If you are having the fees withheld from your federal refund then the preparer must use a third party processing bank to handle the transaction. Your refund must go to a temporary account set up at that bank to receive the refund from the IRS then the fees are paid out to the preparer and the balance is distributed to you and the temp account is closed. This is standard operating proceedure for all the tax prep companies and has been for a long time. The fees they charge cannot be based on a % of the refund and the processing bank can and will charge a flat fee for the service. You should have to sign bank papers for the opening of the account so read them carefully before you agree to this service. And the service is optional not required by any preparer ... they should give you the option to pay upfront by cash, check or charge/debit card.
