The main types of bank products
| Product | What it does | Who pays |
|---|---|---|
| Refund transfer (RT) | Receives the IRS refund in a temporary account, deducts fees, and pays the client the balance by direct deposit, check or prepaid card | The taxpayer pays a bank fee, deducted from the refund |
| Refund advance | A loan for part of the expected refund, usually early in the season, repaid from the refund when it arrives | Varies by program; many are offered at no cost to the taxpayer, with approval required |
| Fee collection | Lets you collect your preparation fees from the refund instead of up front | Built into the RT |
How a refund transfer works, step by step
- You prepare the return and explain the RT, its fee and the alternatives. The client chooses, and signs the bank's application and disclosures.
- The return is e-filed with the bank's temporary account as the refund destination.
- The IRS deposits the refund into that account on its normal schedule. An RT does not make the IRS pay faster.
- The bank deducts its fee and your disclosed preparation fees, then sends the balance to the client.
- You receive your fees from the bank, and any service-bureau or software fees go where the program directs.
Refund transfer vs. refund advance vs. paying up front
Clients choose how to pay. Here's how the options compare:
| Refund transfer | Refund advance | Pay up front | |
|---|---|---|---|
| What the client gets | Refund minus fees, when the IRS releases it | Part of the expected refund early in the season, then the rest of the refund later | Their full refund directly from the IRS |
| Cost to the client | A bank fee, deducted from the refund | Many programs charge the taxpayer nothing; approval required | Only your preparation fee |
| How you get paid | From the refund, after it reaches the bank | Usually tied to a refund transfer | At the appointment |
| Is it a loan? | No | Yes, an advance against the refund | No |
| Best for | Clients who can't pay the fee in January | Clients who need money before the IRS pays | Clients who can pay and want no bank fee |
Which banks offer tax bank products
Tax bank products come from a handful of banks that work through professional tax software. Common names include Santa Barbara Tax Products Group (SBTPG), Republic Bank & Trust, Refund Advantage and EPS Financial. Which ones you can offer depends on your tax software or service bureau, because enrollment runs through the software. Each bank sets its own products, fees, eligibility rules, approval process and compliance training, and these can change every season. Compare them on the fee your clients pay, whether a refund advance is offered and its approval rate, how fast funds reach your office, and the support you get in February.
How and when the preparer gets paid
With a refund transfer, your preparation fee comes out of the client's refund after the IRS deposits it with the bank. The bank then pays you, and any disclosed software or service-bureau fees go where the program directs. That means your cash flow follows the IRS's refund schedule: refunds that include the Earned Income Credit or Additional Child Tax Credit can't be issued before mid-February, and offsets, identity reviews or rejected returns delay or reduce what funds. Plan your January expenses accordingly, and track which products funded so you know what you were actually paid.
Why offices offer them
Many clients, especially families claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), can't pay a preparation fee in January. Fee deduction from the refund removes that barrier. For many offices, that is the difference between turning a client away and filing their return.
For service bureaus, disclosed fees on eligible funded refund transfers are also a main revenue source. See white-label tax software.
What can go wrong
Offsets. If the client owes certain federal or state debts, the Treasury Offset Program can reduce the refund before it reaches the bank. A smaller deposit can leave your fees partly unpaid.
Delays. By law (the PATH Act), the IRS can't issue refunds that include the EITC or ACTC before mid-February. Set client expectations in January.
Rejections and reviews. A rejected return, or one held for identity verification, delays the deposit and your fees with it.
Unfunded products. If the refund never arrives, the RT doesn't fund, and fees deducted from it aren't paid.
Rules and disclosures
Bank products are always optional. Clients must be able to pay you directly instead, and you must explain the fees before they sign. IRS Publication 1345 says the IRS isn't involved in or responsible for these products, which are a business contract between the provider and the taxpayer, and it says providers who help taxpayers apply should:
- Make sure clients understand the IRS will send their refund to the bank, not to them.
- Tell clients that refund anticipation loans are interest-bearing loans, not a faster way to get the refund, and that they may owe extra interest or fees if the deposit is late.
- Tell clients every fee and known deduction coming out of the refund, and the amount they'll receive.
- Get the client's written consent under Treas. Reg. § 301.7216-3(a) before sharing tax information with the bank.
- Make sure the preparer isn't a related party to the lender on a refund anticipation loan.
Advertising bank products
IRS advertising standards say a refund-related product must be described as a loan or other financial product, never as the refund itself, and claims about faster refunds must match official IRS language. Each bank program adds its own disclosure and compliance training, and some states regulate refund-related products too. Base your preparation fee on the work, not on the size of the refund. Choosing software? See professional tax software with bank products.
How to start offering bank products
- Have your EFIN. Banks approve e-file offices, so your firm needs its own EFIN first.
- Choose software with bank-product integration. Enrollment happens through your tax software.
- Apply in the fall. Banks review each office before the season; complete the enrollment and any required compliance training before January.
- Set up your disclosures and fee schedule so every client sees the same clear explanation.
- Track funding. Watch which products funded and which didn't, so you know what you were actually paid.
Bank products for our partner offices
Every partner office gets help enrolling with SBTPG, Republic Bank, Refund Advantage or EPS Financial. Bank products are optional and subject to each bank's approval and fees, which the bank sets. We walk through the programs, enrollment timing and disclosure requirements before you sign, so you know exactly what your clients would pay.
Bank products FAQ
What are bank products in tax preparation?
Optional financial products, offered through a bank partner, that are tied to a client's tax refund. The most common is a refund transfer, which lets the client pay preparation fees out of the refund. Many offices also offer refund advances, which are loans against the expected refund.
Which banks offer bank products for tax preparers?
Banks that work through professional tax software, including Santa Barbara Tax Products Group (SBTPG), Republic Bank & Trust, Refund Advantage and EPS Financial. Which ones you can offer depends on your software or service bureau, and each bank approves offices individually.
Is a refund advance a loan?
Yes, it's an advance against the expected refund. IRS Publication 1345 notes that pre-refund advance products are generally free to the taxpayer and aren't considered refund anticipation loans, which charge interest or fees.
Do tax preparers make money from bank products?
You collect your own preparation fees through the refund transfer. Depending on the program and your software or bureau agreement, disclosed add-on or transmission fees may also be paid on funded products. Fees are paid only when the product funds.
Does a refund transfer get my client's refund faster?
No. The IRS sends the refund on its normal schedule. An RT changes where the refund goes and lets fees come out of it. It does not change IRS timing.
Can I offer bank products in my first season?
Often yes, if you have an EFIN and the bank approves your office. Some programs look at prior-season volume or experience, so apply early and have a plan for clients who pay up front.
Do I need bank products to run a tax office?
No. Many offices collect fees up front by card or cash. Bank products widen who you can serve, but they're optional for you and your clients.
What does a refund transfer cost the taxpayer?
Each bank sets its own fee, and it can change by season. The fee must be disclosed to the client before they sign. We'll show you the current fees for available programs during onboarding.
Sources
Program rules change; confirm current requirements with the IRS and your providers.