PEKIN — Three of the nation’s largest tax preparation firms seek this tax season to attract customers who’ve left them for online competitors by offering quick advances on tax returns, with no added fees or interest.

That’s a promise from local managers of H&R Block and Jackson-Hewitt tax service outlets. It’s echoed by the interstate bank those companies are using to fund the loans.

Yet the Illinois Attorney General’s Office warned taxpayers in a news release this week that “tax preparers often deceptively market these advances as ‘interest free,’ but the loans carry interest rates over 100 percent in most cases.” 

“That is not the case here at all,” said Jeff Brooks, manager of an H&R outlet in Pekin.

After a federal regulation stopped H&R from issuing interest-based refund advances in 2010, other major tax preparers also ended the practice — which, in its height in 2002, cost an average of $77 in interest fees. 

“It’s not allowed in the banking industry any longer,” Brooks said. “I think Madigan’s not in touch with the times.”

“We stand by our advertising” of no-interest, no fee refund advances, said a Jackson-Hewitt office manager in Peoria, who asked not to be named.

Both companies absorb the interest charged on the loans as “a marketing expense” in their quest to compete with online services such as TurboTax, said Katie LeBrun, corporate communications director for MetaBank, the South Dakota-based bank funding the companies’ advance loans. 

A third major preparer, Liberty Tax Service, also advertises interest-free refund advances.

Eileen Boyce, a spokeswoman for Madigan’s office, said Thursday the attorney general is “monitoring” the new forms of refund advances, made by large-chain preparers and smaller chains and independent tax services.

Jackson-Hewitt was the first large firm to offer no-interest advances three years ago. Their popularity is expected to grow this tax season, in which the IRS is delaying the start of federal refunds until Feb. 15 for filers who claim earned income and child tax credits.

“Our point,” Boyce said, “is just be careful. Get all the details, read all the fine print” involved in refund advances before requesting one. 

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