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Slower Internal Revenue Service processing of income tax refunds created challenges for a number of businesses focused on lower-income consumers in January and February, but it may have created opportunities for tax-preparation firms and their financial services partners through increased use of refund advance products.
H&R Block Inc., Liberty Tax Inc. and Jackson Hewitt Tax Service Inc. all reported that demand for their respective refund advance products increased significantly during the early days of the 2017 tax season as they extended promotional offers to customers. Some of those individuals and families may have confronted a cash-flow crunch as a provision of the Protecting Americans from Tax Hikes Act prevented the IRS from releasing refunds on returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit prior to Feb. 15.
H&R Block introduced a no-interest refund advance loan to current and new clients that it characterized in the fine-print as an "optional tax refund-related loan" issued by MetaBank, a unit of Meta Financial Group Inc. MetaBank also originated Jackson Hewitt's Express Refund Advance product. Liberty Tax...