Tax refund feeding frenzy at Walmart

As the tax filing season gets underway, many persons and entities become insinuated into the income tax return filing process.  As noted recently by this author, one key interloper is the tax return preparer.

And now, Connecticut Revenue Services commissioner Kevin Sullivan is questioning the propriety of the entourage accompanying one such tax return preparer.  Sullivan now has reason to believe that Walmart has a sweetheart deal that sets up tax return mega-preparer Jackson Hewitt in its stores, channels the tax refunds through Republic Bank and prepaid debit card purveyor Green Dot Corportation, and unduly pressures the taxpayers to spend their refund checks at Walmart.

On account of the collective billions of dollars involved in tax refunds, it is not in the least surprising that entrepreneurs are gravitating toward the tax compliance process.  Some indiscretions are inevitable.  And the abuses can increase synergistically when the abusers band together.

Never mind that Jackson Hewitt has had tax ethics issues on the part of its employees and franchisees; the organization is so large that some problem somewhere is bound to occur.  Commissioner Sullivan is rightly concerned about possible deceptive business practices being perpetuated upon Connecticut's taxpayers.  Taxation is never popular, and as noted earlier by this author, fear of a negative experience in the tax compliance process can be a basis for rationalizing noncompliance with the tax laws.

But there are larger issues that go beyond Sullivan's concerns.  Retailers, including and especially the larger ones, tailor their marketing to individual customers based upon the customers' shopping histories, including the on-the-spot printing of custom coupons.  A while ago, while shopping at CVS, I received a print-out of many custom coupons for candy.  I do not eat candy, and my wife shouldn't eat candy.  The print-out of those coupons confirmed what I already knew – that my wife, who uses the same CVS customer rewards account, had recently been cheating on her diet regimen.  It is not difficult to imagine a stressful conflict situation being created when a less understanding and accepting spouse is the recipient of such coupons. 

The perils of outside hackers compromising large retailers' customer data have already been demonstrated quite graphically.  As the walls that separate the tax preparers from the banks from the debit card purveyors from the retailers become increasingly blurred and porous, and the tax compliance process grows ever increasingly complex, how far can the tax preparers, debit card purveyors, banks, and retailers be trusted to not intentionally abuse what should be confidential data?

Kenneth H. Ryesky is a lawyer who teaches Business Law and Taxation at Queens College CUNY.  He formerly served as an attorney for the IRS.

 

As the tax filing season gets underway, many persons and entities become insinuated into the income tax return filing process.  As noted recently by this author, one key interloper is the tax return preparer.

And now, Connecticut Revenue Services commissioner Kevin Sullivan is questioning the propriety of the entourage accompanying one such tax return preparer.  Sullivan now has reason to believe that Walmart has a sweetheart deal that sets up tax return mega-preparer Jackson Hewitt in its stores, channels the tax refunds through Republic Bank and prepaid debit card purveyor Green Dot Corportation, and unduly pressures the taxpayers to spend their refund checks at Walmart.

On account of the collective billions of dollars involved in tax refunds, it is not in the least surprising that entrepreneurs are gravitating toward the tax compliance process.  Some indiscretions are inevitable.  And the abuses can increase synergistically when the abusers band together.

Never mind that Jackson Hewitt has had tax ethics issues on the part of its employees and franchisees; the organization is so large that some problem somewhere is bound to occur.  Commissioner Sullivan is rightly concerned about possible deceptive business practices being perpetuated upon Connecticut's taxpayers.  Taxation is never popular, and as noted earlier by this author, fear of a negative experience in the tax compliance process can be a basis for rationalizing noncompliance with the tax laws.

But there are larger issues that go beyond Sullivan's concerns.  Retailers, including and especially the larger ones, tailor their marketing to individual customers based upon the customers' shopping histories, including the on-the-spot printing of custom coupons.  A while ago, while shopping at CVS, I received a print-out of many custom coupons for candy.  I do not eat candy, and my wife shouldn't eat candy.  The print-out of those coupons confirmed what I already knew – that my wife, who uses the same CVS customer rewards account, had recently been cheating on her diet regimen.  It is not difficult to imagine a stressful conflict situation being created when a less understanding and accepting spouse is the recipient of such coupons. 

The perils of outside hackers compromising large retailers' customer data have already been demonstrated quite graphically.  As the walls that separate the tax preparers from the banks from the debit card purveyors from the retailers become increasingly blurred and porous, and the tax compliance process grows ever increasingly complex, how far can the tax preparers, debit card purveyors, banks, and retailers be trusted to not intentionally abuse what should be confidential data?

Kenneth H. Ryesky is a lawyer who teaches Business Law and Taxation at Queens College CUNY.  He formerly served as an attorney for the IRS.