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Reg CC & Tax Refund Checks
Answer by John Burnett, BOL Guru
Guru Bio
Question: With tax season here, we will soon be inundated with tax refund checks issued by [name of tax preparation service withheld]. For Reg CC purposes, are these checks considered cashier's checks? They are drawn on [name of bank withheld], but issued by [name of tax preparation service withheld] as their agent as a loan proceed.
Answer: Tax refund checks are only issued by the U.S. Treasury and states with income taxes. What you have described are tax refund advance loan (RAL) proceeds payments. Ignore what appears in big print near the top of the check. You might see the name of the tax return preparation company there, and/or the words cashier's check or official check. None of that matters. What matters is who signed the check. Look carefully at the signature block on the check. That's the wording above or below the signature. If the signature block indicates that the check is signed for a bank, the check is either a cashier's check or a teller's check, and you'll need to treat it as such. Most RAL proceeds checks that are issued by the major tax return prep companies fit into this group. If the check signature block indicates it was signed for the tax return preparation company (most unlikely, I believe), the check can be treated as you would treat any other local or non-local check.
First published on BankersOnline.com 4/07/08
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