that is unfair.

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

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

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