Feds Warn Bank Making Tax Refund Anticipation Loans That They're 'Unsafe'

tax refund anticipation loans
tax refund anticipation loans

The Federal Deposit Insurance Corporation has notified Republic Bank & Trust of Kentucky that its high-cost refund anticipation loans are "unsafe and unsound."

The FDIC's action against Republic Bank is based on the IRS's decision last year to no longer offer information on a taxpayer's debt indicator, the FDIC said in a statement.

The indicator was a number available from the IRS that helped tax preparers and banks make refund anticipation loans - short-term loans offered by tax preparers to clients that they later repay with their refunds - by letting them know the likelihood of whether a borrower's refund would be taken by the government for debts, such as federally-insured loans, delinquent child support and federal and state tax liens.

Originally published