What type of fee can an Electronic Return Originator (ERO) charge for clients selecting RALs versus direct deposits?

An Electronic Return Originator (ERO) may charge different fees depending on the services chosen by the client. When clients select Refund Anticipation Loans (RALs), they often pay a fee that may differ from the fee associated with direct deposits into their bank accounts, as the risks and costs involved in providing these services can vary significantly.

RALs involve loans based on anticipated tax refunds, which generally entails additional risks for the ERO, as they must front the loan to the client while waiting for the IRS to process the tax return. This added risk can justify a higher fee structure compared to direct deposits, where the client simply receives their refund directly from the IRS into their accounts without the intermediary loan process.

The flexibility to charge different fees allows the EROs to appropriately adjust the costs based on the services rendered and the associated financial risks. Understanding this fee structure helps clients make informed choices regarding how they prefer to receive their tax refunds.