Tax bank products may sound complicated if you’re quite unfamiliar with them, but they’re fairly easy to understand once you get the basics down.
If you’re new to the business, you will find that using bank products for tax preparers will let you do your work faster and more efficiently.
Additionally, it ensures you get paid in full and in a timely manner.
As a tax filer myself, I find tax filing a complicated task, so I leave it to my tax preparer to do the heavy lifting.
Aside from filing my taxes online, they also use a tax bank product to help claim my tax refund much faster and receive their service payment automatically.
As a client, I can say that I’m happy with how this product has made tax refund processing more convenient for me and my tax preparer.
If you’re a tax preparer and are planning to start offering this service to your clients, here are the basic things you need to know to be successful.
What is a Tax Bank Product?
A tax bank product makes the tax refund process more convenient for your client and ensures that all service fees, including yours, are paid for fully and in a timely manner.
Compared to the usual practice, using a tax bank product makes the transaction much faster as the refund and service payments are done electronically.
The funds can be transferred to a Refund Settlement Bank of your client’s choosing, as soon as the refund is released by the IRS.
The Refund Settlement Bank will then sort the fees and deduct them from your client’s tax refund the same day they receive the funds from the IRS.
Your service fee will be sent directly to your account and your client can receive their final tax refund amount through their preferred banking method: direct deposit, prepaid card, or via check.
Benefits of Using Tax Bank Products
While using a tax bank product is not a requirement, it can simplify the tax refund and service payment process tenfold.
For tax preparers, it can help you expand your business as you can take in more clients who opt to use this bank product.
The good thing about using this product is your clients don’t have to pay for your service fees upfront if they want their taxes done at your office.
They can simply opt for this bank product and let the Refund Settlement Bank deduct your fees from their tax refund amount and send it to you directly.
Your clients can have their taxes done more accurately with your help and you can be sure that your services will be paid for all the time.
Gone are the days where service fees would prohibit a client from using your office to take care of their taxes and tax preparers chasing fees from unpaid transactions with previous clients.
Fees Involved in Using These Products
Other fees involved in the tax refund can also be paid for through the use of the tax bank product. Aside from tax preparer fees, it’s important to make your clients aware of these other fees included in the processing of the refund:
Transmitter fees: made to the company that develops the tax software program that was used to make the tax bank product.
Technology fees: this covers the costs of programming the tax software system as well as the system resources that will be used for processing the applications for the bank products.
Service Bureau Fees: made to a third-party company that offers technology-based financial services to their customers.
Bank fees: made to specialized banks or processing companies that design programs for tax preparers and their clients. They facilitate the distribution of fees and deduct it from the full tax refund amount and then send the final amount to the client.
All these fees can be processed using the bank product and do not require any physical paperwork to be filled out.
Since we started using this product, our filing seasons have become less complicated and more convenient.
All service fees are settled at once, and we get our refunds much sooner than we used to, straight to our bank account.
If you haven’t tried processing tax refunds using a tax bank product yet, I highly recommend that you give it a look and start offering this product to your clients.
With the help of a tax bank product, you can get the work done in no time and your clients will be very happy about the quick process and your service.