Republic Bank of Kentucky reports that Jackson Hewitt has notified the bank that they will terminate their agreement for tax products for the upcoming season.
While all parties were working with the knowledge that Republic could no longer offer a refund anticipation loan product, the general assumption was that their agreement to provide refund anticipation checks would remain in place.
Republic received similar news from JTH Holdings, a.k.a. Liberty Tax, earlier this month. When the two events are taken together, Republic faces a big problem. Republic says that forty percent of its revenues for the six month periods ending in June 2012 and June 2011 were derived from their relationship with Jackson Hewitt. The revenue stream from Liberty had been almost as large.
Here is the big question: when will the other shoe drop? The management at both Liberty Tax and Jackson Hewitt would look very foolish if they tried to operate their current business model without an ample supply of settlement products. That is why, if both are walking away from a sound agreement with Republic, then they most certainly must have another option in the wings. Tax season is not far off. It is time for any large preparer to iron out any kinks in changes to the software at their stores.