What Do Other Bankers Do?
In an effort to boost the Internal Revenue Service's electronic filing program, some financial institutions will again next year accept tax forms in chosen locations.
The financial institution serves as a relay point for the tax forms. According to the IRS, this speeds the processing of returns and the paying of refunds.
The pilot for this program came earlier this year at the Bank of America in 25 locations and at Great Western Financial Corp which offered the service in 268 offices in California, Arizona and Florida. Signet Bank in Richmond also provided the service on a pilot basis.
Before 1990, electronic filing was only available through a few designated tax preparers and accountants, and only in selected regions. Now financial institutions are being actively solicited by the Internal Revenue Service to provide this capability to consumers.
According to some government marketing consultants, financial institutions should be able to bring in more customers and deposits if they offer tax-filing assistance.
IRS officials encourage bankers to sell customers on the idea of faster refunds, and to offer refund-anticipation loans.
Instead of the six to eight weeks wait for a check refund, the consumer gets the amount directly deposited to their bank account within two weeks.
A spokesman for Great Western said, "It provides us with an interesting opportunity to open up an IRA account when a refund is due."
Cross-selling possibilities are prominent in the thinking of those who are promoting this idea. Besides IRAs, there is a chance to explain and sell certificates of deposit, and other products to customers who are due refunds.
Start-up costs, according to Stephen Guido, president of Electronic Filing Centers in Farmingdale, NY, are under $50,000. If chosen as a processor, Electronic Filing Centers receives an initial fee from the institution and an additional percentage of the $30 to $50 that is charged to each taxpayer for handling the return.
He pointed out that an institution could generate $2 million in deposits for every 1,000 returns, based on an average refund of $2,000.
Kind of interesting getting ideas from the IRS on how to generate deposits, isn't it?
Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 10, 9/90
First published on 09/01/1990